TOPIC:
Submitted in preliminary fulfilment of the requirement for the
Qualification:
FACULTY OF MANAGEMENT
UNIVERSITY OF JOHANNESBURG
By
Full Names and Surname: Isaac Sikhakhane
Student Number: 221076330
Contact Details: 079 587 3378
E-Mail: isaac@creativenoxion.co.za
Due Date: 25 September 2020
DECLARATION BY STUDENTS
I, the undersigned do solemnly declare that:
•
I understand that plagiarism means presenting the ideas and words of
someone else as my own, without appropriate recognition of the source.
•
I confirm that the work that I submit for assessment is my own, except where
I explicitly indicate otherwise.
•
I have fully acknowledged all words, ideas and results from other sources
that I have used in this assignment through a generally accepted style of
quotes, references and bibliography.
•
I am aware that the university views plagiarism as a serious offence
punishable by a disciplinary committee.
Student No.
Surnames
Initials
221076330
Sikhakhane
M.I.
Signatures
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Table of Contents
1.
INTRODUCTION ..................................................................................................................... 4
BACKGROUND OF THE COMPANY ................................................................................................... 4
AIM ............................................................................................................................................... 4
OBJECTIVES .................................................................................................................................. 4
SCOPE .......................................................................................................................................... 4
2.
ORGANISATIONAL/STRATEGIC DIRECTION .................................................................... 5
VISION .......................................................................................................................................... 5
MISSION........................................................................................................................................ 5
VALUES......................................................................................................................................... 5
3.
ENVIRONMENTAL ANALYSIS .............................................................................................. 5
EXTERNAL ENVIRONMENTAL ANALYSIS.......................................................................................... 5
FIVE FORCE MODEL ...................................................................................................................... 6
THREATS OF NEW ENTRANTS......................................................................................................... 6
THREAT OF SUBSTITUTES .............................................................................................................. 6
THREATS & OPPORTUNITY ............................................................................................................ 7
INTERNAL ENVIRONMENTAL ANALYSIS ........................................................................................... 7
VALUE CHAIN ANALYSIS ................................................................................................................ 7
STRENGTHS & WEAKNESS ............................................................................................................ 8
TOWS (SWOT)............................................................................................................................ 8
4.
STRATEGIC FORMULATION ................................................................................................ 8
STRATEGIC GOALS ........................................................................................................................ 8
BUSINESS-LEVEL STRATEGIES ....................................................................................................... 9
CORPORATE STRATEGIES ............................................................................................................. 9
FUNCTIONAL STRATEGIES ............................................................................................................. 9
5.
STRATEGIC IMPLEMENTATION .......................................................................................... 9
ALLOCATION OF RESOURCES ....................................................................................................... 10
STRUCTURE ................................................................................................................................ 10
CULTURE .................................................................................................................................... 10
ADOPTION OF POLICIES, INFORMATION SYSTEM ........................................................................... 10
LEADERSHIP ............................................................................................................................... 10
LEARNING ORGANISATION ........................................................................................................... 10
6.
STRATEGIC REVIEW AND CONTROL .............................................................................. 11
CONTROL SYSTEMS .................................................................................................................... 11
BALANCE SCORECARD ................................................................................................................ 11
7.
RECOMMENDATIONS ......................................................................................................... 11
8.
RESOURCES REQUIRED: .................................................................................................. 12
9.
LIST OF REFERENCES ....................................................................................................... 13
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1. Introduction
Background of the company
Creative Notion (PTY) Ltd is a small to medium start up Johannesburg-based graphic
design and visual communications company that was established in 2017 and is 100%
black owned, level one contributor (BBBEE) company.
The company specialises in advertising, marketing and media communication solutions
including desktop publishing, Layout and design, and web services. We offer our clients
a fresh perspective regarding graphic design, visual communications, and marketing.
Our knowledge of business and creative skills helps us interpret and solve client’s
problems, from complicated briefs to the simple crafting of logos and other devices of
visual and branding communication.
As a small business, the fast pace of change in the world and the disruptive impacts of
technological developments challenges the way we operate and inspires us to innovate.
In order to thrive in the business of marketing and advertising, Creative Noxion needs
to provide value-adding marketing solutions as core of its strategy to grow customer
base.
Aim
Creative noxion adds value to its clients’ business sustainability and growth by
producing creative solutions that improve their bottom line.
Objectives
To grow a start-up company that will become profitable within three years.
To create a company that distinguishes itself in a crowded market by providing a fresh
perspective and unparalleled quality to its customers.
Scope
Creative noxion will focus on the small start-up companies and established small
businesses who need marketing services but for whom the big agency prices are
prohibitive. Noxion media will also sell its services to big marketing agencies who need
additional capacity.
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2. Organisational/Strategic Direction
Vision
To become a go to marketing communications and design service provider for start-up and
established small businesses as well as large marketing agencies.
Mission
To provide our customers with superior marketing and visual design communications
services and the benefit of service excellence.
Values
Our business is founded on the core values of Quality, Integrity, Creativity and
Friendliness.
3. Environmental Analysis
As a company operating in a dynamic environment, our Strategy pays attention to some
of the key trends affecting our industry using the PESTLE and SWOT frameworks of
analysis.
External Environmental Analysis
Political: Pertinent political factors in South Africa include corruption, confused political
direction and policy confusion which significantly impacts business confidence as it
impacts economic growth. Inefficiencies in government bureaucracy create particular
challenges especially for small and medium size businesses.
Economic: The South African currency, Rand is at an all-time low, with a yearlong
negative economic growth. Covid-19 has exacerbated the situation, fuelling uncertainty
that had begun to take route. The impact of this is many companies are tightening their
belts, investing less in marketing and communications.
Social: Unemployment figures continue to rise, with Stats SA having reported three million
South Africans lost their jobs due to Covid-19. Of those, two million were women. These
job losses exacerbate an already dire unemployment situation, which will increase burden
on the state and see even greater tightening of belts by businesses.
Technological: Digital transformation is changing the ways businesses operate
throughout the world. New technologies such as cloud computing Artificial Intelligence,
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machine learning have had a big impact on the world’s economies and continue to disrupt
media and marketing industries.
Legal: The South African labour regime is often experienced as constraining for business
growth, and new legislation such as the Protection of Personal Information (PoPI Act) as
well as revisions being undertaken to the Copyright Act will pose challenges for business
enterprises who trade on data and flow of information such as our company.
Environmental: The current Covid-19 crisis has upended the way societies are run, and
the same is true for economies. The question of what the new frontiers of economic
growth, and the role of digital technologies pose both challenges and opportunities for all
industries especially Communications and Marketing industry. As a company, we are
looking at how to turn these disruptive trends to our advantage.
Five Force Model
Michael Porter’s 5 Force Model of analysing influencing forces within an industry provides
meaningful tools for our understanding of the Advertising and marketing industry context
in which we operate in.
Threats of new entrants
Whilst new legislation presents challenges, there are no legislative barriers to entry in the
advertising and marketing industry. Whilst Stephen King published his now classic article
“Advertising as a barrier to Market Entry in the 1980s”, a lot has transpired since then.
There are more exciting new ways as far as advertising, online media and marketing are
concerned. Digital technologies and the growth of the internet ushered a new era in
advertising by way of new, cost efficient platforms and channels of promotion for
advertisers. Companies like Google and Facebook are providing a platform for online
agencies to bypass traditional advertising agencies and sell services directly to their
potential clients. Online advertising, social media and mobile advertising provide a wide
landscape for marketers to target and engage various customer segments.
Threat of substitutes
Whilst Digital advertising platforms like Facebook and Google have expanded platforms
for direct advertising, they have not completely upended the role of agencies like ours in
designing targeted strategies for brand longevity. They play a supplier role as advertising
organisations make use of their platform to showcase their products to customers.
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Bargaining Power of Customers
With expected global economic downturn, there is a high buyer switching cost. Customers
tend to hire reputable advertising agencies rather than investing their money in small
advertising agencies.
Bargaining Power of Suppliers
The market is dominated by few large suppliers rather than a fragmented source of supply.
There are no substitutes for the particular input.
Competitive Rivalry between Existing Players
There is high competitive pressure which results in pressure on prices, margins, and
profitability for every company in the industry. Pressure on agencies to differentiate
themselves or face displacement.
Threat of substitutes
Availability of digital platforms and mobile devices where individuals and small companies
can embark in direct marketing to consumers poses a challenge.
Threats & Opportunity
The dominance of big advertising and marketing agencies as they have financial muscle
and capacity to reach new customers. However, the fact that smaller agencies like us
provide same quality of services at more affordable prices is an opportunity for our size of
agency.
Internal Environmental Analysis
Our company has committed management team that provides clear strategic direction and
drives values-based company culture including fostering innovation.
Management has procured sufficient company recourses including a skilled and
competent design and marketing experts. Additional resources will be procured on a
needs basis as new projects or clients come on-board. There are also systems in place
such as Quality Management Systems, accounting Systems,
Control Systems.
Value Chain Analysis
Management’s key role is ensuring that clear business processes are in place with clear
roles that ensure seamless execution with the goal of ensuring that company delivers
quality and customer experience is consistently positive.
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Strengths & Weakness
Strengths: Good understanding of the industry, passion, committed staff and strong
strategic leadership capacity.
Weaknesses: Limited brand visibility. Need for clear market strategy and plan.
Outcome: Despite Management should invest back profit generated until gearing is less
than 50%. Lack of advanced financial management, accounting is weakness for the
business. The entity will employ a skilled, competent, and experienced financial manager
when the time is feasibly to do so.
TOWS (SWOT)
We have outlined our strategic priorities by realistically looking at challenges we currently
face as a business identifying enablers that can move us forward and prioritising them
using a SWOT analysis process.
Strengths: Practical industry experience and track record, core inhouse skills and creative
flair
Weaknesses: Costs of full-time design studio team. Minimal online visibility to promote
our services.
Opportunities: Building on our experience to use online marketing to invigorate our
brand. Working closely with creative industry content providers to secure major clients in
future.
Threats: Rapid advertising and step up marketing from our Competitors. Changes in
government regulations and policies.
The above heighten the pressure for brand visibility and recognition and to innovate and
define our niche position in the market.
4. Strategic Formulation
Strategic Goals
According to Beaver, 2003; 287, “Sound strategy is rooted in a deep understanding of what
current and potential customers value, are prepared to pay, the profile and posture of the
competition, and how such elements are likely to change”. Our goals are realistic, clear,
and decisive (see Mintzberg in et al.,1995; 12) as follows
1. Leverage Industry Standard Technologies To Deliver Quality Services To Clients
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2. Minimise Timeframe For Delivery Of Client Briefs
3. Develop An Efficient, Customer-Centric Automated Website And Mobile App
Business-level strategies
The company has selected to focus on a special product market segment combining the
cost leadership and differentiation advantage by offering the lowest (best) prices compared
to rivals offering products with comparable attributes, i.e. best-cost strategy.
Corporate Strategies
Market penetration
To achieve its long-term goal of growing our business, Creative Noxion has chosen
concentrated growth or Market Penetration, a strategy that has two objectives. The first
one, to seek assertively to increase market share; and secondly, to hang on to our existing
customers by concentrating, specializing and consolidating, which implies what Peters and
Waterman 1982) designated ‘sticking to the knitting’ in their book called In search of
Excellence. The strategy we have chosen involves concentrating on doing what we do
well, and quite frequently involves an investment in brands and brand identity which is also
our primary focus. This can also be achieved by investing in new technologies such as
Artificial/Augmented intelligence. Market penetration strategies generally have a high
likelihood of success, greater than most other alternatives.
Functional Strategies
Departmental Strategies
Noxion Media has chosen a “product team structure” which is suited to its smaller team
size and fosters collaboration. This structure enables us to pursue our objectives of
Quality, Innovation, Speed, Cost competitiveness, Customer responsiveness in our growth
trajectory.
5. Strategic Implementation
5.1.
Reward System
Creative Noxion will use a variety of motivational techniques and rewards for mobilising
employee commitment to the successful strategy execution. This will include options for
performance or expertise-based share options as well as cash-bonuses.
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Allocation of resources
The company believes people are its most critical resource. We will acquire and develop
resources and capabilities, put them into place, upgrading them as needed, and modify
and exercise agility to adapt as market condition evolve.
Structure
Creative Noxion strives for a well-designed organisational structure in which the various
parts (e.g. specific roles, decision- making rights, communication patterns) are aligned with
one another and also matched to the requirements of our strategy.
Culture
Creative noxion is inspired by the concept of tight strategy-culture fit described in (Ehlers
and Lazenby, 2007: 227). This means we are grounded on values, practices, and
behavioural norms that match what is needed for good strategy execution that will help the
staff do their jobs in a strategy-supportive manner.
Adoption of policies, information system
Creative Noxion has put in place policies and procedures that support good strategy
execution. These provide a framework of busines routines and processes for running the
company and an information system that supports the execution of the business strategy.
Leadership
At Creative Noxion, the role of leadership is to keep all parts of the organisation focussed
on strategy execution through putting in place mechanisms for efficiency. Leadership also
fosters company agility and resilience in a dynamic market and operating context as well
as ensure good governance.
Learning organisation
Our company is inspired in this regard by the work of Peter Senge (The Fifth Discipline)
and his colleagues. Creative Noxion prioritises learning in order to foster agility, build
resilience and deepen its capacity to adapt. Based on a Skills Audit conducted, our
company will develop a workplace skills plan which maps the skills development
interventions that are in line with skills gaps in the Audit. A culture of continuous leaning
is how our company remains competitive in a fast-changing industry we operate in.
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6. Strategic review and control
Control Systems
At Creative Noxion, control systems include procedures and processes, define
parameters for employee conduct and job performance and help the company achieve
its objectives. Our company management sets standards and targets, tracks
performance to bridge the gap between strategy formulation and implementation.
Balance scorecard
Robert Kaplan and David Norton of the Harvard Business School developed a
management system called the balance scorecard to assist organisations with clarifying
their strategies and translating them into action and provide meaningful feedback with
regard to their performance. Creative Noxion applies the balance scorecard to evaluate
the organisation’s financial performance, customer knowledge, internal organisation
process and learning and growth. The balance scorecard enables our company to
integrate traditional financial measures with operational and softer customer and staff
issues.
7. Recommendations
Creative Noxion operates in a complex and dynamic business environment where
external factors such as economic trends are putting extreme pressure on company
capacity for survival. Survival will rely on having a clear strategy for the deployment of
company resources and capabilities and establishing niche position or competitive
advantage in a highly competitive market.
To move forward the company needs to
1. Apply the four building blocks of competitive advantage, quality, efficiency,
innovation, and customer responsiveness.
2. Strengthen our value proposition, increase our visibility through on and offline
channels including revamping our website and strategic physical location
3. Increase unique competencies, ensuring that we hire the right people who fit the
culture and foster continuous learning to bolster adaptability.
4. Widen customer based through a rigorous promotional marketing campaign
showcasing updated creative portfolio to boost the image of the company, a clear
pricing structure, pitching new ideas, increase sales, register on targeted
stakeholder database, business to business networks and affiliations.
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5. Apply the business canvass model by linking with small business development
supporting agencies such as National Youth Development Agency, Department
of Small business development Business Incubation Hubs and agencies for
cultivating networks, building our visibility and identify opportunities
All the above is part of implementing the strategy which must be reviewed every six
months and annually.
8. Resources required:
The right personnel and capacities in place. E.g. hire a Client services manager,
production manager, Senior designer as well as two junior designers. Updated
operational studio equipment and adobe creative software to cloud. Design a responsive
website with automated data collection and customer response functionality. Operating
system including an automated financial accounting and information management
system.
Objective 1: Leverage industry standard technologies to deliver quality services to
clients
Intended result:
Who is responsible
Timeline
Increased client base and sales
CEO supported by
employees
Launch brand
marketing campaign by
January 2021
Objective 2: Minimise timeframe for delivery of client briefs
Intended results:
Who is responsible
Timeline
An integrated job trafficking
system and efficient deadline
management
CEO
By March 2021
Objective 3: Develop an efficient, customer-centric automated website and mobile
app
Intended result:
Who is responsible
Timeline
Digital marketing channels,
increased customer
responsiveness and
engagement
Web Developer
(outsourced)
By March 2021
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9. List of references
1. Lazenby, J.A.A. (Ed.). (2014). The Strategic Management Process. A
Southern African Perspective. Pretoria: Van Schaik Publishers.
2. Ehlers, T., Lazenby, J.A.A. (Eds.). (2007). Strategic Management. A
Southern African Concepts and Cases. Unisa Edition. Pretoria: Van Schaik
Publishers.
3. Goldman, G., Maritz, R., Nienaber, H., Pretorious, M., Priilaid, D., and
Williams, D. (2011). Strategic Management Supplement For Southern Africa.
South Africa: Pearson.
4. De Bruin, H.E.C. (Ed.et al.). (2001). Strategic Management. A Southern
African Perspective. Johannesburg: Entrepro Publishers.
5. Thompson, A.A., Peteraf, M.A., Gamble, J.E., and Strickland III, A.J. (Ed.et
al.). (2019). Strategy Management. Advanced Business Management
Series. Cape Town: Custom Edition for University of Pretoria.
6. Hough, J., Thompson Jnr, A.A., Strickland III, A.J., Gamble, J.E., with
Human, G., Makin, Vi., and Braxton, R. (2008). Crafting and Executing
Strategy. South African Edition, Text, Readings and Cases. United Kingdom:
McGraw-Hill Education.
7. Thompson, Jnr, A.A., Strickland III, A.J., (1998). Strategic Management.
Concepts and Cases. International Edition: Irwin McGraw-Hill.
8. Thompson, J., Martin, F., (2005). Strategic Management. Awareness and
Change. Fifth Edition. London: South-Western Cengage Learning.
9. Manning, T., (1998). Radical Strategy. How to use strategic conversation to
win in an age of hostile competition. Second Edition. Johannesburg: Zebra
Press.
10. Author removed, (2010). Mastering Strategic Management. United States:
Published under Creative Commons Licence.
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