Executive Summary: Saatchi & Saatchi Company Plc

Executive Summary: Saatchi & Saatchi Company PLC

Summary

Thus far the strategic cost-cutting, business re-alignment and restructuring moves are in the right direction but S&S can hardly be considered to be out of the woods yet, and Louis-Dreyfus still needs to steer the company to rebuild its competitive edge, add value and restore its reputation, whilst stabilising the units, remotivating employees and aligning them with corporate goals.

Arguments

1. S&S overstretched itself on two fronts - horizontally and vertically- without a clear strategy for diversification and an understanding of how that would value-add to S&S. While they increased their financial muscle and cornered the global advertising market, they failed to capture the value of the diversification when the industry was booming. The expansion was not complemented by a cogent integration plan for what had become a sprawling management services empire, so the potential synergies and efficiencies were never realized from the economies of scale and scope.

2. The reforms undertaken by Louis-Dreyfus so far were effective in that they:

a. Reorganized S&S to focus on its core business, by hiving off the consulting arm and reconsolidating its strengths and best practices in 2 agency networks (SSAW, BSBW). He also tried to reap the synergies of the numerous companies by centralizing their supporting functions into separate entities.

b. Re-established management oversight and control of quality, through occasional direct intervention and engagement to obtain buy-in and to drive the right behavior.

c. Aligned incentives to outcomes by higher performance-related compensation.

d. Brought company back into solvency through the raising of equity and sale of non-core loss-making assets.