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Dentsu SWOT and PESTLE Analysis

ID : 52461053| Sep 2018| 15 pages

COMPANY PROFILE -Dentsu

Business Sector :Publishing - Periodicals

Operating Geography :Japan, Asia, Global

About Dentsu :

Dentsu Inc. has core business in the advertising and communication related solution services. It operates primarily through Japan and various other international segments. It provides advertising services through sales promotion, television, magazines etc. It provides diverse range of other services, for example, the Japan segment offers creative sphere, marketing design, digital media, data solutions, communication design, promotions and social solutions. It also offers real estate management and sale, consulting services, comprehensive network services. The International business segment provides global network and multi-market brands. The company was founded by Hoshiro Mitsunaga on 1st July 1901 and has its headquarter in Tokyo, Japan.The Dentsu group employee strength stood at 60,064 as of Dec, 2017. In 2018, Dentsu defined the three elements of innovation – Entrepreneurship, ideas and technology.

Dentsu Group’s vision “Dentsu Group’s future is that it be able to create new social value through an organizational structure that facilitates employee and Company growth. We will make every effort to ensure that this is achieved.” Dentsu’s USP or unique selling proposition lies in being a very well networked media magnate which pioneered the first newspaper advertisement and television commercial in Japan.

Dentsu Revenue :


5,187,300 Miilions Yen – FY ending 31st Dec, 2017 (y-o-y growth 0.1%)
4,924,933 Miilions Yen – FY ending 31st Dec, 2016

Competitive Analysis of Dentsu

SWOT
PESTLE
The SWOT/TOWS Analysis for Dentsu is presented below:
Strengths
Weaknesses
1. Portfolio Diversification
2. Strong brand reputation and well networked
3. Large number of M&A activities
4. Innovation and Technology
1. Risk due to international diversification
2. Weak brand recognition in public domain
Opportunities
Threats
1. New advertising methods
2. Increasing presence in emerging economies and opportunistic markets
3. Broadening business domain
4. New initiatives and more consumer insights
1. Data Security and frauds
2. Lawsuits and scandals
3. Government Laws and Regulations
SWOT & PESTLE (combined)
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Detailed SWOT Analysis of Dentsu

Strength

1. Portfolio Diversification: The company has a vast network that spreads across Japan, North America, Europe and some parts of Asia. This has been achieved through long standing ties with several clients. The company has seen year on year growth with consolidated revenue up by 10.8% compared to previous year and gross profit on international business up by 21.1%. This growth has been sustained through a diversified portfolio of brands such as Carat (market leader in digital media solutions), Vizeum (a strategic media agency), Mcgarrybowen (a creative agency network) and a few more. It also undertakes various public relation activies such as strategic PR to achieve objectives in terms of products and services and build reputation, provides one-stop digital PR support and provide consulting on analysis of distribution channels and as a part of global PR it executes smooth communication between local media, related companies and customers.

2. Strong brand reputation and well networked: Dentsu has emerged as a driving force in the advertising industry in Japan and has maintained long term relationship with its wide range of customers both in native as well as overseas market. Through its distinctive services the company has been able to set strong foothold in America, Japan, EMEA (Europe, Middle East and Africa) and APAC ( Asia-Pacific Region ). The Company’s business is led by Dentsu in Japanese market and by Dentsu Aegis Network internationally. Today it stands among top 10 advertising agencies in the world and holds a 24.2% share in domestic advertising market. It has successfully harvested the resources and infrastructure provided by its domestic companies as well as by its 10 global network brands and five global specialist/multimarket brands. Improving efficiency was also a key initiative for the company which it undertook in the year 2018. Inorder to achieve it, they introduced salesforce, rolled out Key Account Planning (KAP) to more number of global clients and also expanded Growth Platform, a platform to increase collaboration across network. The group has seen tremendous growth and transformation over last five years and looks forward to grow further and faster in order to continue to exceed its clients’ expectation.

3. Large number of M&A activities: A large number of merger and acquisition activities are conducted by the company to maintain competitive advantage and acquire more resources which helps providing creative and distinctive solution by leveraging capabilities of newly owned businesses. With 45 acquisitions and a cost of 2.6 billion GBP in 2016, the company emerged as a industry leader in M&A. The rationale of the company for M&A is driven more by client , talent and revenue synergy rather than cost-cutting. Most prominent example is when Dentsu acquired Merkle. This step was taken because it would help them compete against various traditionally structured companies and would also help them grow beyond Asian markets. In 2018, the company has also announced acquisition of Whitespace, a creative agency and Global Mind, a digital performance marketing agency. Global Mind would collaborate with Dentsu’s brand called iProspect which will scale up the business not only in Argentina but also in Latin America.

4. Innovation and Technology: It defines innovation in term of entrepreneurship, ideas and technology and has also established Dentsu Innovation Lab to further the interest. The three terms used to define innovation can also be seen in the business strategy of Dentsu as company has always applied new technologies like Artificial intelligence, Blockchain etc, have always came up with new and creative ideas to solve client problem and has undertaken large number of M&A activities. They have spent a massive 936 million yen and 1134 million yen for the year ending in 2016 and 2017 respectively. Using hybrid cars, paperless interviews are some examples of innovation implemented by Dentsu. As earlied mentioned, company has relied on increasing technology like Artificial Intelligence (AI), Internet of Things (IoT), Blockchain, Augmented Reality/Virtual Reality to grow itself in this disprutive market. For example AI and IoT can be used to enable deep learning and Dentsu alongwith other companies like Cloudian (project lead) Intel, Smart Insight, Quanta Cloud Technology, and Jesco CNS have piloted a project called DeepAd in Tokyo to test an innovative digital billboard dynamic content. Also despite increase in cost of investment in technology, the company has been able to achieve 21.1% operating margin. It holds a vision of achieve 100% digitization of its business eonomy by 2020.

Weakness

1. Risk due to international diversification: As of today the company has its footprint across nearly 145 countries and regions, thanks to the acquisition of Aegis; but this exposes it to other problems like increased impacts from global economy downturn, fluctuation in exchange rates, a large of international laws and retrictions which also limits the business to enforce contracts and intellectual property rights. Since these factors are highly dynamic, the company always faces a challenge that the cost of operation might go up which may hurt revenue and cause disruption of business.

2. Weak brand recognition in public domain: Although Dentsu is a well recognised name among its clients, but it is not so familiar among the people of the country in which it operates. Customers only see and feel the impact of the marketing and advertisement campaigns Dentsu designs and deliver to its clients. For example, Grofers’ Aug 2018 OfferParade sale created quite a buzz amongst consumers. But few would have known that the sales stragery was developed by Dentsu. This was because weak media presence and low social media marketing of the brand. So inorder to develop more brand equity it should try to be more socially active so that the company can create awareness about its presence in the market. Also since consumers are becoming more mobile centric, this media conglomerate should try to increase its presence on mobile platform.

Opportunity

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Threat

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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Dentsu Analysis Report

1. Integrated Report 2017 - http://www.dentsu.com/csr/pdf/integrated-report2017_all.pdf
2. Article by WHO - http://www.who.int/sdg/targets/en/
3. Article from Bloomberg - https://www.bloomberg.com/news/articles/2017-09-18/uber-goes-on-rare-legal-offensive-suing-dentsu-unit-for-fraud
4. Company Report - http://www.dentsu.com/csr/pdf/integrated-report2017_all.pdf

Copyrights and Disclaimer

Dentsu SWOT and PESTLE analysis has been conducted by Manish Gupta and reviewed by senior analysts from Barakaat Consulting.

Copyright of Dentsu SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Dentsu SWOT and PESTLE Analysis
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