Saatchi & Saatchi Worldwide: Globalization And Div

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Saatchi is an advertizing company founded in 1970 by the Saatchi brothers, the company grown by acquiring other advertising companies and became in control of 5% of the worldwide advertizing market. The Saatchi brother had also set their sight on the consulting business and they acquire 12 consulting firms. In 1989 the company faced many challenges after considerable losses due to preferred dividends and extraordinary items so the managers had to set out a clear strategy to improve the firm’s long-term prospects whish will lead to turning around the company’s core advertising business. The decision was to concentrate on the communication business (advertising, direct marketing, public relations…) and to turn away from the concept of full-range services. The key to Saatchi growth was its high stock price and the policy of buying companies when the dollar is declining. The problems were in client account losses and staff departure and also in some acquisitions made. To solve these problems Saatchi was forced to put its consultancy division up for sale to provide breathing space, but the urgency for sale encouraged lower bids and ended in selling the division much lower than expected and Saatchi was not able to pay preferred dividends so another plan was put to save the company from bankruptcy. The new plan allowed the troubled advertising company to survive intact but proposed handing over control to its preferred shareholders and focusing on communication businesses. The company spread responsibilities among the mangers and they adopt a new strategy of expansion which is internal growth rather acquisitions and they predicted that the revenue will double by offering two-pronged strategy by offering ‘’one stop shopping’’ and ‘’global communications services.’’ The company also decided to create two distinct and separate advertising agency networks to insure client

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