RECOMMENDATIONS AND CONCLUSION 5.1 Introduction
5.3.1 Growth Strategy/Growth Capability Model
This section will discuss the Growth Strategy/Growth Capability model by Buxton and Davidson (Buxton and Davidson, 1996). This model has been chosen as it emphasises the importance of growth capability in developing a sustainable growth strategy after a merger in the service industry sector
Service industries seeking to deliver superior returns must· look not only to develop growth strategy, but also to create growth capability, which is the ability to sustain growth. The definitions below illustrate the differences between growth strategy and growth capability.
"Growth Strategy is a plan to commit resources to achieve growth-providing, competitive advantage through new technologies and products, new markets and ways to markets and ways to serve them, globalisation, partnerships, and any other means of improving strategic positioning" (Buxton and Davidson, 1996).
"Growth capability refers to a company's business processes and organisation, harmonised in the never ending pursuit of discovering, developing and delivering superior value propositions to customers by satisfying existing needs and those that are emerging from trends in the larger market place" (Buxton and Davidson, 1996).
Most companies in the advertising industry were able to ride the wave when the market had excess demand. However, advertising industry services (in Zimbabwe) have now become standard and mundane, as the market is now mature and saturated. Further due to government legislation and policies, there has been a marked decrease in certain forms of advertising that involve the electronic and print media. This calls for new strategies as illustrated in Figure 5.1.
FigureS.1 Growth Strategy/Growth Capability Model
'owerful
[Jwth Iltegy
Weak
--
41
...
Creating competitive advantagetoride a major Maintaining sustained competitiveness: the endless wave of demand building and rebuilding of competitive advantage by
developing and delivering attractive, new value propositions
~
As the wave ebbs... Make our own waves
Finding the flows, avoiding theebbs
1. .
2 ...
3
Doing the old things doesn't work: with reduced Finding sources of growth through focused value competitiveness in a mature industry proposition despite industry maturity
Weak Source: (Buxton and Davidson, 1996) Growth Capability
Strong
As agencies slump from Quadrant 1 to Quadrant 2, they need to develop robust, effective and innovative strategies to enable them to ultimately reach Quadrant 4. In order to achieve this, agencies should continuously and simultaneously engage in actions on the Four Growth Fronts as illustrates in Figure 5.2.
Figure 5.2 Actions on the Four Growth Fronts Source: (BuxtonandDavidson, 1996)
Building Revatilise Create Manage
Growth- Growth Organisational Organisation
Orientated Strategies Capabilities for Gtowth
Leadership geared to
Team Growth
"Getting
)
~'e:::;~::
) Developcore ) Enter neWmarkets ) Embeddifferent"
competencies innovation
capability
Mobilise Implement Reengineer Develop
leadership profitable growth strategic
"Getting / around market enabling learning
better" customer focused processes capability
driven growth strategy
Create Sense of Implement Leverage Engage
"Getting
)
urgency and market place growth peoplepotential "early wins" processes around started"
for . growth
"Quick hits"
The mega-mergers trend in the service industry is meant to create new markets with few, if any rivals, in order to preserve competitive advantages for long periods (Achi and Others, 1995). "Getting Better" and "Getting Different" strategies will help companies provide radically improved products and services to customers, thereby creating entirely new markets and shaping the industry structure in the markets they create. For example, alliances of technology companies, Internet companies and retailers are being entered into in older to create a business web, which sustains competitive advantage.
In order for the growth strategy and capability to be sustained, a culture that combines the determination to achieve true leadership with the humility to learn from others people's ideas must be developed (Buxton and Davidson, 1996). Ideas generated from the study of Organisational Culture will be useful in this regaId. These include the realisation that organisational learning and communication, tolerance and flexibility on the part of the merging entities can lower the culturerisk. Further that the staff of both merging parties is open minded and flexible in their approach for a lasting solution.
5.4 Critical Success Factors for Growth Strategies
Clemente and Greenspan recommend a lO-step plan to instantly drive revenue growth.
1. Assemble a sales and marketing transition team
The team should ensure that the merged companies create immediate market momentum.
The majority of the sales personnel should be freed from administrative activities so that they can concentrate on sales. As companies merge, a lot of publicity is inevitable. Sales and marketing personnel should cease this opportunity to make use of the "free advertising"
2. Conununicate information to protect existing customer relationships
Communication programs must promptly inform customers of the benefits they will receive as a result of the transaction. As it is cheaper to maintain a customer than to obtain a new one, it is therefore logical that communication in older to achieve profitable customer loyalty and retention should be paramount in the early stages of the merger. In
business and will do all in its power to maintain it. For 0 & M, the Agencies should have ensured that they reaffIrm the group's commitment to the remaining clients and to act upon that promise. Most importantly, Management should get to know all the clients personally and seek to involve themselves at the decision-making levels of these clients by creating a rapport with top management at the companies. The 0 & M Chairman's philosophy of befriending your clients should become a binding one to all his senior members of staff.
3. Detennine the product line and pricing structure
The merging partners should rationalise the product line and aggressively promote higWy profitable product lines. The pricing of transactions should be discussed upfront to avoid departmental conflict. in the case of CM & A where the Managing D~tor had a dramatically different pricing structure, it is important for the key personnel at the agency to meet and discuss the pros and cons of this strategy before suggesting a suitable way that can standardise the agency's system.
4. Identify key competitors, including their products, pricing and positioning
Determining the priority of products must be followed by a comprehensive strengths, weaknesses, opportunities and threats (SWOT) analysis of the key competitors. This analysis will give a clear picture of the company's positioning in terms of its key competitors in a manner that will allow it to better control or improve its position.
5. Articulate the brand positioning
To avoid confusion and the cost of multi branding, it is best to have a common branding upfront, and explain any changes in branding due to the merger. By December 2002, CM
& A was renamed CM & A Ogilvy in a move that went with no publicity. The Group can use the rebranding of CM& A to re affum its stronghold in the advertising industry.
6. Consolidate Customer Databases
This is probably the most daunting task especially when melding disparate technology systems. Effective database marketing can create a powerful advantage as products and
services would e tailored to the customer profile. Database marketing can also help the company increase its share of the customer's wallet. One of the primary requirements of this would be for BMOM to undergo a fully-fledged information technology oveIhaul that would see the agency adopt the use of modem facilities such as computers and networks. Inaddition to the infrastructural changes, the personnel would have to undergo relevant training programmes to enable them to gain maximum advantage from the technology.