WHAT STRATEGIC ALTERNATIVES SHOULD MONSTERWORLDWIDE, INC. IMPLEMENT TO CONTINUE TO BEATTRACTIVE TO CUSTOMERS?A thesis submitted to the Anglo-American University forthe degree of Bachelor of Business AdministrationSemester year 2013 - Spring 2013INSTRUCTOR: SIMON GORDONCIRO CENNAMOSCHOOL OF BUSINESS ADMINISTRATION
2DECLARATIONI hereby declare that no portion of the work referred to in this thesis has beensubmitted in support of an application for another degree, or qualification thereof, orfor any other university or institute of learning.I declare that this thesis is my independent work. All sources and literature are citedand included.I also hereby consent to my thesis being made publicly available via online openaccess and for circulation in the Anglo-American University Library.Ciro Cennamo
3ACKNOWLEDGEMENTI would like to thank to my family, Mamma Camilla and Papà Angelo for their effortin raising me. To my wife, Vera, for her love. A particularly thanks to Anglo-American University, and all the staff that provided me the opportunity to be a studentand leader. An embrace of my heart to my friends, Mr. Charlie Lamento and BryanCastro. Finally, none of this would have been possible without Ms. Dawn Custalow.Thanks to all.With love,Ciro
5EXECUTIVE SUMMARYWhen searching for a company, the first question that came to the author was “Wherethe author belong? In addition, the answer was “the Author belongs to THE internet”,where there are many exciting opportunities now and in the future. This paperprovides the author with an opportunity to increase his knowledge of what ishappening in this sector, and allows him to predict the possible problems andalternative solutions that the author will have to face in a future business career in thissector.This paper tries to answer the question: Which Strategic Alternatives Should MonsterImplement to Continue to be Attractive to Customers? Accordingly, this paper willcritically answer this question that Monster faces now and in the future, since thecompany’s revenue fell in FY 2012 for 10.39% (Revenue $ 993,644 in 2011 to890,392 in 20121(unaudited in thousands). It will present alternative solutions to therevenue dropped down symptom, considering the competitors and academic sourcesand will improve their social media strategy, including problems that are developingin the global market, such as job markets and recruiting via social media platforms.The alternative strategies were made using tools such as marketing researchmethodology (mystery shopper), academic business reviews, quantitative andqualitative data collection and interpretation from the actual world market andeconomic situation, job market, financial and company background, and financial andprofitability ratios. After carefully collecting, selecting, interpreting the informationand data/result and in putting them into modern business tools and schemes. They arelisted by priority, such as CPM Matrix, EFE and IFE Matrix, Porter’s Five Generic.Based on these analyses this paper presents the right strategy for Monster. Thementioned business strategic tools identify and list the best strengths, weaknesses,threats, opportunities and analyzes them in the Matching Stage for the bestopportunities and grades them with and assigned number. The matching phase2assigns a score based on table “SWOT Matrix and SPACE Matrix, from which it ispossible to understand the best possible strategies to be implemented by Monster atthis time.1Monster World Wide Inc. February 2013. 2 March 2013 <http://www.about-monster.com/content/monster-worldwide-reports-fourth-quarter-and-full-year-2012-results>.2David, Freud R. Strategic management: concepts and cases. New Jersey: Pearson Education Inc., Ed.13th. Book.
6All of the strategic alternatives proposed and suggested were identified using aholistic approach (from classical matrix tools to the modern ones called Canvas modeland Blue Ocean). The best tactics suggested to the company for sustainingattractiveness to the customers are as follows: Intensive Strategy – Marketing Penetration: increasing marketing effort by20%. Monster has seen a correlation in the historical data in increasingrevenue with a major expenditure in marketing effort; Price Strategy- Monster can move to a differentiation grid and chargepremium fees and price for their products and services taking advantage oftheir brand image; Integration strategy – Forward integration will allow Monster to surpass theircompetitors. Partnership/Joint Venture/Acquisition – Monster can cooperate withcompetitors to succeed or acquire a potential business that is related to theirbusiness added value; Defensive Strategies – retrenchment, divestiture or liquidation.All the above strategic alternatives are supported by academic business reviews andnews that analyze the most prominent company in the areas of Recruitment online,Social Media Strategy, and Innovation, including Monster’s competitors and otherexternal topics and the time period in which the company achieves these goals. Theactual market has been changing so rapidly as in the previous century, such that thecompany needs to ride growth next curve to growth if it does not want to ride it to adecline. The time of the previous business model is gone and new change has to beimplemented for the sustainability of future company success. Hereby this paper,addresses one best possible solution for the company to continue to provide the bestservice/product and to be attractive to its customers. Conclusion the best strategy forMonster to pursue is price differentiation.
7INTRODUCTIONCompany name: Monster Worldwide, Inc. 3- Address of Principal ExecutiveOffices: 622 Third Avenue, New York, New York 10017 – State of Jurisdiction ofIncorporation: Delaware (US) – Internet Address: http://about-monster.com. Officeslocated in 55 countries.Monster Worldwide, Inc. (Hereinafter-called “company” or “Monster”) is a parentcompany of Monster®, the worldwide employment solution for a better life asdeclared in their annual report4. The company offers employers and job seekers anonline employee search tool to fill open positions with the best candidates. Thispaper serves to clarify the current company’s strategy and provide an alternativestrategy instead to regain the market share in the internet job-advertising segment andcareers one. The information considered in the paper comes from the Annual Report20105, jobs market publications as European Commission –Eurostat6and US LaborOffice7, financial8and business information portals9and is summarized by keyarguments in the following topics.1. FOUNDATIONJeff Taylor1011founded the first job search on the internet in 1994, TMP WorldwideInc. as TMP with database resumes, job search agents and job alert functions. WhenTMP acquired Adion, it became the largest worldwide job search site. Later in 1996,TMP went public; the company was traded on NASDAQ under the acronym3Monster Wordwide, Inc. 10-K Form. Annual Report FYE 2010. New York, New York: MonsterWorldwide, Inc, 20124Ibid5Monster Wordwide, Inc. Monster Annual Report 2010. K-10. New York, New York: MonsterWorldwide, Inc, 2010.6European Commission. Monitoring the job market. February 2013.http://ec.europa.eu/social/main.jsp?catId=955. 5 April 2013.7United States Department Of Labor. Job Openings and Labor Turnover Survey News Release. 9 April2013. http://www.bls.gov/news.release/jolts.htm. 2013 April 15.8Bersin, Josh. LinkedIn is Disrupting the Corporate Recruiting Market. 2 December 2012.http://www.forbes.com/sites/joshbersin/2012/02/12/linkedin-is-disrupting-the-corporate-recruiting-market/. 15 April 2013.9Kucera, Lisa Rapaport and Danielle. Monster Falls as Sale Process Continues Without Buyer. 7February 2013. http://www.bloomberg.com/news/2013-02-07/monster-falls-as-sale-process-continues-without-buyer.html?cmpid=yhoo. 15 April 2013.10APB Speakers International. Jeff Taylor Founder of Monster.com & Eons.com. n.d.http://www.apbspeakersinternational.com/speaker/jeff-taylor. 15 April 2013.11Walter, Milana. Jeff Taylor Monster Entrepreneur. 7 April 2012.http://www.examiner.com/article/jeff-taylor-monster-entrepreneur. 15 April 2013.
8“TMPW”. TMP12has made a few key acquisitions that significantly gained newmarket share and TMP became market leader as Recruitment Advertising Network,JOBTRAK and Online Career Center until 2000. These acquisitions served to gain amarketing competitive advantage and reach more job seekers looking for an entry-level position available via web, job boards and newspaper. They allow them toenlarge the distribution channels, reaching job seekers and employers. The company’ssuccess and escalation to the media channel arrived with a spot in the most famousand expensive advertising time in the U.S. when at the Super Bowl 1999, the ad askedthe job seeker, “What did you want to be?” In 2002, Jeff Taylor acquired Jobs.comand Jobs™ to use it as main URL. In 2005, Jeff left the company and foundedEons.com – a social networking site for baby boomers – then sold it in 2011.Eons.com has been inactive since May 201213.Monster Worldwide, Inc. is still fighting for the leadership market position eventhough the news media has reported the company has been underperforming. This isthe reason why this paper will analyze and promote alternative strategies for MonsterWorldwide, Inc.2. PRODUCTS AND SERVICESDuring the last five years, Monster has focused and developed their technology foroffering innovative solutions to customers, and gained a competitive advantage togive customers a reason to choose them over competition14. In 2008, the companyacquired Trovix Inc.15., where they acquired programming that matched resumes withjob positions, then integrated Trovix’s program in to a new one called Monster PowerResume Search®, which is a product for customers in North America, France and theUnited Kingdom. Power Resume Search is part of a new product line called 6Sense®,a technology platform. As well, the company integrated several technology systemsand provided a more safe, redundant and reliable platform. In 2007, Monster launchedCareer Ad Network, CAN, focusing on an online advertising network reaching 10012TMP Worldwide Announces Merger With the Toronto Practice of Illsley Bourbonnais. 2 March2000. http://www.about-monster.com/content/tmp-worldwide-announces-merger-toronto-practice-illsley-bourbonnais. 14 April 2013.13Businessinsider.com Monster. 26 february 2013. 5 March 2013www.businessinsider.com/blackboard/monster14Pietersen, Willie. Defining Competitive Advantage: How much more value do you deliver than yourcompetitors? n.d. http://www.europeanbusinessreview.com/?p=2355. 17 April 2013.15Ibid
9million internet users worldwide. The company focused on providing and addingvalue to clients through a centralized customer service. In 2010, Monster launched awebsite in the Brazilian Market. In 2011, BeKnown was launched as a new appavailable for Facebook’s users. Acquisitions16: in 2007 China HR.com Holding Ltd;in 2008 Affinity Labs Inc. and in Australia Monster acquired 50% of equity interest ofa company; in 2010 Hot Jobs for $225,0 million from Yahoo! Inc. Disinvestment17:in 2012 China, Latin America and Turkey.The main services provided are divided into two main segments: Careers; and InternetAdvertising and Fees. The careers segment is divided into North America and theinternational market. Monster offers an effective employment solution to theemployer and the job seeker to fill the job position opening with the best and skilledcandidate in quick time. The Monster’s customer value for the employer is reducingcost of new hire, for the job seeker, and in improving life. The company had proven asolid market share and sustained great success results until 2011. There was adownturn in 2012 by 4.61% for Career North America, by 11.87% for CareerInternational and dramatically by 30.56% for Internet Advertising Fees 18. Thecareers segment is confirmed as driving the total revenue of the company by 91.4% inthe year ending in 2012. The company has great searchable software for resumes, jobposting and recruiting solutions throughout magazine, newspaper, web portals, jobboards, universities and other partners. For example, companies can post a jobposition on the website, search for the best suitable candidate and utilize career sitehosting and recruitment media to maximize and target best candidates desired byemployers and/or recruiters. The search in the resume database is not fully guaranteedand not completely successful due to new competitors such as Linkedin19, Facebook20,16Monster Worldwide Inc. Annual Report . 10-K Form. New York, New York: Monster, 2011.17Trefis.com. Monster Worldwide Exits Brazil, Mexico & Turkey As Losses Mount. 8 February 2013.http://www.trefis.com/stock/mww/articles/167803/monster-worldwide-exits-brazil-mexico-turkey-as-losses-mount/2013-02-08. 15 February 2013.18Monster Worldwide Inc. Annual Report . 10-K Form. New York, New York: Monster, 2011.19Leena Rao. LinkedIn Cuts Off API Access To BranchOut, Monsters BeKnown And Others ForTOS Violations. 1 July 2011. http://techcrunch.com/2011/07/01/linkedin-cuts-off-api-access-to-branchout-monsters-beknown-and-others-for-tos-violations/. 11 April 2013.20Pepitone, Julianne. Facebook launches job search app. 14 November 2012.http://money.cnn.com/2012/11/14/technology/social/facebook-social-jobs-app/index.html. 16April 2013.
10Smartrecruiters21and others who have implemented new social media tools to matchcandidates and job positions. However, this topic will be covered in the marketanalysis and then developed into an opportunity for the company. The target segmentis comprised of large enterprises from small to medium sized businesses in variouspartnerships with media, publishing and more than of thousand newspapers in theUnited States. The partnership with various media allows the Company to reach jobseekers with different distribution channels so that they are able to specifically targetthe jobless market in the United States. Monster’s key partners are essential todeveloping a market penetration in the U.S. and holding a solid portfolio. The othersegment, advertising and fees, got 8.57% of all total revenue in the year ending in2012 and has fallen dramatically by 30.56% compared to 2011. Internet Advertisingand fees are concentrated in display advertising and lead generation22. Marketerschoose an online advertising message a numerous sizes and formats to publish onMonster’s websites. How does this advertising work? Consumers visit the websiteseeking to improve their life and finding interesting, persuasive and desirable offerproposals for products and services as consumers and become potential buyers of it.How does lead generation work? Lead generation targets the best market and based onthe business response Monster gets a monetary amount based on the single marketersand proposals.3. EXECUTIVES AND STAFFAs of December 31, 2012: global employees of Monster number 4,037 with fiveexecutive officers (including information on their total compensations and benefits inthousand USD in FYE 201123):Salvatore Iannuzzi, 59 age, Chairman, President, Chief Executive Officer (1,066USD);Timothy T. Yates, 65, Vice President, Director (1,516 USD);James M. Langrock, 47, Vice President, Chief Financial Officer (2,425 USD);Lise Poulos, 54, Vice President, Chief Administrative Officer (1,376 USD);21Ha, Anthony. Take Credit For The Jobs You Create With SmartRecruiters’ “Got Jobs?” Campaign.21 April 2012. http://techcrunch.com/2012/04/21/take-credit-for-the-jobs-you-create-with-smartrecruiters-got-jobs-campaign/. 18 April 2013.22Alexander Hiam et al. Marketing for Dummies. n.d.: John Wiley & Sons., 2nd Edition, UK Editionedition (22 May 2009). Print.23Thomson Reuters.com. People Monster Worldwide Inc (MWW). 5 March 2013. 5 March 2013<http://www.reuters.com/finance/stocks/officerProfile?symbol=MWW&officerId=823855>.
11Mark Stoever, 45, Vice President, Corporate Development and Internet Advertising(1,365 USD).Iannuzzi, Yates, Langrock and Poulos had previous job experience at Motorola Inc.and Stoever had experience in investment funds company specializing in marketingresearch24. The executive officers’ experience has driven the company strategy tofocus mainly on software development; for example, a new product line called6Sense® technology platform, rather than to pursue global strategy. Since Monster’sFounder left, the company has suffered executive officer turnover and short-termleadership, which has resulted in a weak vision and strategic plan. Executive officersfail for two main reasons: missing a clear vision for a long-term prospective andsettling on a development plan that communicates to all employees on how to reachits goals. The recent changes in the market development strategy has caused loss netof tax in the new emerging countries for Careers- China, Latin America and Turkey,for 316,9 million and 12,3 in 2012 and 201125. During the last four years theexecutive officers’ turnover was significantly high and the facts are supported byrecent changes in the strategic alternatives26;4. CRITICISM AND SCANDALIn 2006, Olesnyckyj was accused for backdating an option at a lower price. Thisaction is not necessarily illegal but it should be disclosed to the shareholders.Practically he could exercise a call (buy) with a lower price and pay a stock option ata lower price. For the year ending in 2005, the company restated its financial resultand record for the noncash regarding stock option grants. After that, the companyreplaced all top executive officers from these people already mentioned.Another important fact that has to be considered is the criticism about numerous leaksregarding customers’ data leading to identity theft27that happened in 2007. After that,in January 2009, the British website – known as monster.co.uk – was attacked byhackers who obtained more than 4,5 million people’s personal data information.24Ibid25Monster Worldwide Inc. "Investor Relations." 7 February 2013. Monster.com.http://ir.monster.com/phoenix.zhtml?c=110723&p=irol-irhome. 4 April 2013.26Former Sales Director in Maynard, MA - Monster. Monster Worldwide Employee Review. 10 July2008. http://www.glassdoor.com/Reviews/Employee-Review-Monster-Worldwide-RVW4820.htm. 15 April 2013.27Ibid.
12These incidents pushed the company to redesign a new security information systemthat was implemented in 2010.5. JOB MARKETS AND TRENDSThe economic crisis in 2008 and 2009 led companies to hire less during the economicdownturn and Monster has decreased its revenue since. Monster has decreased in itssegment market for offering job recruiting online through its platform. Executiveofficers have identified different issues and risks related to the company’s business2829 30:- Political uncertainty;- Competitors;- Tax regulation;- Staff and management issues (culture and languages differences);- Difficulties in managing different operations and products based on localmanagement;- Products and services offered as innovative and competitive.Executive officers considered the above key points which were included in theAnnual Report 2012 as the main risk factors to look at, but not necessarily the soleones. Monster has not considered some key issues, for example, customer needs,innovation and social media solutions regarding employment. Nowadays, the newphenomena of social media has been raising the way how businesses recruit talentedpeople and the amount invested in the marketing effort for targeting their customersvia social media and other job aggregator platforms31. The social media is becoming anew way where people open an account to be connected with friends and colleagues,partners and companies. They stay connected with each other and with the worldwidenetwork. Businesses are interested in reaching those people that are in the mediachanging the way society communicates about work and life. This newcommunication is affecting how business adapt social media strategy to support its28Monster Worldwide Inc. Monster Annual Report 2011. 10-K. New York, New York: Monster, 2011.29World Economic Forum. "The Global Competitiveness Report 2012–2013." 2012. World EconomicForum. http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf. 16 April2013.30Association of Chartered Certified Accountants. "Tax After the Financial Crisis." n/d January 2010.Accaglobal.com. http://www.accaglobal.com/content/dam/acca/global/pdf/pb-TaxAftertheFinancialCrisis.pdf. 14 April 2013.31Dutta, Sumitra. What’s Your Personal Social Media Strategy? Boston: Harvard Business Review,n/d November 2010. Print.
13goals32, retain customers and increase satisfaction and customer experience for theirproduct or services. The phenomena forces all traditional business models to adaptand make some changes in order to retain customers and to be profitable. However,the majority of companies cannot change their business models and redesign thembased on new customer needs so easily without incurring loss of operations. Anychange in the distribution channels, structure, key partners and activities would resultin more costs in a shorter period. The avoidance of uncertainty pushes managementto rethink and redesign33their strategic and business models, so as to quickly regaintheir market share and keep the business ongoing in the future. Monster specifically,took a step back and looked at all its options, reconsidering their market developmentstrategy in the short period. Since 2011, the company has shown a lack of vision andmanagement capability to redesign and realign to a unique global company strategytaking into account the actual uncertainty and aggressive competition34.The online jobs recruitment market size, was estimated by Mark Mahaney in 201135,at $3 billion. Monster Worldwide, Inc. has $894 million from “Career Service” tonearly 30% of the entire market, and Linkedin “Talent Solution” has reached $261million. Careerbuilder.com is another big competitor that reached 62% (556 million)in 2010, only from the U.S. “Talent Solution” segment. Indeed.com, Simplyhired.comand Naukri are just behind but struggling to succeed in the market yet gainingpositions.Table 1. Market Share in 2011Career Service PlatformMarket Size(thousands) %Monster.com Job Search 894 29.8%Linkedin 261 8.70%Indeed-Simplyhired-Naukri-Careerbuilder and Others 1,845 61.50%Total 3,000 100%32Ibid.33The Economist. "Managing Uncertainty. 2012. Economist.com.http://media.economist.com/sites/default/files/pdfs/store/Managing_Uncertainty.pdf. 15 April 2013.34Levy, Adam. LinkedIn: Recruiting Room to Run. 20 February 2013. 15 March 2013<http://beta.fool.com/adamlevy/2013/02/20/linkedin-recruiting-room-run/25009/>.35Ibid
14A recent comScore report36has ranked the bigger Job Search sites for traffic in U.Saccording to the following data:Table 2: Data adapted from comSore Media Metrix ranks 01/2012: Top 50 U.S webproperties37U.S WebpropertiesVisitor(million)% growthVisitors%Visitor/totalIndeed.com Job Search 13,7 33% 42,81%CareerBuilder.com JobSearch9,8 27% 30,63%Monster.com Job Search 5 28% 15,63%SimplyHired.com 3,5 42% 10,94%Total 32,00 100,00%Table 2 shows the total visitors in January 2012 and the distribution amongst the mainjob search websites in the U.S. and percent of visitors’ growth compared to theprevious year. Indeed and CareerBuilder have together 73.44% of the total visitorsper 23,5 million visitors (up 60% ) , Monster 5 million (up 28%) and Simplyhired 3,5million (up 42%). The Simplyhired growth visitors’ rate of 42% means that they aregrowing very fast compared to the previous year and to their competitors and in maxtwo years’ time, they will surpassed Monster as visitors. One aspect to point out isthat Indeed and Simplyhired are two job aggregators. They provide recruiters withsoftware platforms that are published by job web sites38. Job aggregators provide abusiness solution for employers who want to post a job offer by choosing job searchsites that best attract the right talent in a short time period and a minimal cost for thecompany.Linkedin offers premium services solutions for recruiters 39and compared to thetraditional industry makes has a less expensive hiring solution via social media forsmall and big companies alike. The premium service helped Linkedin – professional36comScore. comScore Media Metrix Ranks Top 50 U.S. Web. 17 February 2013. 10 March 2013 <http://goo.gl/i53CG >.37Ibid38Mitras, Sramana. Job search sites overview. 13 April 2011. 15 March 2013<http://www.sramanamitra.com/2011/04/13/job-search-sites-overview/>.39Levy, Adam. LinkedIn: Recruiting Room to Run. 20 February 2013. 15 March 2013<http://beta.fool.com/adamlevy/2013/02/20/linkedin-recruiting-room-run/25009/>.
15network – to reach 200 million users in 2012. Linkedin’s members are companies,recruiters, jobseekers with focus markets with mobile solutions in Germany andBrazil. Therefore, Linkedin’s growth is just at the beginning and there is a lot of roomfor reaching more users. Another big giant, Facebook, known for friends networking,recently developed its own jobs app, called “Social Jobs Partnership” with a jobaggregator’s function. As well, Facebook is developing the beta version “GraphSearch40”. It will allow recruiters to grow their networks for candidates.The customer needs have been changing and businesses providing recruitmentsolutions to the market have to follow. Monster has changed and modified theirstrategy. As will be discussed in section V – Strategic Alternatives –there will be acomparison of actual company strategy and the written company policies. Monsterneeds to set fast paced strategic alternatives to stay competitive, keep businessongoing for the future, and move to the next curve, “Blue Ocean Strategy”41.I. INTERNAL ASSESSMENTVISION & MISSIONMonster’s mission is to inspire people to improve their life42. This mission statementhowever looks more like a vision statement. Monster continues to clarify the missionby saying, “We don’t just sell better jobs, and we help promote better lives”43. Thevision analysis better clarifies their mission and identifies, what it means to promotebetter lives. Job seekers want more than just a job in life. They want to be satisfied,successful, wealthy, recognized, positive and optimistic in all areas of their lives.What about the employers? What do employers/recruiters like? They like job seekerswho bring value to the company and clients as well as are employees who areproactive, productive and grow up with the business44. This paper emphasizes a newMonster vision, as “We want to improve the wealth of all people everywhere in theworld… We want to transfer the knowledge of how talented people find jobs and40Arun Sundararajan. With Graph Search, It’s Facebook vs. Facebook. 3 January 2013.<http://goo.gl/1MCls>. 19 April 2013.41W. Chan Kim and Renée Mauborgne - Harward Business Review. Blue Ocean Strategy: How toCreate Uncontested Market Space and Make the Competition Irrelevant. 2005. Ebooks 24x7.42Who We Are. N.d. <http://www.about-monster.com/content/who-we-are>. 15 April 2013.43Ibid44Adams, Susan. Keep Upbeat On The Job Search When Youre Down In The Dumps. 11 November2012. <http://www.forbes.com/sites/susanadams/2012/11/14/keep-upbeat-on-the-job-search-when-youre-down-in-the-dumps-2/>. 17 April 2013.
16create value on a global scale”. As stated in the above analysis, the mission statementand components are clearly defined by the company but the product and services aresomewhat vague. It is not mentioned and the exact services provided to Monster andcustomers and consumers are undefined. The following components of Customers,Markets, Technology, Concern for survival growth and profitability, Philosophy, Self-concept, Concern for public image and employees45are mentioned and clearly definedin the mission statement.KEY INTERNAL FORCESMonster exploits its distinctive competence in brand awareness by innovativeresearch, product development, intensive market penetration and channel distributionto reach consumers and customers with different products and services foremployment solutions46. This distinctive competence provides the firm withcompetitive advantages over rival firms, who are very innovative and price aggressivesuch as Linkedin and Simplyhired.THE INTERNAL FACTOR EVALUATION (IFE) MATRIXStrengthsBrand Awareness: John Sumser says that even though Monster has been in the worldmarket 20 years and that it has had internal organization weaknesses and poorfinancial results, it is still considered a value brand since that brand has covered a bigniche of the market for almost two decades47.Technology & Intellectual Property: Patent rights, during the last decades, have beenconsidered crucial for overtaking the competitors and securing all rights for thenewest technology and software solutions48to make profit and sue any rivals. Monsterhas won the patent for its software solution and always keeps watching markets forany threats. Since Monster’s top executive seniors worked for Motorola Inc., they are45International Labor Organization. "Global Wage Report 2012/13." n.d. Ilo.org.<http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_194844.pdf>. 17 April 2013.46Kirsner, Scott. Monster may have lost its way, but there’s hope. 11 November 2012.<http://www.bostonglobe.com/business/2012/11/11/what-happened-monster-monster-may-have-lost-its-way-but-there-hope-for-yet/OkEeYBQAnNAJX6aSPfoB0J/story.html>. 15 April2013.47Kirsner, Scott. Monster may have lost its way, but there’s hope. 11 November 2012. <http://goo.gl/6al1p >. 15 April 2013.48Reitzig, Joachim Henkel and Markus. "Patent Sharks." Harvard Business Review n.d June 2008: 8.Print.
17aware of the problematic “shark patent”49; the phenomena that possibly could hurt anytechnological company that utilizes modules, integrated software and features in theirproducts. The Shark patent could cause economic damage to those do not followowner patent rights. Monster, up until now, has held a considerable portfolio of patentrights50. Apart from patents, Monster holds domain name sites, trademarks, tradenames, service marks and other proprietary rights. For the future, there is uncertaintyin how the protection right law will change and if it will defend patent owners againstany independent invention51. Technology always needs to be innovative and offer thebest product and added value for the customer. Innovation technology52for recruitingsolutions is crucial for companies who wish to reduce hiring costs and fill53jobpositions in the least of amount of time. Not implementing this innovation technologyis hurting Monster and even Facebook and Linkedin.Market Expertise: Since Monster was founded, the company has been in theleadership position and this factor has allowed them to penetrate the market and offera personalized and variegated recruitment solution to employers and recruiters. Thestaff cost and Monster business model is under spotlight since having lower revenues(See: Financial Analysis). There has been an aggressive competition from newcompetitors such as Linkedin, Simplyhired, Jobvite and others.WeaknessesManagement vision: Moore says “to succeed 54the long-term companiesneed to focus on middle-term”. He clarifies that any tasks and cases needspecific metrics and their related goals. In the financial analysis, thispaper covers all metrics used by the company and not any qualitativemetrics55and balanced scorecard used56. Why Good Strategy fails? Thereare different reasons: wrong people on the board, incapacity to lead people49Ibid50Monster Worldwide Inc. Monster Annual Report 2011. 10-K. New York, New York: Monster, 2011.51Lemley, Mark A. "Should Patent Infringement Require Proof of Copying?" 4 Janaury 2007.SSRN.com. <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=954988>. 15 April 201352Nakache, Patricia. "Finding Talent on the Internet." Harvard Management Newsletter n.d 1997: pag.5. Reprint No. U9704D .53CareerBuilder. Thirty-seven percent of companies use social networks to research potential jobcandidates. 18 April 2012. < http://goo.gl/r46Qs>. 15 April 2013.54Moore, Geoffrey A. "To Succeed in the Long Term, Focus on the Middle Term." Harvard BusinessReview n.d 2007: 9. Reprint R0707F.55Monster Worldwide Inc. Monster Annual Report 2011. 10-K. New York, New York: Monster, 2011.56Norton, Robert S. Kaplan and David P. "Using the Balanced Scorecard as a Strategic ManagementSystem." Harvard Business Review n.d. 2005: 15. Reprint R0707M.
18and the organization in setting and reaching goals, ignoring themarketplace and competition, and not focusing on achievements57. It islikely that the organization fails because of no strategy and Monster failedin their market development in new developing countries such as China,Turkey and Latin America where operations have been closed. Thedecision to enter these markets was just taken two years earlier58.Social Media Solution: During the last decade, Social media such asFacebook and Twitter have revolutionized the technology world andpeople in how they use internet to interact with other people. Thisphenomenon enables billions of people to open their profile online and useit as of communication tool rather than email. Social media has beenintegrated in all aspects of daily life as well as in the work59. Newcompanies that have integrated social media in their online socialrecruiting platform have started to compete aggressively with Monster andother giants in this market. The way in which people communicate isdifferent from the past and social media are becoming and integrated partof personal life60. During 2012, competition has become more aggressivesince other competitors like Linkedin, Jobvite and Simplyhired haveentered the playing field. So Monster needs to explore new ways on howto be competitive and regain the market share lost61. Congruently, Monsterneeds to reconsider its social media strategy in order to be innovative andregain consumer appeal so to win back customers who switched to a more“social platform”. Monster’s present strategy will be analyzed comparedwith an alternative strategy in a future section. This alternative strategyincludes any relevant strength and weaknesses linked with opportunitiesand threats.57Wade, Jared. “managing-strategic-risk-it-all-starts-with-a-plan”. 1 December 2011. <http://goo.gl/jhpYm >. 30 April 2013.58Monster Worldwide Inc. Monster Annual Report 2011. 10-K. New York, New York: Monster, 2011.59Dutta, Sumitra. What’s Your Personal Social Media Strategy? Boston: Harvard Business Review, n/dNovember 2010. Print.60Bersin, Josh. LinkedIn is Disrupting the Corporate Recruiting Market. 2 December 2012.<http://www.forbes.com/sites/joshbersin/2012/02/12/linkedin-is-disrupting-the-corporate-recruiting-market/<. 15 April 2013.61Ibid
19Financial ratios and measures: Monster’s financial measures and ratiosare only relevant for stockholders in the areas of earning per share, priceper share, earning before taxes, income tax depreciation and amortization,operating income before depreciation and amortization, book value pershare, free cash flow, return on equity and cash marketable securities pershare. At year end December 31, 2012, Monster had negative results,booking a loss of 258,720 USD (in thousands) and ratios underperformance as mentioned in the Financial Analysis. As of December30,2011, James M. Langrock CFO was awarded high compensation in the yearending in 2012 for keeping key performance under control compared to otherexecutive officers62. The fact that Langrock received a good compensation led to thefact revealed that other executives did not have enough vision and motivation toaccomplish the sale goals, customer satisfaction, internal procedures, learning andgrowth using Balance Scorecard approach that supports and helps to spread only onemain vision internally amongst all personnel63. The latest financial result will have animpact on shorter-term strategy and Monster will focus on the main profitablebusiness, while reviewing operations and investing more in marketing. The result ofthis paper’s analysis is that Monster focuses and relies more on financial results forstockholders rather that an integrated approach as mentioned above.VALUE CHAIN ANALYSISPorter defines value chain as a “series of support and primary activities made insteadto deliver a valuable product or service for the market”64. Porter establishes65in thearticle Strategy and Internet – “how the Internet can be used to create economicvalue” More companies that are profitable need to create value by decreasingoperating costs through operational effectiveness of premium price so it will give anincredible competitive advantage to the company. However, improving onlyoperational effectiveness will not lead the company to excellence. It is needed toexceed the competitors’ structure. Monster has to review their operation and better62Thomson Reuters.com. People Monster Worldwide Inc (MWW). 5 March 2013. 5 March 2013<http://www.reuters.com/finance/stocks/officerProfile?symbol=MWW&officerId=823855>.63Norton, Robert S. Kaplan and David P. "Using the Balanced Scorecard as a Strategic ManagementSystem." Harvard Business Review n.d. 2005: 15. Reprint R0707M.64Porter, Michael E. "What Is Strategy?" Harvard Business Review November-December 1996. Print.65Porter, Michael E. "Strategy And The Internet." Harvard Business Review March 2001. ReprintR0103D.
20integrate with the internet to decrease cost and increase value for customers. AlsoMonster needs to implement the right strategy to gain competitive advantage overrivals by developing right goals, customer value, distinctive value chain and trade-offsto coalesce and put in action those points66. Here below the value chain analysisexplains which activities Monster should improve to gain competitive advantage overcompetitors (See Appendix B.2 Value Chain):Support ActivitiesMonster’s has several components to its value chain. Firm Infrastructure – Web-basedinfrastructure, which disseminates information to shareholders with a capillary kind ofproducts and services, proposed to the market. Human Resource Management – E-learning and development plan offered online,67Compensation and remunerationbased on career development, Web based sharing and collaboration, Reports onlineand time and expenses, and a Human resource web tool. Technology Development –Web based collaboration for developing products across departments and locations.Monster is focused on Research & Development and releases matching softwarecurricula with job positions. Procurement: Automated Software solution forSuppliers, which controls corporate purchases and inventory for local branch needs.Included is Integrated software that disseminate information for corporate and branchoffices68.Primary activitiesThere are other components of Monster’s value chain. Inbound Logistics: aWarehouse integrated system with suppliers and collaborative departments. Annualscheduling, internal planning and dissemination of information to suppliers.Operations: Integrated systems, scheduling and planning, contract suppliers andexternal consultants, Real time updating for sales and related channels. OutboundLogistics: Terms and Agreements for customers and Service Level Agreements69,automated transactions between sales and customers, Customer queries transaction,Information Technology integrated system for monitoring all activities online fromend customers and consumers. Marketing and Sales: Online and off-line sales66Ibid67—. Job Details. n.d. <https://monsterhires.mua.hrdepartment.com/hr/ats/Posting/view/14445>. 13April 2013.68Monster Worldwide Inc. Monster Annual Report 2011. 10-K. New York, New York: Monster, 2011.69Johnston, Graham Clark and Robert. Robert Johnston. Edinburgh : Prentice Hall, 2008. 3rd EditionPrint.
21channels, Order and quote entry online, Advertising package configuration andspecific customization offer, Web trafficking analyses, advertising metrics70, paymentconditions (See Financial Analysis) and user interface. After-Sales Service: Survey,feedbacks, claims, billing invoices, payment collections (See Financial Analysis),Service Quality and customer satisfaction and experience – Matrix updated and sharedwith all channels.CONCLUSIONThe Matrix internal assessment analysis (Table C) provided a weighted score of 2.65,including all internal factors, taking into consideration strengths and weaknesses71.The result shows that Monster needs to improve internally since it is weak comparedto its competitors and in bringing value to consumers and customers. The IFE Matrixmethodology is weighted on each of internal factors and scored based on the presentanalysis. Each factor has been weighted for its importance to the sector and success ofthe company long-term72. The present analysis is an independent one, not substitutingother internal company assessment analyses. However, it would be considered as anindependent opinion and tool based on improvement. Since the score result is higherthan 2.5, it would not rank the company weak internally and confirm that Monster isstill strong internally. Table C Internal Factors70Alexander Hiam et al. Marketing for Dummies. n.d.: John Wiley & Sons., 2nd Edition, UK Editionedition (22 May 2009). Print.71David, Freud R. Strategic management: concepts and cases. New Jersey: Pearson Education Inc., Ed.13th. Book.72Ibid
22II. FINANCIAL ANALYSISJames M. Langrock CFO and Iannuzzi Salvatore CEO are responsible for all financialdata and overall company measurement to the stakeholders. The stakeholders asshareholders are as follows: Accounting Consulting Firm, U.S. Security and ExchangeCommission (SEC), National Association of Securities Dealers Automated QuotedSystem (NASDAQ), EDGAR online information, Government (Delaware State, U.S.and the rest of the world where (Monster) foreign locations are located73. In thefollowing section, some important issues that influenced the management vision andturnover during the last decade are examined and analyzed. In addition, it considersfinancial companies’ data and vertical-horizontal analysis with a dedicated section forratios analysis that is used for supporting the strategic alternatives addressed in thispaper.Monster was founded in 1967 and was incorporated in Delaware becoming a publiccompany in 1996. By the Delaware law, the company’s benefitted from taxation andanti-takeover provisions that discourage potential acquisition offers74and otherlimitations connected to stock price. Because of the certificate of incorporation andtype of legal entity, the Board of directors has to authorize any sort of share activity.This law entity allowed the company to win the trial vs. Mr. Myron Olesnyckyj whowas terminated in 2006 as VP and General Consul and Secretary for “cause” (SeeSection Executives and Staff). His dismissal is related to the fact that Mr. Olesnyckyjdid not ask any consensus from the Board of Directors regarding share activity thatwould prevent any sort of loss to the company. The founding structure of the companyprevents and avoids any stock activity that would destroy the company’s longevity byaggressive takeovers. Monster, in May 2009, agreed to their citation “ withoutadmitting or denying wrongdoing, to pay a $2,500 penalty to the United StatesSecurities and Exchange Commission to settle claims arising out of the SEC’s inquiryinto the Company’s historical stock option granting practices” (Citation from AnnualReport 201175).73Monster World Wide Inc. February 2013. 2 March 2013. <http://www.about-monster.com/content/monster-worldwide-reports-fourth-quarter-and-full-year-2012-results>.74Monster Worldwide Inc. Monster Annual Report 2011. 10-K. New York, New York: Monster, 2011.75Monster Worldwide Inc. Monster Annual Report 2011. 10-K. New York, New York: Monster, 2011.
23The above information related the SEC might influence as well any stock employeeplan for upcoming years and any investors’ decision. Definitely, the company hasbeen influenced negatively from Mr. Olesnyckyj situation and need to reconsider anystock plan for executive officers and employees to avoid any further damage to thecompany by applying strong internal policies (for example, the clawback policy76) forselecting employees and rewarding them. As in the above case, the company had toreview the financial cash flow and fortunately, Mr. Olesnyckyj was terminated “forcause”. Kaplaro and Norton (Balanced Scorecard) say, explicitly, how to linkfinancial rewards to executive performance splitting it 60% based on weightedfinancial indicators as on return on capital, profitability, cash flow and operatingcosts. The remaining 40% is measured based on other indicators as customersatisfaction, employee satisfaction and environment responsibility. This financialanalysis reviews the company’s links to financial and non-financial measures of thetop management annual performance review and how it reflects on the vision of thecompany77. Up to now, the company has had a limited stock options plan subsequentthe 2008 issue.1. REVENUEIn the Note of the Financial Statement, the company establishes and acceptsaccounting methods generally accepted in the United States, known as GAAP (SeeAppendix A.2 Income Statement). As already mentioned in this paper, the financialanalysis will take in consideration unaudited data in thousands.Table II.1 Data captured from the Annual report 201378Trended DataSummary P&L Information FY 2010 FY 2011 FY 2012Monster Careers 85,00 % 88,90 % % 91,40 %Internet Advertising & Fees 15,00 % 11,10 % % 8,60 %Revenue 100,00 % 100,00 % % 100,00 %76Monster Worldwide, Inc. Proxy Statement. Annual. New York, New York, 2012.<http://ir.monster.com/phoenix.zhtml?c=110723&p=irol-reportsannual>.77Norton, Robert S. Kaplan and David P. "Using the Balanced Scorecard as a Strategic ManagementSystem." Harvard Business Review n.d. 2005: 15. Reprint R0707M78Edgar. MONSTER WORLDWIDE, INC.: MWW (NYSE). 2013. <http://yahoo.brand.edgar-online.com/default.aspx?companyid=3835>. 29 April 2013.
24The above trends’ ratios from 2010 to 2012 show where the most of the company’srevenue comes from. In 2010, the company in the Careers segment generated 85%,which included North America and International. From 2010 to 2012, InternetAdvertising & Fees dropped down by 6.40 %, overall. That is the result from thestrategy adapted by the company that has focused on the Career segment which isconsidered more profitable than Advertising and Fees.Operations per segmentTable II.2 Data Captured from the Annual Report 201379Operations by Reportable Segment (Detail) (USD $)In Thousands, unlessotherwise specifiedDec. 31,2012%Dec. 31,2011%Dec. 31,2010%Revenue890,392 100,00% 993,644 100,00% 874,923 100,00%Careers – NorthAmericaRevenue462,962 52,00% 485,356 48,85% 422,193 48,25%Careers – InternationalRevenue 351,130 39,44% 398,408 40,10% 321,588 36,76%Internet Advertising &FeesRevenue 76,300 8,57% 109,880 11,06% 131,142 14,99%The above ratios indicate the Revenue segments break down in three groups and howeach individual segment influences revenue turnover overall from 2012 until now.The data show, as well, horizontal ratios compared per years end December 31, 2010,2011 and 2012. The North America Careers segment shows a slight increased from48.12% to 52%. However, the total amount had increased significantly in 2011 from2010, 14.96%, then dramatically dropping down -4.61%. Overall, the segment hasseen a positive trend from 2010. The International Careers (all other countriesexcluding North America) has shown a slight trend moving above 40% in 2011 thengoing down again. The revenue ratio was almost the same from 2010 to 2012. TheInternet Advertising & Fees, the only segment that is not divided per country,indicates from 2010 to 2012 a dramatic fall from 14.99% to 8.57%. Moreover, thetotal amount has decreased from 131,142 USD in 2010 to 76,300 USD (in thousands).79Edgar. MONSTER WORLDWIDE, INC.: MWW (NYSE). 2013. <http://yahoo.brand.edgar-online.com/default.aspx?companyid=3835>. 29 April 2013.
25As described in Table II.3, the total revenue was assessed in 2012 from 2010 with aslight improvement in a total amount of 15,469 USD (in thousands) + 1.77%. If so, itmust be taken into consideration that the Internet Advertising & Fees segment hasdramatically dropped by 41.82% since 2010. In December 31, 2011 and 2012, theAdvertising & Fees revenue dropped by 16.21% and 30.56% respectively. Thenegative trend can cause further instability in reaching set goals and redesigningshort-term strategy. Another negative impact on the revenue will push topmanagement to reallocate more cash flow to cover operating costs since Monster willhave a problem in financing its operating costs. These operating costs will beexamined in the next section.Table II.3 Data Captured from the Annual Report 201380(USD in thousands)Revenue (2012-2010)Amount Increased(decreased)% Increased(decreased)Revenue 15,469 1,77%Careers – North America 40,769 9,66%Careers – International 29,542 9,19%Internet Advertising & Fees -54,842 -41,82%Total 15,469 1,77%Operations per segmentThe operations per segment and operating profit margin show how the companyprofitability of each segment changes overtime and how much revenue is able toconvert to operations income81. The most relevant operating profit margin ratio thatshows improvement is, contrary to the precedent ratio, the Internet Advertising andFees with end year December 31, 2012. The operating profit margin is 26%. Monstermakes one dollar of revenue and converts 0,26 USD in operations income that isreally better compared to 2011 for 0,047 and reconstructuring charges related tochange to in certain activities. The other operating margins, the Careers North-America and International, are decreasing and approximately 50% of International isinfluenced by discontinued operations in China, Latin America and Turkey.80Edgar. MONSTER WORLDWIDE, INC.: MWW (NYSE). 2013. <http://yahoo.brand.edgar-online.com/default.aspx?companyid=3835>. 29 April 2013.81David, Freud R. Strategic management: concepts and cases. New Jersey: Pearson Education Inc., Ed.13th. Book.
26Table II.4 Data Captured from the 8-K Form 201382(USD in thousands)2. COSTIt is important to consider Break Even Point (BE) in terms of total revenue (numbersof products and services to be sold) as equaling its total costs83. Based on BE anincrease of fixed costs raises the numbers of products and services sold significantly.As shown in Table II.4, Monster has Fixed costs – salary, marketing and offices – thatmake up 82.1% of the total revenue in 2012. During the past three years the companyhas made a significant impact in the total fixed costs from 89.7% to 82.1% in 2010and 2012. A 6.6% reduction had a major impact on salary and related categories thatdropped from 417,293 USD to 380,131 USD - 5% less. In 2012, the company firedapproximately 1,200 employees in 201284. Layoffs at Monster happened in Januaryand December 2012 for 400 and 800 employees respectively for reconstructingreasons. The most recent change resulted in 800 fired employees and discontinuedoperations, net of tax, $316,9 million and includes $8 million of shut-down costs inTurkey, Latin America and China. From 2010, employees were reduced to 639 –13.67% less 5% in real salary cost. Revenue annualized per average employee showsthe gain from $191,8 to 203,8 in 2010 and 2012 - 6.26% of the increment. Theanalysis shows the dismissal cost of company employees exceeded companygenerated revenue. Given this fact, the change in the total revenue of 1.77% - from2010 to 2012 – does not equal the increase of the annualized revenue per averageemployee per 6.26%. However, it shows the company effort to keep costs controlled.82Monster Worldwide Inc. "Investor Relations." 7 February 2013. Monster.com.http://ir.monster.com/phoenix.zhtml?c=110723&p=irol-irhome. 4 April 2013.83David, Freud R. Strategic management: concepts and cases. New Jersey: Pearson Education Inc., Ed.13th. Book.84John Zappe. Layoffs At Monster Worldwide. 5 December 2012.<http://www.ere.net/2012/12/05/layoffs-at-monster-worldwide/>. 28 April 2013.
27The Annual Wage report considers that wages were adjusted for inflation by 1.2% in2011, down from 2.1% in 201085. Productivity and wages is a topic that should beaddressed in this analysis, as reported in the Annual Wage report. 86In 2011,productivity increased contrary to the average wages in developed countries with thegap between those being enlarged and requiring more productivity at cheaper laborcosts. This factor has impact on the demand and all voices related to the recruitingprocess. Monster as an employment solution company suffers demands from theirclient and as an employer demands for raising salary wages. The company marketdevelopment strategy in the new emerging market as in China, Turkey and LatinAmerica has shown a huge impact in wages, since the wage average has beenincreasing in Eastern Europe, Latin America and Asia more than 5% per year. Inaddition, these economic factors were not taken in consideration during the decisionmaking process to penetrate these markets in 2010, as reported in the Annual Report201187. Table II.4 Data Captured from the Annual Report 201388(USD in thousands)In conclusion, the analysis shows that fixed costs are 86.6% of total revenue and thecompany needs to sell more products and services instead of reaching the breakevenpoint with a higher fixed cost. For example, companies such as Amazon, Apple andLinkedIn have lower fixed costs that evolve into a lower break-even point and in adown economy yields great advantages.89.85International Labor Organization. "Global Wage Report 2012/13." n.d. Ilo.org.<http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_194844.pdf>. 17 April 2013.86Ibid87Monster Worldwide Inc. "Investor Relations." 7 February 2013. Monster.com.http://ir.monster.com/phoenix.zhtml?c=110723&p=irol-irhome. 4 April 2013.88Edgar. MONSTER WORLDWIDE, INC.: MWW (NYSE). 2013. <http://yahoo.brand.edgar-online.com/default.aspx?companyid=3835>. 29 April 2013.89Alexander Hiam et al. Marketing for Dummies. n.d.: John Wiley & Sons., 2nd Edition, UK Editionedition (22 May 2009). Print.
283. CASH FLOWP.Andrew and L.Sirkin identify three different categories on how to be innovative forcash90. Based on the category mentioned in this paper, Monster is identified as anintegration approach to be taken. Selecting the wrong approach, the company wastesand destroys all efforts made and even becomes too expensive and slow to respond tothe market also. Monster can be identified in one of the above three categoriesmentioned by Andrew and Sirkin91as an integrator. What is an integrator supposed todo? An integrator has a strong market position and controls all chain, from productdevelopment to sales. Therefore, the company needs to be skilled and innovative in allthese fields, if not, it can fail. The integration approach is more slow to adapt to themarket and be innovative at the same time; with an integrated approach all keydepartments cooperate and develop a unique plan for the common goal. This approachrequires upfront high investment in Research & Development and in all otherdepartments as well. Based on the following analysis this paper will clarify strategicalternatives for the right approach to continue to be attractive to customers.Free Cash Flow92is the company’s ability strength to generate positive cash afterinvesting in assets. The following analysis will cover only the relevant data shown bythe calculations made and important findings to be mentioned later. Monster closedthe year 2012, with $6,245 that has decreased by 94,104 USD (in thousands) from2011. Net cash provided by operating activities on continued operations and net cashused per discontinued operations have influenced free cash flow negatively by 67,450and 28,900 USD. Summing up, the total is 96,350 USD less in 2012 from 2011. Theresult shows the company’s difficulties to generate net cash from continued operationsfinancing its assets in the short-term which might cause further amendments in thecompany’s credit line. The net cash provided by operating activities decreased by96,350 USD from 2011 to 2012 with a consequent negative impact on the company’scash and cash equivalents equaling 102,132 USD (in thousands) in reduction by theend period. If this negative trend is not managed in time, Monster will suffer a short-term cash shortage in 2012 but that in the long-term will increase the credit line. The90James P. Andrew and Harold L. Sirkin. "Innovating for Cash." Harvard Business Review September2003. Print 4945.91Ibid92Richard Brealey et al. Principles of Corporate Finance. New York: McGraw-Hill, 2010. Print.
29credit line will affect key financing and investing activities regarding future successand business continuity93.Table II.4 Data Captured from the Annual Report 201394(USD in thousands)USD (in thousands)FY 2010 FY 2011 FY 2012Increase(Decrease)Increase(Decrease)Net cash provided by operating activities 93,072 149,677 53,327 56,605 -96,350Cash and cash equivalents, beginning of period275,447 163,169 250,317 -112,278 87,148Cash and cash equivalents, end of period 163,169 250,317 148,185 87,148 -102,132Free cash flow : 0 0Net cash provided by operating activities of continuingoperations 106,939 163,608 96,158 56,669 -67,450Net cash (used by) provided by operating activities ofdiscontinued operations -13,867 -13,931 -42,831 -0,064 -28,900Less: Capital expenditures -57,126 -61,818 -59,572 -4,692 2,246Free cash flow 35,946 87,859 -6,245 51,913 -94,104The net cash used for financing activities increased significantly by 103,943 USDfrom 2012 from 2011. Payment on borrowings on term loans increased by 43,750USD from 2011to 2012. Payment on borrowing on credit facilities shows an increasedamount of 261,208 USD in 2012 and 290,209 USD from 2010 (See Appendix A.3Cash Flow). Raising payment on borrowings means that the company relies on thecredit line to satisfy cash shortage95and creditors such as banks and private funds.During the last couple of years, the commission board has approved repurchasing ofcommon stock from the market for 107,584 USD in total. Stock buybacks is amanagement approach used for several diverse reasons by companies96, but Monsterdid so for protection against any hostile takeovers by competitors. When there are lessoutstanding shares in the public market, it is more difficult to take over the companyin financial trouble. The other advantage for buybacks is that decreasing the numberof outstanding shares is more attractive. Earnings are the same but Price earnings ratio(PE), earning per share (EPS), return on asset (ROA) and Return on Equity (ROE)97increase due to less outstanding shares and cash as part of the asset that has been93Richard Brealey et al. Principles of Corporate Finance. New York: McGraw-Hill, 2010. Print.94Edgar. MONSTER WORLDWIDE, INC.: MWW (NYSE). 2013. <http://yahoo.brand.edgar-online.com/default.aspx?companyid=3835>. 29 April 2013.95Federal Reserve Bank of San Francisco. "Empirical Analysis of Corporate Credit Lines." 2007.frbsf.org. <http://www.frbsf.org/publications/economics/papers/2007/wp07-14bk.pdf>. 5 May2013.96Gustavo Grullon and David L. Ikenberry. "What do we know about stock repurchases?" Journal ofApplied Corporate Finance (2000): Pages 31–51. Print.97Richard Brealey et al. Principles of Corporate Finance. New York: McGraw-Hill, 2010. Print.
30decreased98. Stock buybacks are a powerful tool for increasing performance of thecompany in an economic downturn and look better to shareholders.Table II.4 Data Captured from the Annual Report 201399(USD in thousands)USD (in thousands)FY 2010 FY 2011 FY 2012Increase(Decrease)Increase(Decrease)Cash flows provided by (used for) financing activities:Proceeds from borrowings on credit facilities 90,000 108,722 224,718 18,722 115,996Payments on borrowings on credit facilities -15,500 -44,501 -305,709 -29,001 -261,208Proceed from the borrowings on term loan — — 100 0 100Payments on borrowings on term loan — — -43,750 0 -43,750Tax withholdings related to net share …-14,227 -17,139 -8,482 -2,912 8,657Repurchase of common stock 0 -41,973 -65,611 -41,973 -23,638Proceeds from the exercise of employee stock options300 23 23 -277 0Net cash provided by (used for) financing activities 60,573 5,132 -98,811 -55,441 -103,9434. BALANCE SHEETThe analysis of the data in the balance sheet was made using horizontal analysis. Theanalysis compares data from the fiscal year ended December 31, 2012 vs. December31, 2011 and December 31, 2011 vs. December 31, 2010 and only relevant datashown and critique with only appropriate comments (See Appendix A.1 BalanceSheet100).Cash, as already mentioned in the previous section, has been used to cover actualoperating activities and to buy back stock. The management approach has caused adecrease in cash available to finance short-term obligations. Cash decreased by102,132 USD in end year December 31, 2012 vs. 2011. The strategy decreased theshort-term debt in 2012 to 170,572 and lengthened the payment period for long-termdebt so the leverage could payoff short-term debt with actual cash. Long-term debt,consequently, increased from 2011 to 2012 by 145,975. Goodwill 101becameimpaired so Monster needed to record a significant change during the period 2012.Goodwill decreased by 244,890 USD which determined a charge to the earnings for258,720 USD (See further details in the Q42012 Financial Supplement, Monster). Asof December 31, 2012, goodwill and amortizable intangible assets were $919,85498Ibid99Edgar. MONSTER WORLDWIDE, INC.: MWW (NYSE). 2013. <http://yahoo.brand.edgar-online.com/default.aspx?companyid=3835>. 29 April 2013.100Nasdaq Inc. MWW Company Financials. 15 March 2013. <http://goo.gl/k7bJe>. 25 April 2013.101Richard Brealey et al. Principles of Corporate Finance. New York: McGraw-Hill, 2010. Print.
31million, which represented 55% of the total consolidated assets (60% in 2010). Thedecrease of the value was equal to 5% from 2010102.Table II.4 Data Captured from the Annual Report 2013103(USD in thousands)5. RATIOS ANALYSISThe ratio analysis (see Appendix A.4 Ratios) takes in consideration Liquidity,Profitability, Leverage, Activity, Growth and selected financial ratios from Monster.The Liquidity ratios confirm that the company is having difficulty meeting short-termobligation since the ratio is 0.99 and Monster might need further credit. The operatingmargin shows 4% as the remaining tax to pay as well as other indirect (interest,property, etc.) and other variable costs.104The operating margin has been reflected byreconstruction costs occurred by shutting down businesses in China, Turkey and LatinAmerica. As mentioned in the earlier section, Monster recently has increased thelong-term debt that shows the proportion of equity used for financing total debt per91.45% - Long-Term debt-To Equity Ratio- that means the debt is reaching of thecompany’s equity. The Ratio shows that the company now is in good financial statusand it can be considered for investing. The company is investing and it is not at anyserious risk until ratio doubles up to 200%. The Activity ratios analysis shows FixedAsset Turnover as 60% in 2012 and shows the ability of Monster to generate salesfrom fixed assets. In 2011, the Fixed Asset turnover ratio was higher than 65% when102H. Kaner. A New Theory Of Goodwill . London: Ford. Press, 2007. Print.103Edgar. MONSTER WORLDWIDE, INC.: MWW (NYSE). 2013. <http://yahoo.brand.edgar-online.com/default.aspx?companyid=3835>. 29 April 2013.104Richard Brealey et al. Principles of Corporate Finance. New York: McGraw-Hill, 2010. Print.
32the company had more ability to use fixed-assets to generate revenue. AccountReceivable Turnover Ratios is measuring how efficiently the company uses itsassets105and during the last three years, the company from 2.40 in 2010 dipped to1.95 in 2012. The ratios show that the company increased the time for collection andit is necessary to review its credit policies in order to improve the ratios. Thedifficulty of the company to collect its credit has been increased by 20% and it isdriven as well by liquidity risks106. GoldmanSachs, in its recent guide for investors,says that the global credit crisis could worsen the short-term company liquidity and itseffect to reduce the liquidity capacity to meet short-term debt. The Daily SalesOutstanding ratio (DSO) confirms that the company has had difficulty collecting fromits customer since in 2011 when the ratios were 0.95 and reached as 1.03 in 2012. Theratios clearly show that the collection period has been increasing. The ratios show thatthe company might decrease its current liquidity capacity to meet its current debts andso increase long-term debt. A slight change in the 107credit policy might encourage animprovement in the collection and increase the DSO ratio.A. CHANGE OVER TIMEThe ratios below identify a growth sale and earnings per share (EPS) that decreased in2012 compared to five years ago. The company has suffered aggressivecompetition108and wrong strategic decision-making109. EPS has dramatically droppedfrom 48.38% made three years earlier to -4,27% and the result has influencedinvestors recently.105Ibid106The Goldman, Sachs & Co. "An Explanation of Short-Term Credit and Liquidity Risk Measures."2010. goldmansachs.com.<http://www.goldmansachs.com/gsam/docs/funds/investor_education/investor_education/ei-224_short-term_credit_and_liquidity.pdf>. 5 May 2013.107CFO Selections, LLC. Establishing an Appropriate Credit Policy. n.d December 2004.<http://www.cfoselections.com/cfos/desk/detail/19/establishing-an-appropriate-credit-policy>.1 May 2013.108Bersin, Josh. LinkedIn is Disrupting the Corporate Recruiting Market. 2 December 2012.http://www.forbes.com/sites/joshbersin/2012/02/12/linkedin-is-disrupting-the-corporate-recruiting-market/. 15 April 2013.109Lisa Rapaport and Danielle Kucera. Monster Falls as Sale Process Continues Without Buyer. 7February 2013. <http://goo.gl/BAOjf>. 15 April 2013.
33Table II.5 Data Captured from Reuters1102012 3 Years 5 YearsSales %-10.39 -0.55 -7.63EPS % -4.27 48.38 -14.97B. INDUSTRY AND COMPETITORS COMPAREDBased on the table below, Monster generally has lower ratios per growth rates,financial strength and profitability compared to the related Industry and Sector. Theresults show a different perspective if it is taken from the ratios of previous yearswhen Monster had better performance compared to the industry and sector related.Staff efficiency is lower compared to the industry peers where each employeegenerates 178 USD compared to the industry where each employee generates 27,764USD (in thousands). In contraposition, management effectiveness has evolved intopositive ratios as related to industry, yet has been less efficient compared to otherindustrial ratios. Therefore, management has space for improvement and employeeefficiency has to be reviewed and make dramatic change111.Table II.6 Data Captured from Reuters112VALUATIONRATIOS Company Industry SectorP/E Ratio (TTM) 8,82 20,68 24,89P/E High – Last 5Yrs.111,40 21,66 59,47P/E Low – Last 5Yrs.11,01 614,00 12,16Beta 2,18 0,80 0,99GROWTHRATESSales (MRQ) vsQtr. 1 Yr. Ago-10.03 7,49 3,77FINANCIALSTRENGTHCurrent Ratio(MRQ)0,99 2,89 1,74LT Debt to Equity(MRQ)0,71 4,08 61,36PROFITABILITYRATIOSGross Margin(TTM)2,26 30.86 0,89Gross Margin – 5Yr. Avg.53.67 1,03 26.61110Thomson Reuters. Monster Worldwide Inc (MWW.N). 2013.<http://www.reuters.com/finance/stocks/financialHighlights?symbol=MWW.N>. 15 April2013.111Richard Brealey et al. Principles of Corporate Finance. New York: McGraw-Hill, 2010. Print.112Thomson Reuters. Monster Worldwide Inc (MWW.N). 2013.<http://www.reuters.com/finance/stocks/financialHighlights?symbol=MWW.N>. 15 April 2013.
34EFFICIENCYRevenue/Employee(TTM)178,08 27,764,504 30,685,429NetIncome/Employee(TTM)11,85 952,07 1,794,929MANAGEMENTEFFECTIVENESSReturn on Assets(TTM)0,14 0,35 0,13Return on Assets –5 Yr. Avg.0,13 0,19 0,18Return onInvestment (TTM)0,24 0,52 0,19Return onInvestment – 5 Yr.Avg.0,18 0,31 0,27Return on Equity(TTM)0,26 0,56 0,33Return on Equity –5 Yr. Avg.0,20 0,36 0,386. STOCK PRICEAs of December 31, 2012 the Monster stock share price closed at 5,62 USD and as ofApril 5, 2013 it closed at 4,51 USD per share with a 20% drop in price. Monster andLinkedin had the same stock market price in June 20, 2011. Initially, Monsterincreased the stock market price but now the tendency has been changing to whereLinkedin drives the next positive curve of the market leadership position. Linkedinhas increased its stock market price by 75% but Monster has dropped by 50%.Chart II.7 Data Captured from Reuters113- Monster and Linkedin Stock Market PriceShare– from July 2011to April 2013.113Thomson Reuters. Monster Worldwide Inc (MWW.N). 2013.<http://www.reuters.com/finance/stocks/financialHighlights?symbol=MWW.N>. 15 April 2013.
357. CONCLUSIONThe summary of the financial analysis brings to the conclusion that Monster has a bigchallenge to improve its ratios and to generate revenue related to employee efficiency.The leadership hold for the past years by Monster has been taken over by Linkedinand its competitors. However, the economic crisis 2007/2008 negatively affected itsfinancial ratios. Linkedin closed the end period of 2012 with the following mainratios: Growth rates 81%, Current Ratio 2.45% and Operating Margin 5.85%.Afterwards, this paper will analyze the better strategy to compete with the competitorsto continue to be profitable and be the leader for next upcoming years114. The strategicalternative will consider the financial analysis as a main key driver for making thebest strategic management decision.III. EXERNAL ASSESSMENTFreud115says, “No forecast is perfect, and some forecasts are even widely inaccurate”.This paper will confirm that statement and try to forecast external factors using such atool as PLEESTIC, EFE Matrix, Porter’s Five Forces, and Competitive Profile Matrix.This paper will not consider the quantitative forecasts because it is expected that thekey variables will remain the same. In this research, it shows that the variables havebeen changing and the following section will examine the relative areas forecasted.PLEESTIC ANALYSISPOLITICALThe current political uncertainty116and economic growth are seriously interconnected.Political instability damages the market and the inclination to invest even a dollar.Recently, Greece117and Cyprus118have been living in a period of instability ofgovernment collapse from 2012 until now. Both countries need to cover huge debtsand they have decided to raise taxes to recover their deficit. Political uncertainty leads114Thomson Reuters. LinkedIn Corp (LNKD.N). 2013.<http://www.reuters.com/finance/stocks/financialHighlights?symbol=LNKD.N>. 18 05 2013.115David, Freud R. Strategic management: concepts and cases. New Jersey: Pearson Education Inc.,Ed. 13th. Book.116Swagel, Phillip et al. Political Instability and Economic Growth. Working Paper No. 4173 .Cambridge, MA: National Bureau of Economic Research, 1992. <http://nrs.harvard.edu/urn-3:HUL.InstRepos:4553024>. 10 April 2013.117BBC. Eurozone crisis explained. 27 November 2012. <http://www.bbc.co.uk/news/business-13798000>. 18 April 2013.118Elena Becatoros and Melaos Hadjicostis. Cyprus Seeks Alternative Solution to Debt Crisis. 20March 2013. <http://goo.gl/b5BV5>. 14 April 2013.
36international companies to review their strategies and determine if it is necessary toshut down operations and leave the country. This uncertainty is unpredictable in theshort term but the evaluation of political situations might be able to be made inadvance and allocate resources for growth opportunity. The authors say that there is acorrelation between collapsed government and economic growth and if Monster wantsto grow in any country, it needs to evaluate and make strategic plans for specificcountries. The political situation, after the economic crisis in 2008/2009, has dividedthe actors into different areas: the United States, the United Kingdom, Europe, Russia,China, India, Brazil and the rest of the world. Monster has good standing in the U.Ksince it offers employment solution services to the government with increased revenuein the double digits119. The relationship with the British government is crucial as wellas with any other party that it will be in charge of in the future. Monster also hasspecific products and a web site for a veteran’s project where they support private andpublic sector recruitment for military veterans solely dedicated for the Americanmarket. Monster generates roughly 52% of its revenue in the U.S market and makesan effort to maintain a good relationship with all parties since it is an American entity.LEGALThe legal external factor can have an impact on the business of the company120considering international threats, local and regulatory agencies. Online business hidesserious threats for privacy laws, labor market laws, patents and tax laws, federal andstate laws. There are international organizations such as the European Union, theUnited States and other countries that have established numerous legalenforcements121. The remaining legal enforcement is taken by each sector andjurisdiction related to a specific country. Even in the globalization era, externalinternational forces regarding specific laws give rights and protections to the companyso as not to constitute a serious business risk. The most important of Monster’s legalforces are intellectual property, tax law, labor market law, antitrust regulation, andpolicy privacy markers and stock market.119Monster Worldwide Inc. Monster Annual Report 2011. 10-K. New York, New York: Monster, 2011120David, Freud R. Strategic management: concepts and cases. New Jersey: Pearson Education Inc.,Ed. 13th. Book.121Brian A. Reaves. Census of State and Local Law Enforcement Agencies, 2008. Bulletin. n.d: U.S.The Bureau Of Justice Statistics, 2011. <http://bjs.gov/content/pub/pdf/csllea08.pdf>.
37ENVIRONMENTContingency theory is management’s way of reacting to external environmentsituations. Fiedler, in the contingency model of leadership, 122emphasizes theimportance of altering management’s capability under stressful situations in order tocapitalize on the company’s leadership strengths. Monster management’s capability isto focus on facing new, external environment challenges and as result monitor groupeffectiveness. The company now faces the most crucial moment of its inception sincethe external environment has more obstacles and threats compared to the successfultime period of its growth. Management has to be focused on the external issues but atthe same time leading the organization to effectiveness. Monster is best suited tocertain and stable tasks environment.ECONOMICPolitics and economics 123are interconnected as mentioned in the section – Politic –as was seen when the economic crisis of 2007/2008 was renamed as “confidencecrisis”124. The European Central Banks’s research says, “…that businesses andconsumers have been affected by optimism and pessimistic waves. The sentiment isthe forecast for future economic developments”. These optimistic and pessimisticwaves determined how business cycles could be affected by any actual negativetrend. The conclusion of this paper is that the pessimism with uncertainty make thecompany retreat from investing any funds and allocating costs to disinvest. Anotherpoint of view to be considered is from the World Economic Outlook in 10/2012 whichdeclared, “For the first time developing countries and emerging countries haveperformed better that developed countries as measured by time spent in expansion.These economies are doing better for the heavily indebted poor countries initiatives125(Debt forgiveness Initiatives) and better policy makers”. As this paper mentioned,developed countries could experience an economic downturn because of banking122Fiedler, F.E. (1967) A Theory of Leadership Effectiveness, New York: McGraw-Hill123Swagel, Phillip et al. Political Instability and Economic Growth. Working Paper No. 4173 .Cambridge, MA: National Bureau of Economic Research, 1992. <http://nrs.harvard.edu/urn-3:HUL.InstRepos:4553024>. 10 April 2013.124European Central Bank. "Confidnce indicators and Economic Development." Monthly Bulletin n.d.January 2013: Pag.1. <http://goo.gl/gZWfv>.125Caritas International and CIDSE. The Highly Indebted Poor Countries Debt Forgiveness Initiative.n.d. <http://goo.gl/YOzvQ>. 27 April 2013.
38tensions and continuing fiscal sovereignty in Europe and the fiscal cliff in the UnitedStates. A fiscal cliff puts the brakes on growth126.The International Labor Organization has monitored wages for 2012/2013 andreported, “Crisis continues to dampen wages, and consequently the gap betweenproductivity and compensation has been increasing. From 2010 to 2011 wage salarygrowth 127was almost double in Asia and Eastern Europe, while in developedcountries it was approximately 5%. The wages schemes clarify the trend to increasepersonnel performance and reduce wages. Monster has an actual presence andrevenue stream generated from developed countries, which are needed to increase andmaximize performance and revenue per employee (See Financial Analysis).SOCIAL-CULTURALMonster is socially embedded in the society, which is situated in a cultural context128.To analyze the social-cultural framework it is essential to anticipate and avoid anycultural misunderstandings in different cultures. Monster is present in approximately55 countries and each one represents different national cultures, values and norms.Hofstede’s model of National Culture129lists which dimension the national culturescan be classified according to Individualism vs. Collectivism, Power Distance,Achievement vs. Nurturing orientation, Long-term vs. Short-term Orientation, andUncertainty Avoidance. The model says that one cultural approach followed in onecountry does not necessary work in another one. Where Monster applies anindividualistic approach, as for example in the United States, it will not work in Asiawhere collectivism is seen a personal contributions to the goals of the group.Customer needs are the drivers for the company’s decision130and leads motivation forentering emerging as well as developed markets. Marcotte et al. say that customers arenot always the same. Where a strategy is successful in one country, it can be differentin another one, with most differences being between developed and developing126The Wall Street Journal. WSJ Editors Picks -- Fiscal Cliff Affects Returns. 16 April 2013.<http://goo.gl/u5wFy>. 28 April 2013.127International Labor Organization. "Global Wage Report 2012/13." n.d. Ilo.org.<http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_194844.pdf>. 17 April 2013.128Hofstede G (2001) Culture’s Consequences: Comparing Values, Behaviors, Institutions andOrganizations across Nations, 2nd ed. Thousand Oaks, CA: SAGE.129Hofstede G (1980) Culture’s Consequences: International Differences in Work-related Values.Beverly Hills, CA: SAGE.130Let Emerging Market Customers Be Your Teachers by Guillermo D’Andrea, David Marcotte, andGwen Dixon Morrison
39countries. So taking into consideration the customer as social-cultural path, Monsterhas to adapt them to their strategy. Since Monster has not succeeded internationally innew countries such as China, Turkey and Latin America, the company has had toidentify specific strategies to understand customer needs.TECHNOLOGICALThe internet has changed peoples’ life styles131. The annual social media report byNielsen and NM Incite contains relevant data to be considered. The total times spentin the U.S using social media is up 20%132, mobile web use is reaching 82% andmobile app usage is up 85%. Social networks dominate internet usage and Facebookis number one in social media, followed by Twitter, Pinterest, Google+, Myspace andLinkedin. Twenty six percent of people are more likely to pay attention to promotionsadvertised by one of their connections or sent to them by their friends. The waycompanies innovate and provide customer service has been changed in the lastdecade133. Nowadays buyers communicate via social media and submitting ticketsonline. The Internet is altering economies of scale, breaking down barriers for newentry and defining a new supply chain. Concurrently, new opportunities and threatsare presented in the markets for companies such as Monster that build their customervalue based on brand awareness and market job experience delivered to customersand consumers by sales and research expertise. Technology is not anymore an onlyasset of the company but rather embraces the company business model and maximizecustomer experience exceeding expectations by integrating business and social mediainto one. The speed of altering life cycles of products and services has beencontinuously changing and pushing other traditional businesses to adapt to this pace.Monster’s executive officers have to quickly respond to these needs and changecustomer behavior in how customers use technology.INTERNATIONALSubhash Jain says, “Global economy drives standardization of marketing strategy inthe way of using a common product, service, price, distribution and promotion131David, Freud R. Strategic management: concepts and cases. New Jersey: Pearson Education Inc.,Ed. 13th. Book.132The Nielsen Company. State of The Media: The Social Media Report 2012. 12 April 2012.<http://goo.gl/lxFYk>. 27 April 2013.133Kalypso L.P. "Social Media and Product Innovation." n.d 2013. kalypso.com.<http://goo.gl/FXjE2>. 26 April 2013.
40program on a worldwide basis”134. Monster has failed to standardize its products,services and prices internationally135. Across the boards Monster sales departments inEurope do not offer the same product solution as in the United States. For example,Monster Power Resume Search® product is offered only for customers in NorthAmerica, France and the United Kingdom. “Thinking globally, acting locally” is theoperative phrase to indicate that there is only one global strategy applied to thecompany. The main decisions are made per each single state or country. The onlyunique marketing strategy that can help Monster regain customer expectation will beidentified in the strategic alternatives section136.COMPETITIONThe competitive analysis – Porter’s Five Forces Model – can be used to developalternative strategies considered competitive in the related industry: Internet137.Rivalry among Competing Firms: Competitive advantage is considered one the mostimportant for Monster over its rivals. Brand awareness and continued marketexperience is not enough anymore to maintain the market share because rivalry hasincreased since it is easy to enter the market and for consumers to switch products.Monster has higher costs and more product offered beyond the competitors. Theaspects of the products have been mentioned in the Technology section. Freudanalyzes that the relevant aspect of numerous acquisitions in the internet markethappened because of new technology successful start-ups. Therefore, Monster’s actualstrategy weaknesses are a reaction to the rivals intensifying marketing efforts andproduction to maximize on the opportunity. Potential Entry of New Competitors: thethreat of new competitors entering in the online business domain is higher sincetechnology, internet free barriers and the global economy intensifying competition.Moreover, competitors are allowed to enter the markets and compete vs. Monstersince they can offer at a lower price138, differentiate distribution channels and beinnovative on a large scale. Monster can counterattack by adding features, lowering134Jain, Subhash C. "Standardization of International Marketing Strategy: Some Research Hypotheses."Journal of Marketing (1989): pp. 70-79. Print.135Benedova, Gabriela from Monster Sales Department. "Re: Job advertisitn in CZ, IT, USA, UK,Romania, India". Praha, 22 February 2013. Email.136Michael E. Porter. "The Five Competitive Forces That Shape Strategy." Harvard Business Reviewn.d January 2008. Reprint R0801E.137David, Freud R. Strategic management: concepts and cases. New Jersey: Pearson Education Inc.,Ed. 13th. Book.138Ibid
41prices, increasing premium accounts, adding value to the chain and others strategiesthat will be considered in the related section (See Strategic Alternatives). PotentialDevelopment of Substitute Products: Internet propagation on a large scale and itsintegration in online business has decreased customer retention and introducedsubstitute products to the traditional Monster ones. Competition rises and lowersprices making it difficult for Monster to react promptly and change its business model(See Appendix B.4 Five Forces). Bargaining Power of Suppliers and Consumers: Theinternet has changed the way in which companies deliver products and services to theconsumers and how suppliers reach their target. Monster has been intervening in thedistribution channel allowing suppliers to reach their end user. Current trends promotereduction in leveraging Monster to reach end users. Recruiters and employers cancreate their brand image through Linkedin139directly reaching job seekers without anyintervention by Monster as an intermediary.CONCLUSIONThe industry analysis summarizes and evaluates PLEESTIC and competitiveinformation. The average total weighted score of External Factor Evaluation Matrix(See Table II EFE MATRIX) is 2.0. Freud says,140“A total weighted score of 2.0indicates that Monster is not responding in an outstanding way to existingopportunities in its industry. And the company is not fully capitalizing onopportunities or avoiding external threats.” Note that the most important factors tobeing successful in this business are: Social Media in use and Competition by 0,30weight each one.” Both factors are driven by new social trends and new competitors’new substitute products. This significant score shows where Monster needs tocapitalize opportunities and avoid external threats. The Competitive Profile Matrixscore, in which Monster is confirmed as a field leader per EFE matrix, indicates thelowest score of 2.65 compared to other competitors. Monster is the strongest andBrand awareness and image (See Appendix B.3 Business Model Canvas). Numbersare not significant in the analysis but are meaningful to understand and evaluate therelative strengths of the firm’s strategic alternatives141.139Linkedin Inc. LinkedIn Company Page. n.d. <http://marketing.linkedin.com/company-pages/>. 17April 2013.140David, Freud R. Strategic management: concepts and cases. New Jersey: Pearson Education Inc.,Ed. 13th. Book.141Ibid
42Table III: EFE MATRIXIV. STRATEGIC ALTERNATIVESFocusing on long-term strategies can allow Monster to pursue its strategies142. Theperiod of accomplishing long-term strategies was from two to five years. Nowadays,Moore says,” To succeed in the long-term, focus on the middle term”143. The phrasehas value since the internet sector has a faster product cycle than other industries.Priority should be given in choosing strategic alternatives. This paper will presentonly two simultaneous ones because more strategies are too risky to be taken144. Topexecutives share these strategies to the whole organization from top down and receivecontinuous feedback as well as exchange information (See Appendix B.5 BalancedScore Card). The actual strategy of the company focuses on marketing and advertisingwith a greater effort focused on the main profitable segment revenue (Career) andimproving efficiency of internal operations. The present analysis considers the currentstrategy as a weakness for the future growth of Monster for remaining as theuncontested market leader.142David, Freud R. Strategic management: concepts and cases. New Jersey: Pearson Education Inc.,Ed. 13th. Book.143Moore, Geoffrey A. "To Succeed in the Long Term, Focus on the Middle Term." Harvard BusinessReview n.d 2007: 9. Reprint R0707F.144David, Freud R. Strategic management: concepts and cases. New Jersey: Pearson Education Inc.,Ed. 13th. Book.
43Selecting StrategiesThe author has selected a series of alternative strategies and developed them in acreative way to encourage the thought process.145The alternative strategies proposedwill be listed and analyzed for their attractiveness. The strategy formulation isdeveloped in three stages: Input Stage, Matching Stage and Decision Stage. The Inputstage is covered in the previous chapters, Internal and External Assessment. The Inputstage gives the following results:- External Factor Evaluation (EFE) Matrix weighted score is 2;- Internal Factor Evaluation (IFE) Matrix weighted score is 2.65;- Competitive Profile Matrix (CPM) score is 2.65.The analysis judges the importance of each external and internal factor that will allowit to generate and evaluate selected strategies146. The following stage is defined asMatching Stage. The Matching Stage consists of developing specific frameworks andthe present analysis considers these Strengths-Weaknesses-Opportunities-Threats(SWOT) Matrix and Strategic Position and Action Evaluation (SPACE) Matrix. Thesetools are developed based on the information derived from the input stage to matchexternal OT with internal SW.SWOT MATRIXThe Matrix is crucial for matching four types of strategies: SO (strengths-weaknesses)Strategies, WO (weaknesses-opportunities) Strategies, ST (strengths-threats)Strategies and WT (weaknesses-threats)147. SO Strategies use Monster’s strengths forhelping executive officers take advantage of opportunities148. The relevant SOStrategies identified are (see Table III SWOT Matrix): (S1,O1) The analysis suggests major investment in marketing of 20%. Freudsupports this theory saying that Monster should use this strategy alone orcombined with others instead of increasing market share for present productsor services149. Porter says that, “The intensive strategy is not at all eliminating145Ibid146Ibid147Ibid148Ibid149Ibid
44the threat of substitute products and it does not distance the company’s, in thisanalysis Monster, products or services from other one”150; (S1,O2) The combination of the Brand awareness of Monster with over 20years of experience and strong brand reputation in the industry can becapitalized on in order to develop products and technology. The pace oftechnology speeds up product integration with social media platforms foremployment solutions. Technology integration in the social media influencesemployers to look at the job seekers’ reputations online in combination withscanning potential employees’ experience and knowledge. Cross-Tab’sresearch says, “…That 85% of the recruiters say a positive online reputationinfluences their hiring decisions151.” Porter’s five competitive Forcesencourage companies to reshape their strategies in Monster’s favor152. Monstercan standardize products and services so it is possible to switch to othersuppliers. The company provides a wider portfolio of products and services sothe customer cannot switch easily to competitors. The company can increaseor invest more in product development, Research & Development (R&D), inorder to differentiate from their competitors, along with offering better productand service value to customers and awarding them with premium services.This aforementioned strategy is one of the best in differentiating the companyamongst its competitors. This will be considered and developed in theDecision Stage; (W2,O1) An identified internal weakness is the application, known asBeKnown™, which was developed for Facebook, has reached approximately158k likes153. This application and the social media strategy did not leadMonster to success until 2013. The greatest success of one of Monstercompetitors, Linkedin, saw its revenue in 2012 of $304 (in thousands), rise up150Michael E. Porter. "The Five Competitive Forces That Shape Strategy." Harvard Business Reviewn.d January 2008. Reprint R0801E.151Neville Hobson. Recruiters really care about your online reputation even if you don’t. 1 February2010. <http://goo.gl/gyR4c>. 27 April 2013.152Michael E. Porter. "The Five Competitive Forces That Shape Strategy." Harvard Business Reviewn.d January 2008. Reprint R0801E.153Facebook Inc. BeKnown From Monster. n.d. <https://apps.facebook.com/beknown/>. 25 April2013.