Saatchi & Saatchi's Turnaround: A Study of Management & Strategy

This case study delves into the turnaround management of Saatchi & Saatchi, examining its rise to prominence in the advertising world through creative campaigns and strategic client relationships, followed by a period of challenges stemming from aggressive acquisitions, internal conflicts, and market changes. The analysis highlights the key issues that led to the company's decline, including problems with serving competing clients, the departure of key personnel like Martin Sorrell, and unsuccessful financial ventures. The study further explores the strategies implemented by Bob Seelert, the appointed Group CEO of Cordiant Communications Group, to revive the company. These strategies included focusing on core client relationships, implementing a more realistic budgeting process, and launching a discounted rights issue to restore financial stability and credibility. The case study provides insights into the complexities of managing a global advertising agency and the critical decisions required for successful turnaround.

Running head: TURNAROUND MANAGEMENT OF SAATCHI AND SAATCHI
Turnaround Management of Saatchi and Saatchi
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1TURNAROUND MANAGEMENT OF SAATCHI AND SAATCHI
Table of Contents
Answer 1)...................................................................................................................................2
Answer 2)...................................................................................................................................3
Answer 3)...................................................................................................................................4
References:.................................................................................................................................6

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Answer 1)
Saatchi and Saatchi became popular from the era of the early 1970 on account of campaigns
that are creative and attention grabbing. The agency put emphasis on the arena of developing
along with connecting with the customer by the help of creative copywriting and art
direction. It had dedicated, committed staff who worked throughout the night in order to
produce outcome that was worthy of the name of Saatchi. It was known for creative
excellence that immensely helped in relation to advertising for clients like the reputed British
Airways and Conservative Party of Margaret Thatcher (Claridge and Cooper 2014). Its
unique policy of approaching the client made it hugely popular among people as compared to
that of agencies who used to wait in order to be pitched. Maurice publicized the launch of the
agency in Campaign and it flew in the face of his rivals along with potential clients. He never
withdrew in the aspect of splurging large amount of sum on the premises and was ready to
spend large amount for the purpose of keeping appearance (Sheehan 2013). Saatchi had a
great ambition of becoming biggest agency in world and becoming aware that their agency
was not capable enough of drawing the attention of big clients they harboured a global vision
that would be able to spread its influence even further.
According to the Saatchi brothers, those were successful agencies who had achieved a
global scale so that it can match the global clients with that of the global brands. This vision
was crucial in relation to their ambitious acquisitions programme. Saatchi and Saatchi was
able to gain access into that of the UK stock market in the year 1975 with the help of a
takeover of Garland Compton. It thus became restructured into that of a holding company
who had subsidiary agencies like Saatchi and Saatchi. The holding company did not waste
time in the area of tapping public market in order to fund deals that embraced that of
advertising and along with management consulting (Sinclair 2017). In the year 1986, the

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company was able to acquire Ted Bates by paying an amount of $450 m and it was on a P/E
ratio of 14. This helped in making Saatchi number one agency in the world. Saatchi and
Saatchi was able to maintain continuous growth on account of careful financial management
by the finance director by the name of Martin Sorrell.
Answer 2)
Saatchi and Saatchi growing to the position of number one agency in the world also carried
with it its own share of problems. The acquisitions increased the odds in relation to the
different part of Saatchi that was serving competitive clients. Proctor and Gamble started
having problem with that of the Bates acquisition and it signified that Saatchi was working
for themselves along with that of the Warner Lambert who was the arch-rival. Rigid policy in
relation to the supplier interest of P & G stated that the advertising agencies could no longer
work for the competitors of P & G (Trahms, Ndofor and Sirmon 2013). All the agencies who
were owned by that of same holding company started to be considered as that of single
commercial entity. It avoided the rationalizing of the acquired companies and exerted only
financial instead of that of managerial control.
Martin Sorrell had always helped in making the deals successful but in the year 1985
he left in order to build the WPP which started growing at a rapid pace and challenged the
business enterprise of Saatchi and Saatchi. His departure from the company was a brutal blow
for the company. Tim Bell who was the client handler who had provided effective help in
nurturing the company from the beginning also went away in the year 1984 after he was
denied a position in the board of the company. There were analysts who had the notion that a
large agency added little value and even reduced the creativity (Bornemann, Kleske and
Riedling 2016). The aggressive acquiring strategy of Saatchi was viewed with contempt by
some observers. Some even thought whether that of globalization along with diversification

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in the arena of consulting was the right path for that of Saatchi and Saatchi. There were others
who suggested that globalization was simply an academic fiction and rationalization of the
personal ambition of the brothers. WPP started to grow strong and under the leadership of
Martin Sorrell it acquired ten marketing company service in UK along with US. Financial
restructuring that took place between the year 1990 and that of 1992 provided help to the
WPP in order to cope with that of debt that resulted on account of the acquiring many
acquisitions (Ndofor et al., 2015).
The abortive bid of Saatchi and Saatchi for gaining the retail bank of UK-Midland
along with that of the stock market crash struck a heavy blow to the fortune of Saatchi and
Saatchi. Landscape was also undergoing a rapid change. In between the years 1988 and tat of
1991 the shares of Saatchi and Saatchi lost around 98 % of its value. Robert Louis Dreyfus
who was the new CEO and Charles Scott who was the new finance director did not possess
any kind of advertising experience (Rothaermel 2015). In the meanwhile, Charles along with
Maurice had distanced themselves from the affairs of the company and started growing busy
with that of the individual clients.
Answer 3)
Having same name for that of the holding company along with that of the agency network
created confusion and amidst this environment Cordiant Communications Group was brought
into existence from that of Saatchi and Saatchi Advertising. Bob Seelert was soon appointed
as the Group CEO of the Cordiant. He had worked with General Foods Corporation for 22
years and he had also helped in handing turnaround for many investment bankers. Seelert had
discussion with two confidants called Ken Roman and John Luther. According to Ken
Roman, the experience of Seelert in the arena of marketing services would prove to be
extremely fruitful and would be in the best interests of the company (Sahay 2014). Inherent

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resilience along with that of persistence in relation to the agencies relationships along with
that of global clients like Proctor and Gamble made it a formidable force to be dealt with.
Seelert visited the ten locations of Cordiant along with that of the clients because he wanted
achieve some kind of stability. Seelert felt that the relationship with that of P & G along with
Toyota would deliver superior results for the company (Eslinger 2014). In the opinion of
Seelert, the Saatchi brothers had put little effort in the arena of managing acquisitions.
The owners in relation to the buyout targets were attracted and convinced by being
promised with wonderful contacts along with pitching opportunities. Budgeting was carried
out in a ‘bottom-up’ manner and the managers developed annual plans with the help of
budgetary experiments. Executives who did not have much financial expertise were engaged
in dictating the financial plans that resulted in a budget that had hardly any relation with that
of the business reality (Bell 2016). The analysis of the competitors revealed to Seelert that
gross margin of around 10-15 % was achievable. Making use of growth predictions along
with market analysis Seelert derived the revenue targets for the component business of
Cordiant and imposed timeframe of three years so that it can achieve the 10% margin. Seelert
went for a discounted rights issue. All the existing shareholders were provided with the
opportunity to buy out one new 60 p share in relation to each share that they already had.
This measure proved to be successful and made them credible with that of the clients.

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References:
Bell, R., 2016. An empirical investigation of factors predicting the choice of an advertising
agency.
Bornemann, M., Kleske, S. and Riedling, S.R.H., 2016. Intellectual Capital in Bankruptcy
Situation–How to Capture Intangible Assets in a Crisis Moment and Turn Around?. Theory
and Applications in the Knowledge Economy, p.701.
Claridge, B. and Cooper, C.L., 2014. Kevin Roberts—CEO Worldwide, Saatchi & Saatchi.
In Stress in the Spotlight (pp. 6-15). Palgrave Macmillan UK.
Eslinger, T., 2014. Mobile Magic: The Saatchi and Saatchi Guide to Mobile Marketing and
Design (Vol. 1). Hoboken, NJ: Wiley.
Ndofor, H.A., Carnes, C.M., Sirmon, D. and Chapman, C.A.T., 2015, January. Stakeholder
Conflict in Organizational Decline and Turnaround. In Academy of Management
Proceedings(Vol. 2015, No. 1, p. 18225). Academy of Management.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Sahay, M., 2014. Turnaround for small sector: A Case of Diary Project. International Journal
of Innovation and Applied Studies, 8(2), p.494.
Sheehan, K.B., 2013. Controversies in contemporary advertising. Sage Publications.
Sinclair, J., 2017. 1 Globalisation of advertising. Global Advertising Practice in a Borderless
World, p.12.
Trahms, C.A., Ndofor, H.A. and Sirmon, D.G., 2013. Organizational decline and turnaround:
A review and agenda for future research. Journal of Management, 39(5), pp.1277-1307.