Monday, March 30, 2009
While growth is the top priority for companies of all sizes, it can be extremely difficult to create and maintain, particularly in today's competitive environment and overall economic climate. The global recession makes it even more difficult.
The latest case of Spa Advertising, historically an inhouse agency of one of the largest and oldest conglomerates, Osotspa, merging with Thai Hakuhodo, one of the oldest agencies in Japan, drew attention to the question of whether this was a strategy to survive or strategy for growth.
Merging of business during recessions, economic difficulties and times of pe
ssimism is one of the traditional survival options of businesses.
Corporate mergers and rebrandings of this nature happen during economic upturns and boom periods as well.
The move depends on the stakeholders' policies, which normally mirror the ambitions and vision of the management. In Spa Hakuhodo's case, both parties admitted that the project was a long-term growth strategy initiated by their respective future co-marketing units.
The firms worked on the plan for almost three years prior to its realisation.
Both Spa Advertising and Hakuhodo have maintained consistent growth patterns, so the rebranding of Spa Hakuhodo as a single brand among the Thai top 10 should make the company more competitive and superior in terms of value creation for both stakeholders.
In each business sector, growth has its limit where clients and brands change agencies like underwear, particularly in service industries like advertising.
Many independent Thai advertising agencies face a tough task sustaining growth.
Many Thai companies were conceived and grew into medium-sized enterprises with good reputations later found themselves being bought out by top global networks and merged into a single multinational brand.
Thus, ending their entrepreneurial heritage, family-owned majority shareholders turn themselves into minority shareholders in bigger companies.
The benefit is that return on investment can exceed levels achieved by remaining a 100 percent Thai-owned firm whose growth is limited.
Such local firms can easily be left behind in the fast-changing competitive landscape.
Unless, of course, the owner is a contented entrepreneur for whom aggressive growth ad competitiveness are nit priorities, and in whose dreams being in the top 10 does not figure. Some of these types are happy to maintain the status quo.
Given the global recession , the question of "survival strategy or growth strategy?" will be with us for a few years to come.
In 2009, with pessimism prevailing, consumers are reluctant to spend, impulsive buyers will buy less and shoppers tend to make more rational decisions, stronger brands definitely have an edge over weak brands in image and quality perception.
Below-the-line ideas help tremendously in sales, but comprise a short-term tactic.
Above-the-line brand-building is still needed, even more in these dark economic times, to persuade consumers to opt for one's brand over the others.
Last but not least, a management and marketing tip: You can judge how good a company is by the brands they have in their portfolio.
Good brands outlive their creators : They speak well of their companies, their marketing management, their lifecycle - and most of all, their valu.
Shop well with your Bt 2,000 cheque to help our economy.
Kitti Chambundabongse
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