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Figure 7.2 AccentUK AccentUK
1990
Phase 1 Phase 2 Phase 3
Firm-level influences:
• Founded by 4 partners with strong international experience
• Committed to service quality
• Leadership is motivated to internationalize
• Key competence in advertising for secondary/tertiary brands
External influences:
• Initial
internationalization was prompted by client's invitations and later proactively pursued through partnerships in Europe Managerial issues:
• Insufficient capabilities
• No hands-on involvement on service delivery
• Limited market knowledge
Stand-alone international projects in bilateral partnerships 1990–1999
Managerial issues:
• Arguably 'psychically close' but different management styles
• Complex financial arrangements SOFIA
BUDAPEST WARSAW
Unipolar networks
NEW YORK LISBON
HELSINKI ATHENS AccentUK
Multipolar networks It works by:
• Drawing on local insights within carefully selected cross-border clusters, enabling itself to translate regional patterns into a streamlined European strategy
• Enabling cooperation between free-spirited enterpreneurs. Partner agencies are not owned by the network, but the network is owned by them
• Enabling a central planning and monitoring system
DUSSELDORF Entrepreneurial initiative
to join an independent international network regrouping similar agencies in 18 countries
• Europe's second largest representing 12 multinational clients
Independent International Networks:
BRUSSELINKS
..
Dev K. Boojihawon 113
to the venture – BRUSSELINKS was not going to share AccentUK’s equity, but vice versa. There were also significant similarities in the background and experience of the firms forming the network.
AccentUK now works primarily with sister agencies with contact established through BRUSSELINKS’ headquarters (HQ). New and existing businesses are handled through proactive use of established network relationships or cross-referrals based on flexible, non-binding contractual agreements. The interviewee at AccentUK explains:
International businesses are handled in three ways in the network: first, through the HQ going European-wide or global; second, at a satellite-level where two or more partner agencies collaborate to pitch for a big interna- tional account at their own discretion and third at a local level, basically foreign market servicing of domestic clients.
Furthermore, the organization of the network is structured to promote flexi- bility and coordination to avoid the red tape and bottlenecks involved in multinational agency structures. However, handling international business in this network is not entirely problem-free. AccentUK encounters frequent challenges in liaising with partner agencies coming from arguably ‘psychically close’ cultures but with their different management styles. Even though the agencies share more or less the same philosophies at corporate level, they are very often not organized or managed in the same way. There are different approaches to handling international business, different styles of management and different strategic approaches. There are also significant differences in accounting for profitability. Partners often end up in conflict because of the lack of precise guidelines in handling financial arrangements in completed international projects.
Contactpoint
Four entrepreneurs founded Contactpoint in 1971 (see Figure 7.3). Its current annual fee income approximates to £6m and it employs about 42 people.
These partners had planned to go international from the very outset, but no significant opportunities appeared. In 1980 they seized a unique chance to sell out when a multinational agency network (Intermedia) showed interest. Inter- media offered Contactpoint a strong partnership and promised access to a global network of offices and clients. Intermedia is a multinational agency with a global network of 359 offices in 100 countries, employing more than 8500 people.
Interestingly, however, Contactpoint decided to change its strategic orientation following the acquisition. Based on its core competences, it chose to service only business-to-business (B2B) clients and projects (for example advertising
Contactpoint 1971
Firm-level influences:
• Founded by 4 partners with strong international experience
• International orientation at set-up
• Key competence in undertaking B2B advertising
1980
External incentive:
• Sold out to multinational agency network (Intermedia)
• Intermedia offered Contactpoint a strong partnership and promised access to the scope and scale of an international network
• Intermedia is a global media network with 359 offices in over 100 countries, employing more than 8500 people
• Contactpoint concentrated to grow in Europe and streamlined Intermedia's 23 European offices to create the Intermedia Buisness Network (IBN)
• This became a specialist resource exchange network dedicated to international business and technical communications. In Europe, IBN regroups dedicated B2B teams from over 20 countries
Multipolar networks
Unipolar networks Entrepreneurial initiative:
• Contactpoint changed its strategic direction to specialize into B2B advertising, its core capability
• Contactpoint utilized Intermedia's global spread to devise a pan-European strategy to exploit its strengths in B2B internationally and create new business
Contactpoint's International
Business Network
Figure 7.3 Contactpoint
Dev K. Boojihawon 115
only complex industrial and technological products). This gained the full support of Intermedia as it had been unsuccessful in penetrating B2B markets.
B2B campaigns are distinct because they must speak to a knowledgeable target audience, often about highly complex products and services.
Contactpoint also devised a pan-European strategy to penetrate B2B markets across Europe by exploiting Intermedia’s global spread. Contactpoint’s managers focused their growth on Europe and reorganized Intermedia’s 23 European offices to create the Intermedia Business Network (IBN), a specialist B2B resource exchange network. In Europe, IBN regrouped B2B teams from over 20 European countries. Through IBN, Contactpoint operates as a B2B specialist with its own in-house design and creative teams, media planners, print-buying experts, and undertakes responsibility for the overall marketing communications of its clients. Contactpoint is able to offer ‘international advertising’ rather than
‘literal’ translations for international markets. In other words, it checks its creative works for cultural acceptability, provides information on local markets, media and list sourcing. It is capable of liaising with local experts who understand the complexities of B2B advertising and use their knowledge to create well-branded campaigns that work locally.
The international strategy of IBN centres not only on servicing Intermedia’s existing international clients, but also on stretching the network’s international capability and experience to accommodate new businesses. It benefits both through its own initiative to appoint new clients, and through referrals by Intermedia. Furthermore, irrespective of how the client is appointed, Contact- point directly coordinates its works through IBN’s offices. The local managers of those offices have immediate control of the businesses and departments but they are ultimately responsible for reporting to Contactpoint in the UK.
This networking strategy has been very successful for Contactpoint and it is actively planning to replicate this process across Intermedia’s American and Asia-Pacific networks. The difficulty in this process is that creativity is impaired because this loose network structure makes it difficult for managers to align advertising professionals to produce good ideas.
Finewaters
Finewaters is small agency with fee income of about £4.8m and 35 employees.
Four partners established it in 1989 (see Figure 7.4). Similar to AccentUK, all the partners had worked for multinational agencies like Abbott Mead Vickers BBDO and EuroRSCG. Despite launching at the height of London’s recession, Finewaters has enjoyed spectacular growth. The agency has produced some widely recognized campaigns, mostly for the big blue chip companies, like Toshiba, Daewoo Cars and Pizza Hut among others.
This agency’s initial internationalization opportunity came about with the success of its first international appointment to Pizza Hut in 1992. Its
Phase 1 Phase 2
1990–94
Facts:
• Founded by 4 partners with strong international experience
• Leadership motivated to internationalize
• Key competence in undertaking international advertising for blue chip companies
External incentive:
• Finewaters was appointed to develop the GM Daewoo brand across UK and Europe
• GM Daewoo, however, was much more centralized in structure
• Finewaters had to coordinate its campaign through a network of agencies already set up by the client in Europe
Enterpreneurial initiative:
• Networking arragements were initiated by Daewoo
• Similiar-size partner agencies were located in six countries in Europe
• Developed an initiative to set up an inter- national network to collaborate and share international clients and markets
Managerial issues:
• No one set of ownership
• Appointing conflicting business Phase 3
Finewaters 1989
External influences:
• Client pull: initial international- ization through one of its multi- national clients: Pizza Hut
• Won Daewoo account in 1994 – critical event
• Signified a new league of work for the agency, much bigger clientele and more visibilty
• The Daewoo campaign was the most successful car launch in the car industry
• It generated 1% market share in first year, and in two years the company built a database of 489000 interested customers
Multipolar networks
Finewaters' Creative Partners
Unipolar networks
Figure 7.4 Finewaters
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successful campaign here attracted Daewoo Cars in 1994, which in turn became instrumental in furthering its international expansion. The interviewee recalls:
. . . The first of those was probably a few years ago when we won business from Pizza Hut. Then, about two years after that, the company won the Daewoo Car business and that was a huge step forward for the company because what happened was very innovative and built the company’s repu- tation a great deal . . . Daewoo was also particularly awkward from the point of view that we had to suddenly deal with a, culturally, very different company (Korean). The difference is that we had to work at a much more fundamental level to get their trust in that respect. We did hire somebody who could speak the language but it was the cultural issues that were the biggest ones to deal with. And then they were very different projects from what we were used to handle (bigger and more complicated) but that’s a question of degree rather than anything else.
The Daewoo campaign was the most successful car launch in the industry.
Following this success, Finewaters was appointed by General Motors (GM), which later acquired Daewoo, to develop the GM Daewoo brand across UK and Europe. GM Daewoo, however, wanted to work in a more centralized way and Finewaters was asked to coordinate its campaign through a network of agencies already set up in Europe by GM.
The networking arrangements were initiated and directed by GM Daewoo. In total, six agencies were coordinated across France, Germany, Switzerland, Italy, the Netherlands and Sweden to manage Daewoo’s pan-European campaign. All these agencies were of similar sizes, had a reputation for consistent creativity in their respective markets and were commonly ranked among the most competi- tively awarded agencies.
Furthermore, while GM Daewoo’s campaign was ongoing, these collaborating agencies developed enough trust in each other to start sharing other interna- tional businesses: ‘. . . the French agency needed to come to the UK and asked for our collaboration. Then the Spanish and Italian agencies came with similar needs and we helped them to service their clients in the UK.’
Although frequent, most of these collaborations took place in a fairly haphazard manner. They decided to give them form by creating their own independent international network called Creative Partners. This network shares similar characteristics to BRUSSELINKS, in the AccentUK case above, but was much smaller in size. Currently, their shared clientele includes Prudential Europe and Bananalotto. The network is also looking to expand in the USA.
However, the biggest managerial challenge for Finewaters relates to handling partners’ insecurities in undertaking competing international businesses.
The advertising firms in the Creative Partners network are not governed
through single ownership; each conducts business for clients competing in common markets or industries, so cross-border referrals between partners can lead to potential conflicts of interests in the portfolio of clients they represent.