FOUNDATIONS OF MANAGEMENT ASSIGNMENT

“A Strategic Review”

Case: Action Global Communications (AGC)

International Public Relations Company founded and

headquartered in Cyprus.

By: Anna-Denise Ioannou

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1. INTRODUCTION ................................................................................................................... 2
THE CASE................................................................................................................................ 3
2. VMOST ANALYSIS/STAKEHOLDERS ............................................................................... 3
2.1 VMOST ANALYSIS ............................................................................................................ 3
2.2 STAKEHOLDERS ANALYSIS ................................................................................................. 5
3. EXTERNAL ANALYSIS ........................................................................................................ 6
3.1 PEST ANALYSIS ............................................................................................................. 6
3.2 LIFE CYCLE ANALYSIS .................................................................................................. 8
3.3 THE MAJOR COMPETITORS......................................................................................... 9
3.4 THE CUSTOMERS...................................................................................................... 100
3.5 PORTER‟S 5 FORCES MODEL……………………………………………………………..11
4. INTERNAL ANALYSIS ....................................................................................................... 12
4.1 VALUE CHAIN ............................................................................................................... 12
4.2 MC KINSEY 7S MODEL ................................................................................................ 14
4.3 FINANCIAL PERFORMANCE ....................................................................................... 16
5. SWOT ANALYSIS AND CONCLUSIONS .......................................................................... 17
5.1 SWOT ANALYSIS DISCUSSION .................................................................................. 17
5.2 CONCLUSIONS ............................................................................................................ 19
6. OPTIONS AND RECOMMENDATIONS ............................................................................. 19
7. REFERENCES/BIBLIOGRAPHY ....................................................................................... 20
8. APPENDICES ..................................................................................................................... 20
APPENDIX 1: VMOST ......................................................................................................... 22
APPENDIX 2: STAKEHOLDERS ANALYSIS ...................................................................... 23
APPENDIX 3: PEST ANALYSIS .......................................................................................... 26
APPENDIX 4: VALUE CHAIN .............................................................................................. 30

1. INTRODUCTION

This assignment attempts to examine the competitive standing and future of AGC, a Cypriot

founded and headquartered Public Relations company with a presence in 36 countries for
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more than 35 years, employing a team of more than 200 professionals - with a turnover of

€24.5 million for 2005. In doing so we are going to examine the external and internal

environment of the organization, by using business models that will help us conduct a SWOT

analysis and evaluate AGC‟s VMOST in order to reach some conclusions concerning the

organization‟s strategic position. A brief description of the company is given below.

COMPANY HISTORY AND BACKGROUND

AGC was founded in 1971 by PR-industry guru Tony Christodoulou – currently CEO, to

generate the power of public relations in emerging markets (East and South Europe, North

Africa, Central Asia and the Middle East) by operating an international network and acting as

a regional hub and single point of contact for the clients. AGC‟s core practice is the creation,

development and implementation of region-wide PR campaigns, in a wide spectrum of

sectors including aviation (British Airways in 28 countries), travel & tourism (Visit Britain,

Radisson Hotels, Four Seasons Hotels, Cyprus Tourist Organisation), IT, sports marketing

(World Rally Championship, Paris 2012) oil & gas (OMV), banking (Nomura Bank, Bank of

Cyprus, Piraeus Bank) real estate, and automotive (BMW) etc. AGC expanded rapidly the

past 5 years by buying out local partners either fully or partially. This move has created

problems with its financials and forced the directors to acknowledge the need of a

comprehensive business plan, leading to the development or enhancement of Finance, HR,

New Business and Client Service departments, to remain a key player and profitable entity.

2. VMOST ANALYSIS/STAKEHOLDERS

2.1 VMOST ANALYSIS

In short the analysis of the AGC‟s VMOST found in appendix 8.1 is clearly focused on new

business followed, by improvement of profitability, cost control and effective use of existing

infrastructure. The involvement in the new business tactics of the country managers and the

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necessity of inspiring and involving all the employees in the company‟s strategic plans seems

imperative; while current levels of client service must reach high standards.

AGC‟s recent designed vision, to make public relations the lead discipline in the

communications mix for the region it operates, is highly ambitious while the mission

encompasses its purpose of existence. Although both are well written; lack of commitment

from the directors and effective communication among the network of either statement results

in an unclear direction and absence of commitment. On the other hand the objectives meeting

the „SMART‟ analysis are simple and straightforward. Therefore provided the „network engine‟

commits and focuses on them immediately, actual results (in short: 3-5% increase of new

accounts in each office, focus on value add services and improve cash flow and margins by

controlling costs and capital management cycle) could be achieved within the determined

time frame. Moreover AGC‟s three faced strategy; includes short and long term goals

supported by door opening tactics, focus on new business by achieving growth using the

existing infrastructure in the short term and improving financial position in the long term.

In simple words, we could say that strategy and tactics are well designed but implementation

hangs in thin air. Unless an incentive scheme, substantial training, performance monitoring

and fusion of passion by the directors are set in motion in a consistent manner, the entire

business plan of Growth – Increase Revenue – Vision; will be extremely difficult to fulfil.

2.2 STAKEHOLDERS ANALYSIS

AGC‟s has eight important stakeholders, divided into external and internal; shown in Fig. 1

(Stakeholders Map) and analysed in more detail in appendix 8.2. Stakeholder management

should primarily be concerned with long-term strategic decisions, because is important to

know about their expectations and to determine, to what extend they could and would exert

an influence.

Most influential stakeholders are analysed below.

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Internal Stakeholders:

Directors- AGC founded and still owned by the same family was build and is strongly

depended by their performance on a personal basis. Having complete control on expansion

decisions and budget allocations; gives them the highest level of interest and influence. In

addition they monitor and influence almost all activities on a daily basis. Clearly, immediate

profitability and family motives (strongest expectations) are the driving force of the directors,

goals which are aligned with the strategy and objectives. Rather short sighted approach

though, lacking real commitment to the Vision and Mission statements.

Employees-On the other hand, AGC being a public relations company depends immensely on

the excellent levels of service delivered by its „satisfied‟ employees to maintain and acquire

new clients. This issue is not much appreciated by the directors who need to reconsider

offering valuable job benefits (dedicated HR schemes) in order to decrease the high level of

staff turnover and enhance the feeling of belonging in a solid and reliable organisation,

(expected attributes from employees leading to pay rises and bonuses). Even though the

employees have no say on the decision making process, are the face of the company. At the

very least, they need to be communicated the key goals and objectives.

External Stakeholders:

Clients- Evidently the objective to offer impeccable service; meets the client‟s expectations of

receiving ROI, leading to successful communication campaigns which generate sales

opportunities and positive reputation management for them. Retention of existing and

acquisition of new clients is the major influencer of the company‟s revenues.

Therefore the company must ensure that the client‟s perception of its services matches their

expectations more than they expect!

Suppliers- They have great power over AGC operations and client service delivery levels,

because the company depends on their „mood‟ whether they will publish or cover a story

generated on behalf of the client. AGC does not pay the media nor has advertising budgets to

allocate; therefore maintaining excellent relationships with the media is a priority and a

constant effort. Examining AGC‟s successful business tactics so far proves that the media‟s

expectations are met successfully via being a credible and transparent source of information.

Fig.1 Stakeholders Map

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 Stakeholder Power

Low High
1 5 10
Keep advised – low level Keep informed regularly- stay attuned
Fulfilment of expectations

reaction to their needs and behaviours

G
S
5 A
COM

E
M C
Keep informed- Monitor Closely
Remain aware of their Keep regularly informed
B Lobby actively
contacts with others
High 10 External Stakeholders : Suppliers, Public, Government,
Clients, Competitors

Internal Stakeholders : Board of Directors,

Employees, Management

Therefore, since AGC operates within complex, culturally different and emerging markets

must constantly assess and evaluate the external forces of interests and influences and

adjusting them with corporate objectives.

Following in our analysis, we are going to take a look in the external environment of Action

Global Communications.

3. EXTERNAL ANALYSIS

In this part we aim to give a representative analysis of AGC‟s external environment in order to

understand the challenges of the highly competitive market of PR services, in the regions it

operates by using various academic business models as the PESTLE, Life Cycle,

Competitors analysis methods and the Porter‟s 5 forces model.

3.1 PESTLE ANALYSIS

Ideally to thoroughly analyze the environment in which AGC operates we could conduct a

PESTLE analysis for each region; Middle East/ Balkans/ Central Europe / East Europe and

North Africa, because an external influence could have a positive impact in a specific region

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while at the same time have a negative impact in another region. Since the main problem with

PESTLE factors is that they are continuously changing; is important to analyze what is

affecting the company now. Therefore, for the purpose of this assignment we have conducted

a more generic PESTLE analysis found in Appendix 3, focusing on the main threats and

opportunities facing the company as a network.

Key current Opportunities:

Despite the global trend of reducing operating costs as a priority, the marketing departments

still enjoy high budgets; whether are intended for advertising, marketing or public relations.

Most importantly, corporations the past 3 years are shifting from the traditional „costly‟

advertising campaigns and search for more innovative and alternative ways of communication

via „value for money‟ public relations methods. Clearly this global economic trend of allocating

higher budgets for PR activities; is a huge opportunity for AGC for all markets; because its

client base is consisted both of international (high pr budgets) and local clients.

EU‟s recent expansion of adding 10 new member states including Cyprus is proving a door

opener for new business. Cyprus remains the most prosperous of the new member states, as

both inflation and unemployment rates remain relatively low.

Healthy facts which allow the H/O to use its current infrastructure and become a valuable

partner; acting as a single point of contact for global clients who wish to do business in these

countries. Presence of more than 15 years in the Balkans, in Eastern and Central Europe,

strategic affiliations with local agencies and highly experienced staff are AGC‟s network

powerful competitive advantage. (Positive change in the political environment).

Normally language and cultural differences tend to be an obstacle in business, but for AGC is

an opportunity. Employing more than 200 professionals, mainly local staff in each agency (36

countries) under the H/O support and overview; enhances client service and creates real

relationships between the client and the suppliers (media) being the hardest thing to achieve.

Along the same lines, changes in lifestyles; positively challenges AGC core ability to adjust

and present innovative PR ideas to the client.

Key current threats:

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However, not everything is as bright as it seems until now. Real threats exist as well.

Intense competition affects the industry immensely by acquisitions, unfair practice, and loss

making fees (just to win a specific project with the prospect that the client will become a long

term one.) The domination of this market by few multinational agencies (quite often

Advertising ones, offering PR services for free on the side) who strive for market share

-sometimes at any cost – was, is and will be the greatest threat for AGC. This profession has

no limiting entry requirements; anyone from former employees to senior retired managers can

start up a PR agency. In addition is important to continually identifying the strategic policies of

the competitors and comparing them against AGC‟s, i.e. benchmarking of growth or

acquisition strategy. Moreover, focusing on new business opportunities and reassessing its

competitive position in relation to competitors, is in line with the strategy and objectives set.

Level of education, finding and holding qualified people are another competing element

among agencies. People are the face and heart of AGC. Demand for these people is rising

due to growth plans of large consulting agencies, while on the other hand many graduates

choose to join start-ups. Without a doubt, ongoing investment on the human capital is needed

for AGC.

In short the major external driving forces in the PR consulting industry are:

 all the changes happening in the clients‟ environment ( Threat and Opportunity)

 the rising competition within the industry (Threat)

 the investment on human capital ( Opportunity )

 the developments in the areas of technology ( Threat and Opportunity)

3.2 LIFE CYCLE ANALYSIS (LCA)

As a principle where LCA is used to evaluate procedures rather than products, the information

can help ensure appropriate choices are made. Following the different stages of the LCA

(Johnson & Scholes 2001), AGC depending on the region it operates can be placed in all five.

In the Middle East – booming markets- and in Eastern Europe – emerging markets - the

company gains market share daily while for example in Greece it strives to keep it, let alone

gain in expense of the competition. Of course the strategy and objectives set need to be

adjusted accordingly for each country, but following their main direction are applicable. Finally

the network as an entity is at a growth stage.

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3.3 THE MAJOR COMPETITORS

The competitors affecting AGC network are divided into two main groups:

 Multinational agencies i.e. Weber Shandwick, Hill & Knowlton, Porto Novelli.

Having high operating costs, being faceless, weak presence in AGC‟s operating

markets; give to the company new business opportunities. Main threat remains their

strong brand image; when it comes in terms of winning international clients –

„Stealing international clients from multinational agencies‟ is an objective set for this

year.

 Local agencies. I.e. in Cyprus is DELEMA, Marketway, Gnomi. These agencies

(dominate Cyprus PR market) are advertising ones offering PR services on the side

to their customers. Generally companies in Cyprus assign their PR needs to their

advertising agencies for two reasons: a) PR tool is underestimated b) Saving of

Budgets.

This practice creates both opportunities and threats for AGC, being a purely PR

agency. Eventually clients realize the value and differences of PR Vs Advertising

methods offered to them by advertising agencies which DO NOT have dedicated PR

departments. On the other hand advertising agencies started to acknowledge this fact

by creating PR departments. AGC should take this opportunity and act aggressively

to win new clients.

3.4 THE CUSTOMERS

The scenario with the customers is the same as with competitors:

 International customers – British Airways, Goodyear, Siemens, BMW etc.

Controlling costs and decrease in budgets while maintaining value for money deals

and successful results; is a major trend within international corporations. Therefore

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 AGC‟s cost effective PR campaigns, established network and experience, allow the

company to be a serious choice of potential clients when choosing an agency.

 Local customers – Any company requesting AGC‟s services along the network

either in their country only or for other regions as well. The threats with this group is

low budgets, family owned business (use traditional ways of promotion i.e.

advertising, marketing only) hard to evaluate PR benefits and the easy way out by

hiring internal PR manager. Alternative all these elements can turn into opportunities

by educating local customers of the value of PR services offered by an established

network with reasonable fees.

3.5 PORTER’S 5 FORCES MODEL

Assessing industry attractiveness

Intensity of rivalry is high because every agency is fighting for market share and the service

market is always a struggle of tenders and awarded projects. Competition is especially strong

within the market segments and within the player groups, while the market is dominated by

large players. Moreover, big players have developed different strategies by positioning

themselves as a one-stop-shop service for the consulting needs they might have. Therefore

they focus on long-lasting customer relationships and cross-selling opportunities, almost at

any cost, a tactic that AGC currently does but without a defined plan.

Threat of new entrants is high. A threat of new entrants into an industry depends largely on

barriers to entry. Specifically for the PR industry; entry barriers are considerably low, no legal

limiting regulations, need into fixed assets investments is little, forming agencies is quite

simple, growing entry trend of companies from outside this industry i.e. IT companies; surely

leaves no doubts of this threat for AGC.

Threat of substitutes is low. Although PR does not receive as much attention as advertising

and marketing, its role is increasingly important to organizations, because it fully support them

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to influence public perceptions. PR discipline and activities cannot be replaced by other

communication methods and receive the same results. All three are interrelated and

compliment each other.

Bargaining power of suppliers is high. As already mentioned earlier, suppliers are the media.

This means that publication of articles and any other media coverage is depended on the

good intentions of the journalist whether they cover the story. Generally publicity is received

by maintaining „excellent‟ relationships with the media, because articles and news releases

are not paid. Media can turn the public‟s perception in a split second either positively or

negatively. One of the strongest advantages of AGC is the remarkable media relations it has

around the network, a guaranteed success factor – which must be maintained and enhanced.

Bargaining power of buyers is high. Almost needless to say how powerful customers are. The

growing emphasis from clients on ROI (Return-on-investment) is a major concern to the

industry. Switching ease allows clients to constantly press and push for lower fees. PR

industry needs to be more accountable by moving from wide coverage in media to more

precise and measurable coverage, which can be proven to affect the target audience‟s

attitudes and behavior.

Overall the PR industry being a younger one than marketing and advertising shows high

future growth margins attracting all kinds of players (from one-man show to international

corporations). In addition TV commercials are losing their charm – an opportunity for PR

agencies – therefore AGC‟s must create and deliver revolutionary and exciting ways of

communication while meeting the client‟s expectations for ROI.

A recent debate said: „The market for PR and communications professionals can only be

described as extremely healthy. A recent article in the Economist magazine (January19th,

2006), cites PR as „an increasingly vital marketing tool‟.

Fig.2 Porter’s Five Forces Model applied for Public Relations industry

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 Threat of new entrants - HIGH
•No entry barriers Bargaining power
•Local ADV agencies develop dedicated of buyers-
Bargaining independent PR departments
power of •Smaller specialised consultants start to
HIGH
suppliers - serve customers of all sizes
HIGH •many companies from outside the
consulting industry enter this market •Switching agencies
•Low capital investment effortless process
•Growing emphasis
l from clients on
•Publication of return-on-investment
Intensity of rivalry - HIGH (ROI )
articles depends
entirely on the •PR budgets almost
•Established international
journalist’s mood always lower from
players: one-stop-shop
•Imperative to Advert. & marketing
service creating business leads
maintain excellent •Fees war
relationships with •Local ADV agencies offer
the media PR services to existing
•Negative media Clients almost for free
Coverage over night

•PR is cheaper/ supports/enhances - Advertising and Marketing

•Increasingly role of PR
•PR is a growing young industry
•In-house PR capabilities do not preclude the use of an outside agency
•Use of online-media grows

Threat of substitution - LOW

4. INTERNAL ANALYSIS

In this section we are going to analyze how AGC uses its resources and configures its

operations in order to develop services that meet market needs and create a competitive

advantage. In doing so we used the concept of Porter‟s value chain (1985), identified and

evaluated the factors of Mc Kinsey‟s 7S model, presented and translated financial data and

finally assessed AGC‟s distinctive capabilities.

4.1 VALUE CHAIN

AGC’s primary activities and supporting activities hold simultaneously core competencies and

vital linkages exist between them.

An outline of AGC‟s value chain is found in appendix 4.

New contracts being the primary source of operations, separated in retainer fee and ad hoc

contracts are the inbound logistics. International retainer fee accounts are the company‟s

strength; i.e. British Airways (BA) due to automatic renewal of contract every year for the past
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30 years in 28 countries. Therefore AGC‟s power of servicing this client successfully for so

many years in so many countries has two positive effects: a) becoming a strategic partner for

BA thus making it costly for them to switch agency easily and b) enhances AGC‟s brand

name across the region it operates. Moreover ad hoc projects and other retainer fee accounts

remain a daily priority in securing existing clients and attracting new ones.

Operations include the pitching (preparation of offer/proposals) process until the contract is

signed. A major weakness used to be the preparation of these proposals only from a PR

perspective, neglecting the clients primary goal; that of increase in sales in general. The

recent introduction of dedicated new business team, is educating country managers in

presenting more „communications strategic‟ proposals. Further to brainstorming and creative

PR ideas, the need of addressing the client‟s sales targets is becoming the next competitive

advantage of AGC.

Outbound logistics include project implementation which is directly linked with service of

monitoring and evaluation. Both are powerful primary activities because are what the client

perceives as value for their fee. Results measurement of PR activities is not easy to prove to

clients; except with the number of cuttings and advertising value received. AGC maintains the

competitive advantage of high standard services; something that took years to build, evidently

very difficult to create or copy over night.

Marketing department never existed, because the core philosophy of the founder is that a

successful PR agency shouldn‟t be doing PR for itself. Indeed the company hasn‟t bought its

reputation. It was build via word of mouth effect by being among the top five PR agencies in

each country. Nevertheless modern times require more dynamic presence, thus the creation

of a dedicated Sales/ New Business team was necessary.

Next we are going to examine the supporting activities of AGC in order to have a full view on

the inside of the organization.

Firm Infrastructure - As mentioned in the stakeholders‟ analysis, AGC‟s directors and

founders are the controlling force who quite often „panic‟ and deviate from the long term

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objectives; in an effort to achieve immediate results now. On the other hand, the core

competence (value) of the directors‟ skills and in-depth market intelligence is almost priceless

and should be promoted in any possible way.

Human Resource Management - In addition, human resources management does not seem

to be one of the company‟s priorities. Due to the fact that there is no HR department; the

accounts departments of each office deals with operational procedures such as payment and

compensation, insurance etc for their staff. Currently the directors are examining HR schemes

with the help of an external HR consultant, a promising fact.

Technology development – A large part of AGC operations is based on basic IT structure;

supporting its network on a 24 hour basis, keeping up to date with new technologies. None of

the less though, is all basic systems of exchanging information, while using as a primary tool

the emails. Automatically the whole system is unsophisticated. For example the accounting

process of the network is not streamlined creating additional work and duplicated effort

leading to high operational costs. Another example is luck of a global HR application allowing

the organization to reduce its efforts in managing its human resources. Ultimately the

company does not invest in IT systems to gain the competitive edge and enhance its primary

activities by realizing benefits such as:

 Increase Value add to its clients

 Increase knowledge share across the network

 Allow employees across the network to jointly work on projects

4.2 MC KINSEY 7S MODEL

The main conclusion of the value chain analysis is luck of HR management procedures to

support the company‟s most valuable and profitable asset; its people! In an effort to have

better understanding we will use the Mc Kinsey‟s 7S model.

Hard S’s: Easy and feasible to identify

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Strategy – Derived from VMOST, is well structured and detailed actually responding to the

external environment‟s challenges. Again the issue here is that strategy should be

communicated to the staff, thus winning them over and achieving desired results for the

Network.

Structure – The organizational structure of AGC could be characterized as flat. In fact the

directors are on top, followed by client service, finance and new business managers who

support the network from the H/O. Further down we have the country managers, their

department heads (only in big offices) and the executives. Career paths do not exist.

Systems – The formal and informal (basic) procedures support the strategy and structure. In

addition the flexible pricing policy and the well organized and effective new business team are

considered to be major strengths of doing business. Surely the systems could upgrade and

even become more sophisticated, thus creating an added value for the client.

Soft S’s: Hardly feasible and difficult to describe

Style (culture) – Dominant values are „lets make it for the month‟, while managers focus on

the day-to-day activities (to achieve unstructured targets) maintain a casual relationship with

their team members, failing to create enthusiasm, loyalty and serious involvement in the

company‟s objectives.

Staff – Absence of incentive schemes, internal career plans, consistent management training,

allow no room for high morale. It‟s imperative to introduce HR-systems to address these

issues, thus achieving one of the most important objectives; that of providing high standards

of service. Satisfied and well informed employees affect the company‟s positive performance.

Skills - The distinctive competences of AGC include multi-experienced and diverse

professionals who deliver creative and innovative PR ideas. Unfortunately high staff turnover

results in losing these professionals; an identified weakness.

Shared Values - Being a perception influencer company; is defined by integrity, transparency

and simplicity; shared and operating by values of AGC.

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4.3 FINANCIAL PERFORMANCE

Since AGC is a family private owned company, access to financials is limited and not so

transparent. Therefore in this part of the analysis we will attempt to present some facts and

figures concerning financials in order to get a better understanding.

Five years ago AGC‟s financial position was not one of its strengths. The fact that the

company was making losses every year forced the directors to consider hiring a general

manager whose main responsibility was to shift the company from loss making to profits.

Today the Network is getting financially strong; however there are business centers which are

loss making currently and they represent 20% of the network operations. Gearing ratio is low

and the reason is that AGC doesn‟t use loans or large overdrafts to operate. Occasionally

cash flow becomes an issue due to collection cycle of fees from local clients, even though

most of the clients are international corporations who pay normally.

Impact of retainer fee clients on AGC’s revenues:

The major international retainer fee client represents 36% of AGC overall revenues which

could be both a positive and negative fact. Positive because specialization and in depth know

how of a client makes AGC a strategic partner for life, while should an international client

decide to leave the agency this could have a negative impact. Therefore the balance between

costs and income needs to be enhanced by more retainer fee clients – focusing on network

accounts - thus creating economies of scale with the existing infrastructure.

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In Fig.3 – Normal Distribution Graph demonstrates the impact of retainer fee clients. To get a

better understanding of the revenues we have separated the extremes in retainers by

excluding the low end (low fee accounts) and the high end (premium fee accounts) to

calculate an average realistic fee (global retainer), which is derived from the volume of

revenues. This method helped to set feasible and realistic targets for 2006.

Fig.3: Normal Distribution Graph

• Action Global PR Revenues 2005

• Fees €180,135*12 = €2,161,620

– 11 accounts

• 36% Revenue from BA

Average Global Retainer €10,000

Less €5,000 €25,000 +

Low A/Cs Network A/Cs Premium A/Cs

Act. Egypt Merloni BA
Savoy Siemens OMV
NEC
Visit Britain
CTO
Goodyear
BAE

5. SWOT ANALYSIS AND CONCLUSIONS

5.1 SWOT ANALYSIS

In the table below are included all the outputs from internal and external analysis. The ranking

for the strengths and weaknesses that were identified in our internal analysis was based on

the strategic importance that each one of these factors has for the organization now and in

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the future. Additionally, for the opportunities and threats the prioritizing of the factors was

made according to their occurring probability and their expected impact on the organization.

Strengths Weaknesses

1. Strong network – Brand name 1. Human Resource Management

2. High standards of service 2. VMOST is not communicated to

3. Creation of dedicated New Business employees

department 3. Financials – regular cash flow problems

4. Multi cultural professional employees 4. Basic technology is used

5. High profile long term clients 5. 7S linkages

6. Flexible pricing procedures 6. Lack of inspiration from the directors

7. Excellent media relations

Opportunities Threats

1. Expansion of European Union 1. Intense competition from local agencies

2. Development of own network and multinationals

3. Operation in emerging and booming 2. Entry in PR market of companies outside

markets the consulting industry

4. Global trend of innovative ways of 3. Smaller specialized consultants start to

promotion ie PR activities serve customers of all sizes

5. PR market is a healthy one 4. Low capital investment, specially in

emerging markets

5.2 CONCLUSIONS

The company being in growth state has two promising assets, its network in emerging and

booming markets and multi cultural professionals offering high quality of service which can

place AGC within the next ten years as the market leader. Looking forward is beyond a doubt

that a number of challenges lie ahead, especially when current globalization trends are taken

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into account. Unfortunately not all local units survive following periods of turmoil. Moreover,

since the global scene is delicate and unpredictable; at any given moment big players could

open offices in the markets AGC operates and become dominant players. Therefore each

business unit must be competitive and become profitable in it self. Thus becoming the market

leader in the specific country, resulting to sustainability and security, while implementing HR

schemes to motivate employees and keep them on board.

6. RECOMMENDATIONS

To sum up, the following are the main recommendations for AGC‟s strategy:

 Communicate strategy to staff to create sense of acceptance and ownership and

motivate them by applying incentive schemes and offering valuable job benefits.

 Through continuous environmental scanning and analysis of Porter‟s five forces

model use the existing market position to control suppliers power, to be a step ahead

of competition and new entrants and to fulfil clients expectations, thus lowering their

bargaining power

 Focus on high standards of customer service through efficiency and ROI measurable

results. These will in turn lead to lower operational costs and increased profitability.

 Implement New Business Plans both for short and long term in a structured,

consistent and defined direction way. Stop acting „in a panic‟ to achieve short term

results.

 Each business unit to become top player in their market by acquiring big local clients

 Create new working-styles and corporate cultures that are attractive for more

entrepreneurial-minded people, and actually keeping them

 Enhance network alliances to increase range of services offered through cooperation

with other agencies

Concluding our analysis, we would recommend AGC‟s top management team to evaluate the

linkages within the mission, objectives and tactics focusing at the same time on the linkages

within the 7Ss and investing not only in expanding its network and technological development

but also to its most valuable asset, the human capital.

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7. REFERENCES/BIBLIOGRAPHY

Action Global Communications Internal Reports, 2004-2005

th
Johnson, G & Scholes, K (2001) Exploring Corporate Strategy, 6 edition, Prentice Hall

Porter, M E (1980) Competitive Strategy: techniques for analyzing industries and competitors,

The Free Press

Porter, M E (1985) Competitive Advantage: Creating and Sustaining Superior Performances,

the Free Press

Peters T., Waterman, R. (1982) In Search of Excellence, New York, London: Harper & Row.

http: www.actionprgroup.com

http: www.ft.com

http: www.hbr.com

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8. APPENDICES
APPENDIX 1 - VMOST
Vision
“AGC aims to make the public relations tool,
the lead discipline in the communications mix
for the region it operates; because public
relations have the immediacy and
transparency to build credibility and trust.”
Mission
“To be universally recognised as the most
effective and creative public relations
consultancy throughout the regions we
operate in, building lasting relationships
between our clients and their stakeholders.”
Core organisational values:
 Engage credible sources of
information
 Cut through the information overload
to something meaningful
 Maintain excellent „Media‟ know-how
 Offer creative and innovative
experiences
 Employing pioneering spirits
 Personal and professional integrity in
daily activities
 To understand global and local
trends : „movers and shapers‟
Objectives
 Increase market share – new
accounts - in existing
markets of operation by 3-
5% by the end of 2006.
 Increase value add services
leading to an increase in
revenues from existing
accounts
 Improve cash flow by
Analysis/Implications/Discussion
AGC„s recently designed vision portrays a
dynamic and ambitious big idea on behalf of
the company. In some countries, this can be
achieved quite easily, in some already it has
and in some it may never be the case. Action
operates in emerging and multi-cultural
countries; therefore the complexity and
unpredicted evolution – of the region -
combined with many unknowns are a
challenge for the company. The tool of
„Advertising‟ is the major competitor against
this idea, which nevertheless tends to lose
budget amounts every year. Therefore, the
vision statement needs to be effectively
communicated among the network in order to
promote this idea, internally and externally.
Analysis/Implications/Discussion
A thorough and explanatory mission
statement which mirrors the purpose and
ways of operation. The issue again is that
neither Vision nor Mission is effectively
communicated in the Network, a fact that
disorientates people. Although both
statements are well written, they lack
commitment by the employees who need to
be inspired by the directors of the company,
in order to secure more clients. Unless the
unity of the network is „fused‟ to its staff, thus
creating a snowball effect of passion and
loyalty, AGC will not be able to make great
advances under these conditions.
Analysis/Implications/Discussion
It seems that the objectives set for 2006 meet
almost all elements of the „SMART‟ analysis,
by being specific, measurable, achievable
and realistic. The agreed part remains a bit
foggy due to lack of commitment and
effective communication among the network.
The major concern remains the immediate
improvement of the is cash flow, which will be
quite hard to positively influence in all
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 controlling costs and capital
management cycle process.
 To operate by the slogan
„Think Globally, Act Locally‟
Strategy
“For AGC the way to move forward is by
generating new business for the network
constantly, delivering high results and
seamless service to the clients, encouraging
them to remain with us.
To achieve this we will :
a) Use Door Opening Tactics
b) Apply Focus and
c) Concentrate in the Big Picture”
Tactics
 Door Opening Tactics –
1. Focus on Small Medium
Enterprises on the brink of
expansion.
2. Use off-the-shelf Modules
 Apply Focus –
1. Business as usual, maturity.
2. Work on the internal mission
3. Develop a centre of excellence
that will demand over and above
market rates
 The Bigger Picture –
1. New local affiliations for each
country
2. Enhance existing AGC
affiliations
3. „Stealing‟ Multinational
accounts
(Source: Action Global Communications Business Plan for 2006 - 2008)
markets. Evidently some markets will be a
feasible task while in others a strong
challenge, therefore the company should
focus pressing and supporting the big offices
first. With regards to the – slogan- service
offered, this shouldn‟t be a problem at all,
since this is the competitive advantage of
AGC against other PR agencies. Local know-
how and excellence of service offered is the
strongest advantage. Provided the „network
engine‟ focuses on them immediately, actual
results could be achieved soon. Since the
objectives are simple and straightforward
make things easier.
Analysis/Implications/Discussion
Evidently the AGC clear cut strategy targets
and focuses on the main challenge faced by
the company – which is to acquire the
soonest new business, resulting immediate
improvement of its financial position. The
strategy is a three faced one and addresses
both short and long term goals. Therefore the
reasons for emphasizing on New Business
are increased costs and risks which resulted
from the past 5 year‟s rapid expansion and
investment moves in the Network. Further to
this, in order to achieve short term goals of
gaining 3-5% market share in 2006 in
operating markets, the existing infrastructure
must generate the additional growth.
Analysis/Implications/Discussion
Cleary the every day tactics support the
strategic plans and if implemented effectively
by the managers of the agencies around the
network, actual results could be produced
within reasonable time. Nevertheless though,
implementation of these tactics requires the
commitment of each agency‟s manager in
attracting new clients, and again this is
another challenge for AGC. The company
designs and delivers Public Relations
services. Therefore its managers are NOT
sales people and hiring a sales person for
each agency is not an option at this stage. In
plain words we would say, that the tactics are
well designed but implementation is hanging
on thin air. Unless a powerful motive scheme,
intense education and commitment from the
directors are set in motion immediately, the
whole plan could face great difficulties
moving forward.
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APPENDIX 2: STAKEHOLDERS ANALYSIS

As a first step we have divided stakeholders into two groups:

 Inner circle :

o Owners who are the founders and current directors

o Human capital (management + employees),

o Suppliers -for AGC‟s case is the media ( print, tv, radio, internet sites),

o Clients ( multinationals and local companies)

 Outer circle:

o Competitors( PR agencies, Advertising agencies, Internal departments)

o Public

o Government.

Overview of the key-stakeholders is presented below.

Stakeholder Power Interest Expectations Objectives

met/satfied?
Directors High High YES – so far Growth - Expansion plans
Internal but to move Profitability
forward, need Strategic freedom – PR agency of
to stay focus choice in the region
on VMOST High performance
elements Enhance reputation
Family motives
Management High High NOT to an Personal motives
acceptable Operational freedom
degree to High salaries – attracting
secure loyalty competent country managers
Need Support from H/Q
motivation
and trust
from owners

Employees Modera High NOT really. Salary and job security

te Fear for Job satisfaction
company‟s Great service supports customer
future. Need retention, leading to bonuses and
to share pay rises
VMOST as to
make them
feel part of
AGC team!

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 Clients High High YES in most Value for money service
External cases. Need Fee VS Publicity value
to sustain Competent and efficient account
HIGH levels managers representing them
of service Generation of business
and keep opportunities where possible
flow of Positive word of mouth effect at
innovative high levels
ideas going Proud to be represented by AGC

Suppliers High Low ABSOLUTEL Credible flow of information to the

( Media) Y media – AGC is a trustworthy
source
WIN- WIN relationship maintaining
excellent relationships with them
Anticipate their needs
24/7 contact with AGC people‟s
Media are our „friends‟
Positive influence on behalf of our
clients
Competitors High Modera NOT all of Enhancing competitive
te them. Need advantages
to focus on Close monitoring
differentiation „Steal‟ multinational clients
elements Securing niche markets
Public High Modera YES – AGC to deliver trustworthy news
te maintain and information on behalf of its
positive clients
reputation of Create innovative communication
AGC by plans to impress and positively
being influence perceptions
transparent,
innovative
and ethically
correct.
Government Modera Modera YES – pay Abide by local laws
te te taxes and „Friends‟ with local authorities
keep the Taxes paid on time
books legal Transparent accounting
procedures
Effective lobbying

APPENDIX 3: PESTLE FRAMEWORK AND ANALYSIS OF MOST IMPORTANT EXTERNAL

INFLUENCES

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Political Economic
o Expansion of EU o Business Cycles
o Middle East Governance o Intense competition
o Government Changes o Tendency for tight budgets
o Taxation Policy o Exchange Rates
o Terrorism/War o Interest rate risks
o Money Supply
o Inflation
o Unemployment

Socio cultural Technological

o Population Demographics
o Language and cultural differences
o Income Distribution
o Social Mobility
o Lifestyle Changes
o Attitudes to Work and Leisure
o Consumerism
o Levels of Education
o Global diseases
o Speed of Technological Transfer
o New Discoveries / Development
o Government Spending on Research
o Government and Industry Focus on
Technological Effort
o Security measures

Environmental Legal
o Environmental Protection Laws o Monopolies Legislation
o Waste Disposal o Employment Law
o Energy Consumption o Health and Safety
o Product Safety

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HENLEY MANAGEMENT COLLEGE
FOUNDATION OF MANAGEMENT ASSINGMENT: Lannet Communications

ACTION GLOBAL
COMMUNICATIONS
PESTEL ANALYSIS

Threat /
FACTOR External influence Opportunity Explanation
AGC operates mainly in EU's emerging markets therefore huge and
EU expansion and economic O = high numerous opportunities for growth;new markets for existing clients and
POLITICAL growth in some regions impact prospects for potential clients

Depending on the location of a war and the nature of terrorism ( Sept. 11), a
temporary downfall of economy is created. Evidently PR services are the
T = high least of the people's worries. SOLUTION: Be flexible within the operating
War / terrorism impact country, maintain a NEUTRAL position regarding Politics.

T = High Every country has its own laws and regulations, despite belonging in EU. As
impact/ O = for the Middle East region, monarchy is a totally different game where is
Government Changes High impact important to be friends with the ruling family.

ECONOMIC
Unfortunately the game is not fair. Advertising agencies tend to offer PR
services on the side - some time for free. This means devalue of the PR tool
and bad practice. Takeovers to increase market share. SOLUTION: Close
monitoring of competition moves. Anticipate moves where possible and act
T = high proactively. Offer consistent high levels of service and acquisition plans
Intense Competition impact when is feasible and at a reasonable price

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HENLEY MANAGEMENT COLLEGE
FOUNDATION OF MANAGEMENT ASSINGMENT: Lannet Communications

Primary goal of organisations ( unless not-for - profit) is to make

profits.regardless of other external or internal influences, a means of
promotion will always be important. Therefore in hard times, advertsing
budgets decrease and PR ones increase; while in good times both benefit.
T = High SOLUTION: Take advantage of current trend of decreasing Advertising
impact/ O = budgets and investing in alternative ways of promotion ie- innovative pr
Business Cycles High impact campaings.

Local know how under Global thinking. Being a network operating in so

Language & Cultural O = high many different markets by using local staff reporting to H/O is a solid
SOCIAL differences impact competitive advantage which creates LASTING relationships

O = high Core line of business of AGC is reputation management, which means it can
Lifestyle changes impact adjust client campaings accordinlgy due to multi culture countries expertise

Eventhough SARS, cow flu, bird flu etc are negative issues around the
globe, for AGC could generate new business for PR campaings. ie Objective
: To promote Dubai as a travel destination! It is a safe destination no bird flu
Global diseases T = low impact cases!

Competenet high caliber personnel is hard to find, let alone to keep.

T = High SOLUTION: AGC has two issues to consider: 1) Create attractive job
Level of Education impact benefits 2) Focus and Invest on current key people as not to lose them

TECHNOLOGICAL
For a PR network Information management is crusial in delivering excellence
of Services. Keeping up with technology involves Increased costs &
Employee Special Training. Competitors who are leaders in Technology
T = High have the upper hand. SOLUTION : Since Information Technology is a
impact/ O = means of competitive advantage ( Porter:1985) - keeping up to date with the
Information management High impact latest trends in IT and market trend makes the difference.

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HENLEY MANAGEMENT COLLEGE
FOUNDATION OF MANAGEMENT ASSINGMENT: Lannet Communications

Depending on the clients needs these laws usually request Public Affairs
ENVINROMENTAL Environmental Laws O= Low impact services, thus more business for AGC

Various laws in various countries have a negative impact on clients public

T = Low image and line of business meaning the PR agency cannot offer them its
LEGAL Laws in general impact services or only at a limited degree.

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HENLEY MANAGEMENT COLLEGE
FOUNDATION OF MANAGEMENT ASSINGMENT: Lannet Communications

APPENDIX 4: AGC VALUE CHAIN

Support activities

Organisation infrastructure: Directors, Country Managers,

monitoring systems, finance, quality
Human Resource Management : Incentive scheme, Job benefits
IT Management: Development of IT processes and systems
Procurement: Business Partners ( catering services, Valu
photographers, venues, translators etc) e for
Visibility / Public Relations
Bene
Marketing & ficiar
Operations: Outbound Service:
Inbound Sales: y
Project logistics: Project
logistics: Brand Value,
design, Project monitoring,
Funding Network
tendering, implementati evaluation
(budget) power
contracting on follow up

Primary activities

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