Organization Behavior
A Report on Advertising Industry
This paper presents a detailed report on the environmental factors, competitive environment, and current trends in the advertising sector. The purpose of this report is to highlight and discuss the major challenges which companies in the advertising sector are facing in the present business landscape. It starts with a brief overview of the advertising industry; its introduction, functions, and purposes, and proceeds by discussing the major environmental forces that impact the companies in this industry. These are political, economic, social and technological forces. The later section explains the competitive environment in detail. That is, how advertising companies are managing to compete in the presence of a stiff competition from existing competitors, new entrants, and substitute services. The report also discusses the introduction and role of the five key players of the advertising industry. Moreover, the trends, opportunities for graduates, Gap analysis and action plan have also been discussed in this report for the advertising sector. All the discussion has been made in the light of some recently published academic articles, books, and magazines. All the references used in this report are authentic and give useful information on this sector.
ADVERTISING INDUSTRY -- OVERVIEW:
Advertising is a way to communicate important messages and product or service offerings to the potential audience. The purpose of advertising is to persuade the parties of interest towards some important initiative or offering by an individual, Business Corporation, or a Government institution (Clark, Doraszelski & Draganska 2009). Advertising is generally done through sponsors or advertising agencies to a specific target audience. Hence, there exists an advertising industry which facilitates every type of clients with a variety of advertising services. It is done on various advertising and promotional mediums including electronic media, print media, social media, public relation events, direct mails, and text messages (Website Magazine 2012). In the past, advertising agencies used to offer their services against a pre-decided commission from their clients. With the passage of time, they have started offering full range of advertising and allied services. For example; they provide creative ideas for slogans and logos, ads designing, creative writing, defining target audience, and the like. The advertising industry has taken a big advantage from the Internet and Globalization (Website Magazine 2012). It has emerged as one of the most successful industries of the present times. Therefore, it makes great contributions to the economy by educating people, promoting businesses, and creating jobs for the unemployed (Doole & Lowe 2008).
P.E.S.T ANALYSIS FOR ADVERTISING INDUSTRY
The PEST Analysis gives important information on what is happening in the Political, Economic, Social, and Technological Environment of a business. Advertising companies operates in a highly uncertain business environment which turns either in favor or against their growth and profitability (O'Guinn, Allen, & Semenik 2012). Therefore, it is vital for these companies to analyze all the environmental factors before taking strategic their decisions or implementing business policies. The PEST Analysis for advertising industry is as follows:
1. The Political and Legal Environment:
The Political and Legal Environment consists of the policies, rules, and regulations that are implemented by the Government of a country on the business corporations and govern the way they operate in their industries. Advertising companies operate under the supervision and guidelines of the Ministry of Information and Broadcasting. It is obligatory for these companies to strictly follow these guidelines and avoid any ads or messages that may hamper the integrity of the nation in which they operate (Doole & Lowe 2008).
As the advertising companies operate in the services sector, they are subject to business taxation under the same category. The taxation patterns and policies vary according to the mediums of promotion used by these companies. For instance, the tax on electronic media is generally higher than on print media. Any unfavorable change in the Government's fiscal policy, taxation policy, or regulations for business organizations also has a negative impact on the advertising sector.
2. The Economic Environment:
Economic environment involves the earning and spending patterns of individuals and businesses in response to different economic factors. These parties take a direct impact from the economic conditions of their country. The most important economic factors are inflation, unemployment, industrial growth, exchange rates, GDP, Health and educational infrastructure, attractiveness for Foreign Direct Investments, etc. The Advertising sector takes impacts from all these factors in one way or another. An increase in the inflation rate makes their costs of doing business higher while high industrial growth, GDP,...
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