The Saatchi & Saatchi Company’s Financial Perspective

Introduction

The Saatchi & Saatchi Company is an internationally known advertising agency with more than eighty branches across the globe. It was founded by two brothers, Charles and Lord Maurice Saatchi in London, UK. It started to operate in the early 1970s. With time, the company emerged to be one of the world’s leading creative organizations. The company grew through mergers and acquisitions. The company was also characterized by creative excellence because several innovations have been developed. The company was instrumental in keeping the Conservative Party in power in 1980s. This made the company become a legend in the UK (Fendley & Fendley, 1996).

However, in the mid 1990s, the company that was associated with billion dollars almost came to a halt, when bankruptcy became inevitable. The decline in performance was caused by the recession in the country, and the company lost a lot of its capital. This was also caused by the poor management of the company’s acquisitions. The departure of the two brothers, Charles and Maurice Saatchi, affected leadership and direction of the organization. The company was in a critical condition, and the only remedy was to improve the set goals and the company’s efficiency. The stakeholders changed all the top management team. In 1995, the company appointed Bob Seelert as the chairman. Bob replaced the two brothers in the management of the company. The two brothers had established goals to have an aggressive financial system. The two top officials identified an approach with two perspectives: financial perspective and customer perspective (Greenhalgh, 2004).

The financial perspective aimed at developing goals which could be quantified and achieved. This aimed at developing a new vision. The company established a goal to accelerate the rate of earning revenues than the market. Therefore, the managers wanted to have a higher growth rate for the company compared to the market growth. The second goal was to convert thirty percent of the raised revenue into operating profit. The last goal was to double the earnings per share (MyStrategicPlan, n.d.).

Analysis

With the new vision and financial goals set, the next step for the two top officials was to make the strategy real or practical. This led to the restructuring of the internal structure by introducing changes. The top management started to re-examine their investment strategies on business units. They started by creating agency categories, each with a different strategic charge. These agencies included drive, lead, and prosper. The prosper agency had less than 50 workers. It was given limits regarding its growth. However, it was charged with having extremely high margins (Averson, 1998).

The drive agency had 50 to 150 workers. The drive agency was mandated to maintain the goals and to improve the revenue of the company. The UK, New York, China and other large agencies were given lead status. This is the unit where fast growth and the allocation of considerable resources was expected. The financial success of Saatchi and Saatchi can be attributed to the company’s attentiveness to the agency’s core client base. Therefore, the management paid considerable focus to the lead agency (Niven, n.d.).

Saatch & Saatchi Company also embraced various strategies associated with the customer perspective. Seelert, Roberts and their senior team set a customer-facing organizational structure and strategy. With the help of customer perspective, the financial perspective goals were achieved. Saatchi succeeded by paying close attention and creating a good relationship with the core client bases. The senior team created a phrase, “permanently infatuated clients” (PICs). The company wanted to make a strong impression on Wall Street and win customers. The analysis of the top management indicated that about 20-30 percent of the company’s customers were responsible for the 70-80 percent of the company’s revenue (Greenhalgh, 2004).

Communication was also an instrumental tool of customer perspective. In this case, all the business units of Saatchi received a message. The message informed all the stakeholders that the company aimed at penetrating the global market. This would be achieved through creating appropriate goals of achieving customer satisfaction. The Saatchi employees, in their business units, were entrusted with generating BFS (big fabulous ideas) to win the favor of its clients. The (BSC) business scorecard played a number of roles in helping the company of Saatchi and Saatchi achieve success. This helped the company emerge from the 1997 crisis and match towards attaining its goals. It helped the company accomplish the Wall Street objectives six months before the deadline. In addition, it helped Saatchi implement its strategies (Greenhalgh, 2004).

Conclusion

The financial strategies made sense for each given unit. With the help of the Business Scorecard, the company made a financial checkup. The company identified that the business units were earning profits. It was easy to identify the units with the potential to make profits in the future and the ones that could not perform well. With this knowledge, the Saatchi and Saatchi company made a wise decision on choosing a business partner. The acquisition of the Publicis Groupe SA did not affect the results of the Business Scorecard (BSc). The Publicis Groupe SA was aware that the business scorecard was a proven tool that could correctly restructure a collapsing company. By paying 2.5 billion for the company, Publicis Groupe SA was fully convinced that the company (Saatchi and Saatchi) would have to succeed in the future. The positive results showed that the overall cost of Saatchi & Saatchi Company could be paid by its increased revenue year after year.

Evaluation

The two perspectives, financial and customer worked in line with each other in reviving the Saatchi and Saatchi Company. There are exceedingly many scenarios in the story of this company where cases of the two perspectives worked together. There was a lot of interdependence, and it is in rare cases where one perspective work on its own. The steps that the senior management took in planning for the whole strategy worked effectively (Sharma, n.d.). The financial goals guided clients in the three units. For the financial goals to be attained, planning and implementing of the clients’ objectives should have been looked at first. The employees established BFIs to create the PICs. They were also implemented as per the plans of the customers (Fendley & Fendley, 1996). The two perspectives work hand in hand, and in cases where a company employs one perspective, it can be in the un-resolvable situation. In addition, there is an issue regarding the perspective to be employed first. A competent management strategy is the only remedy in this case. For instance, a firm that chooses to employ the customer perspective first may get itself in trouble while budgeting for cash to satisfy a customer.

References

Averson, P. (1998). What is the Balanced Scorecard? Balanced Scorecard Institute, a Strategy Management Group company. Web.

Fendley, A., & Fendley, A. (1996). Saatchi & Saatchi: The inside story. New York: Arcade.

Greenhalgh, C. (2004). Building a Strategic Balanced Scorecard: Saatchi & Saatchi Complementary Case Study. Business Intelligence Company. Web.

MyStrategicPlan (n.d.). Balanced Scorecard: Performance Measurements for Success. Web.

Niven, P. (n.d.). Financial perspective. Web.

Sharma, P. (n.d.). Measuring Business strategy through balanced scorecard. Web.