Advertising associates inc. strategic management paper

• Main Author: Reyes, Catherine V.
• Format: text
• Language: English
• Published: Animo Repository 2007
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/4467
• Institution: De La Salle University

The authors objective in writing this paper is to assess Advertising Associates condition and also provide recommendation on how to address the growing threats of the industry while maintaining profitability. Different frameworks were used to examine the old strategies of the company and to come up with a new set of strategies. Outdoor industry is controversial because government and other militant groups are against in building new billboard structures specially those that cover the skyline. Another major concern that the militant group raised is the hazard it can cause to human life should if fall down. These concerns threaten the existence of the industry. The opportunity which any billboard can capitalize is the exhaustion of EDSA being the billboard avenue. EDSA has been tagged with the most number of billboards, primarily because the whole stretch of the road targets majority of the employees traveling to and from their office. In the point of view of advertisers, billboard is a frequency builder which enhances the presence of any advertising material other than using TV as medium. Other opportunities would be the increasing number of people traveling the emerging developments of roads in nearby provinces like Tagaytay, Bulacan, Pampanga,Iloilo, Cagayan de Oro, Baguio, Cebu and Davao and the massive expansion of super malls not just in key urban cities but in urban provinces. Advertising Associates has been in the industry for almost 60 years. The company survived the economic depression in 1980s. Now that the industry is being challenged, Advertising Associates must assess its internal capability to keep up with the challenges. Advertising Associates is a company founded in 1974 with core business in manufacturing or fabricating billboard structure and neon signages. Integrity in doing business and year long experience are just few of the things that the company stands for until today. The company now owns a number of sites located in provinces and key areas in Metro Manila. Apart from having a good location, the company is also a member of OAAP or outdoor Advertising Agency of the Philippines a third party agency that ensures regulations are being followed by outdoor supplier. The company complies with the governments rule that no billboard will be fabricated without a permit. The management also assures the quality of materials they purchase from its accredited suppliers. The industry grew tremendously. To date, the industry is worth 2 Billion Pesos with more than 100 outdoor suppliers. Billboard structures are everywhere.It has now become one of the advertising medium considered by advertiser in influencing their target market to buy a particular product. Advertisers consider the size and the location in choosing a billboard site. No wonder most of the billboards are placed in major throughfares like NLEX, SLEX and EDSA because of high traffic. The 3 major issues of Advertising Associates: 1.Growing number of outdoor players 2.New regulation on billboards set by government 3.High leasing fees of building and land owner Looking at the companys internal capabilities, Advertising Associates is not liquid. The company has a marginalized profit with lots of non-performing assets billboards sites on production, sales and marketing, organizational structure, and MIS processing that need to be addressed. The industry has lots of potential. The company should not waste what is has built over the years as such a strategic move must be done in order to survive the challenges. Advertising Associates may continue doing what works for them: 1.Continue with their specialization in fabricating billboards structures 2.Lease billboard sites to advertisers and co-market with other billboard companies. 3.Fabricate billboard under strict quality standard No billboard will be fabricated without permit and approval from their Engineer. 4.Employ ancillary services 5.One price position The company visualizes itself as the preferred credible outdoor supplier of advertisers in key provinces in Tagaytay, Bulacan, Pampanga, Iloilo, Cagayan de Oro, Baguio, Cebu and Davao. The goal is to achieve a net income of P2M in 2008 with 59 performing billboards. The identified key strategies that would help the company achieve its goal are: 1.Develop internal capabilities to establish a more stable competitive advantage a.Organizational structure Professionalize the organizational structure by hiring professional people and not just family members b.Marketing and Sales Train marketing executives and properly design assignment based on each employees capability. Improve the way of doing business with clients through innovative marketing programs and ancillary services. Align with other billboards companies as co-maker of other sites. The company may also do a tie-up with a supplier such as Kinetic in marketing its billboards sites. c.Human Resources Define clear job description, standardize pay scheme and improve incentive scheme d.Production Re-evaluate leadtime, Implement strict monitoring of inventories, e.MIS Improve MIS to provide accurate analysis of the business 1.Improve on technological leadership Advertising Associate has the capability in fabricating sturdy and quality billboard structure, thus client can be assured that the company can deliver and execute structure, thus client can be assured that the company can deliver and execute structure accordingly. 2.Improve on financial leverage Company must employ strict monitoring of expenses and disposal of non-performing inventories to achieve its objective. Advertising Associates foresees itself to continue being a major player in the industry. The company may not be number one in the industry, but it can still capitalize in its capability to fabricate structures and the billboard sites the company has. Since the typhoon Milenyo, the government instituted new rules in billboard: 1.No building of new structure 2.Remove billboard that obstruct public highways e.g. roads, foot bridges, pavements etc. 3.Decrease size of over-sized billboard 4.Tear down billboards that are operating without permit These regulations limit any company to build new structure. However, this can be taken as an opportunity for existing outdoor supplier with vacant sites. Advertising Associates can offer its vacant billboard sites to clients that have requirements. This regulation can benefit the company because their existing sites are already built, billboard structures are not over-sized, the location of the site are mostly in private establishments and all their billboards of the government permits. However, should be the government enforce this as a permanent regulation the company will need to take an alternative action to continue its business. One alternative is to venture into other form of outdoor media e.g. electronic billboard (in offices) and transport ads. The ruling of the government only applies to billboard structure. Small electronic billboards in office buildings, waiting shed ads and top ads placed in public transportations are not covered by this regulation. These alternative outdoor media can be another source of income of the company. Moreover, this move will bring more opportunities for the company as it will now have more options to offer, capitalizing on its already established market network.