Management Consulting in the UK - Research Paper Example

 Management Consulting in the UK Executive summary This analysis was conducted in the field of management consulting in the UK. Several firms are included in the research and divided into several categories. Interviewed firms include; Ernst & Young, Accenture, KPMG, PricewaterhouseCoopers and Deloitte Consulting. The commencements of the industry can be traced back to the beginning of the 20th century, to the ideas of specific management and to guiding change in the repercussion of the Wall Street crash. In the UK, this consulting industry began to grow speedily in the mid 90’s (Rodenhauser 34). This growth was powered by the onset of the US consulting firms, management and the waves of the new technology systems and techniques, and the increasing demand from clients for highly specialized skills (Dicarlo 23). Today, the industry is more worth than 9 billion pounds and hires more than 80,000 consultants. The industry extents a wide range of firms, most of which undertake pure management consulting work, of which are part of larger firms that also undertake IT and change programmes and from training individuals and team to providing expert advice in specialized fields (Bushko 45). Essential to the success of the whole consulting industry is their capabilities to deliver high quality services that enable create sustainable value to organizations. To this end, the MCA has a Code of Practice to which all MCA members pledge. The MCA also encourages the positive contribution made by the industry to the economy and the wider society through the annual MCA Awards (Buono 45). As its clients look for integrated solutions to their IT requirements and management, many consultancy firms are entering into treaties with software suppliers, telecoms or communications firms in order for them to provide a broader range of quality services and outspread their global reach. At the same time, the consultant/client relationship is changing. Boundaries are distorting. Consultants can become part of the client organization for some time, and may as well sometimes share the profits as well as the risks of a scheme or project (Bushko 34). Consultancy firms that have in history competed are now more or less working together on client projects and there will be continuing union within and outside the industry as firms co-operate and join in order to offer better services to their clients (Buono 59). Introduction Consulting is a high-profile, high-paying field that gives you the chance to take on a great degree of obligation right from university and hastily come to obtain a boundless deal about the world of business. It's also a career that might lead you to the very far ends of the region, and have you stay there for days or weeks while you sort out hard queries and demands for a client that is compensating your firm millions of dollars. Principally, we can say that consultants are engaged advisors to the hiring corporations (Buono 100). These so-called consultants challenge a wide selection of business complications and provide the solutions to these problems for their clients. Dependent on the size and the strategy chosen by the consulting firm, the problems can be frank and straightforward as precisely challenging, as scheming and coding a large industrial control system, as exploring a new market, as sensitive or delicate as offering outplacement services to the Human Resource section, or even as refined as wholly rethinking the customer's strategy and organization (Buono 88). Management consultants have to be skilled at piloting research as well as analyzing it. Research means gathering raw data from different variety of sources which includes the client's computers, government agencies, and associations of trade in the client-ran business, and, perhaps most importantly, market studies and survey that you develop and perform yourself (Buono 54). This also means interrogating people to collect anecdotal data of facts and expert opinion. The candidates for the interview can be any person, from the industry specialists to the client's top administrators to the client's lesser-level employees. All these data are then to be analyzed, with use of tools from databases into your brain (Buono 93). The key idea at this point is to detect production bottlenecks, behavior patterns, market movements as well as other conditions and trends that affect a client's business. The industry Generally, various different methods to consulting could be assumed of as lying someplace along a scale, with an 'expert' or inflexible approach at one end, with a facilitative tactic at the other. In the first end- expert approach, the expert (consultant) takes the role of professional, and offers expert advice or help to the client, with, matched to the facilitative methodology, less input from, and less collaboration with the client. With a facilitative line, the consultant concentrates less on detailed or technical expert knowledge, but more on the consultation process itself (Buono 37). Due to this focus on process, the facilitative methodology is also often stated to as process consulting, with the likes of Edgar Schein being well-thought-out as the best-known consultant. The consulting firms are very closer headed for the expert method of this continuum. Most consulting firms are prearranged in a structured matrix, in that one 'axis' defines a business function or the type of consulting: e.g., strategy, technology, operations, executive leadership, sales, process improvement, etc. Then we have the second axis which is an industry attention or focus, for example, retail, oil and gas, automotive. Organized, these form a matrix, in which consultants occupy either one or more cubes in the matrix (Buono 54). For instance, one consultant can be attentive only in tasks for the retail industry, while another may put effort on process expansion in the downstream gas and oil industry. Your ultimate job of consulting is to advance the client's business by carrying out the changes or effects in response to the conducted analysis. That's mostly the hard part, since it contains and includes providing convincing report the client to admit your recommendations and references, often at the risk of disagreement from client officials who feel aggrieved outsiders outdoing them, or confrontation from the company’s other work personnel who believe they have something they will lose from the change (Buono 86). To be successful in this you'll need outstanding and brilliant people skills as well as the skill to create an influential PowerPoint presentation. Finally, you'll need the skill to handle disappointments in case your solution nose-dives or the client chooses not to try the implementation of your idea or report. One best thing in this advice business is that most or all companies tend to want extra or more. As indication, this consulting industry has shown a continuous growth spree for well almost more than a period (Buono 88). Additionally, one other crucial thing about this management consulting business is that, the product actually is the people; hence the firms compete basing on who are the hardest and the smartest. As a result, every firm wants to appoint the brightest and best. Tools for analysis The following illustration shows the five consulting competitive forces named above Potential Entrants Consolidated medium size consulting firms that have joined together in order to provide a multi-disciplined approach or global presence. Industry rivalry, or opposition among existing current firms, is just one among Porter’s five forces that is used to govern the strength of competition or its intensity in an industry. Some other features in this competitive analysis include: bargaining power of the client, barriers to entry, the bargaining effort by suppliers (which in this case is the consulting firm or company), and threat of getting substituted by your client for other consulting agencies (Buono 45). Management consultant Industry rivalry commonly takes the custom of jockeying for better position using various policies and tactics such as price competition, service introductions or advertising battles (Buono 66). These industry rivalries tend to rise in intensity when organizations or companies one or the other feel the competitive pressure or get an opportunity to advance their position. Among most industries, a firm’s competitive moves will tend to have a clear impact on the outcome of the competition- who will at that time react or retaliate in order to counter these efforts (Buono 63). Consultation companies and organizations are mutually dependent and therefore the pattern of the reaction may affect all companies in the field. Competitions that have effect on the price for services rendered are very much unstable and they influence the profitability of the industry negatively. Some other tactics of competition such as the advertising battles may influence the industry positively as they tend to increase the service demand or enhancing service differentiation. Several structural factors will often affect industry rivalry; Plentiful or alike balanced competitors- Once there are numerous competitors, certain firms rely on assumptions that they can make swift competitive moves short of being noticed. When firms are somewhat balanced in power of operations, then they are more likely to participate in competitive conflicts and will attack and also retaliate as they struggle for market leadership. Slow industry growth- Incase there is a slow growth market, most companies can rely their growth by seizing market share from each other, and this leads to increased rivalry. High fixed costs- the high fixed costs will create weight for all firms to fill capacity, and therefore effecting to price cutting in the field when there is extra capacity. Absence of diversity or switching costs- When services are perceived as supplies, its choice is often strong-minded by service and price, which in turn leads to greater than before competition in service and price. Capacity increasing in large increments - The minute economies of scale call for large increases in capacity, disruptions are instigated in the industry’s demand/supply balance, which in turn then leads to periods of congestion or overcapacity and value cutting (Buono 53). Diverse competitors- firms with varied strategies, personalities, origins, and associations to parent companies also have unlike competitive objectives and strategies than the firms companies contained by the industry. Diverse tactics and styles to the market and distinctive competitive approaches can disappoint the status quo of undertaking business (Buono 93). Competitive and Economic Forces Affecting Top Consulting Firms Market size Recessionary factors- very tough economic conditions led to fewer consulting Dollars available. This caused rapid consolidation within the industry Number of buyers Trend towards developing in-house capabilities. The companies sought to lower cost and build internal expertise, especially in the area of information technology. Size of rivalry There was an increase in competition as new companies emerged and existing companies formed new alliances Pace of technological change Technological advances caused new consulting firms to emerge and existing traditional firms added technology consulting capabilities. Companies offering hardware and software product sales added consulting services and thereby increased the number of competitors Product differentiation Government regulations changed the structure of the accounting firms as Deloitte Consulting required separation of practices and transformed the Accounting industry. As a competitive strategy, firms adopted a multi-disciplined approach combining such disciplines as management and technology consulting. Experience curve-Ease of entry As companies became more global in nature they hired consulting firms with a global presence. This increased the barriers to entry since new firms entering the marketed are required maintaining operations and expertise in several areas throughout the world. High strategic risks or stakes – Consulting companies that have high stakes in attaining success can sacrifice their profitability for development and expansion. In addition, companies with great market share will feel susceptible to competitors looking for reduction in their market share. High exit barriers- strategic, economic and emotional aspects can stop companies from exiting the industry even if they are earning very low or negative incomes on investments. Key causes of exit barriers include fixed costs of exit, specialized assets, strategic interrelationships, government or social restrictions and emotional barriers. Trends in the management consultancy industry year Number of employees Total payroll ($1,000) Number of firms 0-19 employees 20-99 employees 100 and above 2013 78,273 4,789,567 11,475 10,567 455 112 2012 80,768 5,145,785 9,678 9,567 786 114 2011 71, 577 4,345,234 8,345 8,334 786 107 2010 64,786 3,968,854 7,430 8,000 476 98 Chart describing variations in the amount of competitors. E-Business Consulting of which means the use of Internet is shifting the way companies look after business as well as the type of consulting in need to employ. Many old-style consulting carry out are at threat of becoming less significant in this rapidly evolving internet age (Buono 67). The future consultants will necessitate different skills of work than the-now-a-days consultants. Many consultancies ensure some kind of e-business thrust underway- a definite e-biz practice, an initiative, or just channeling a stack of dough to figuring out means they can employ the use of Internet to benefit their clients. Many forms of e-business firms have already risen in latest years, including Scient, Viant USWeb/CKS, and Agency.com. Better Lifestyles To accomplish growth while upholding or preserving staff and service quality, most consulting firms have engaged renewed emphasis on holding seasoned staff. It's usually much better to retain people who are familiar with this field of business than hiring fresh scholars and elevate them to maturity (even though students are somewhat cheap). Consulting will on no occasion be an eight-to-four job, though many firms appear to be adopting methods to minimize hassle and pressure where possible. Specifically, the big five have arisen from a long way en route to creating a convenient and livable working environment (Buono 65). And many are posing benefits like business-casual environments; additional payments for volunteering on company time, free flights to stopover important others maybe for the weekend, as well as concierge services. Firms are also crafting new positions beneath the partner level that allow veterans to evade the “up-or-out” track, proposing sabbaticals and part-time work options, limiting travel to weekdays, and declining to schedule demonstrations and exhibitions on Mondays. Branding Most consulting firms are also working hard to build up their brands, and the sureness business leaders may show in them. An analysis steered by Louis Harris Associates indicated Accenture - which happens to be the first accessing firm to support itself heavily- as the most highly considered consulting firm amongst business leaders. In 1999 and 2000 Ernst & Young, Accenture, KPMG, PricewaterhouseCoopers and Deloitte Consulting have all promoted their trademark names greatly through billboards, T.V, magazines and also sponsorships for events. How It Lowers Although there are numerous consulting organizations across the UK, these corporations can be hard to get on. This is because most are privately held, and go ahead to work in a straight line with some other businesses instead of with your typical consumer and they tend to be strongly private even on the titles of the clients that they work for/with and the real work they do (Buono 53). All the same, if you desire to secure a job in this consulting industry, you are going to have to identify which companies do what and hence be will in a position to say it pure and convincing term why French vanilla can be so much better than just vanilla with tiny specks of vanilla bean spread throughout. To help you know the consulting scenery or landscape, I have subdivided the industry into six diverse categories: the Big Five, the industry elite, boutiques, human resources specialists, information technology (IT) consultancies, as well the independents. Even though still, most players in this industry can fit into one or several of the different categories. Industry Elite These are considered rich and the well-known of the consulting world. The companies here in this category mainly focus on ensuring providence of front-line operations and strategies, guidance and advice to the top board of large corporations. They, by and large, employ the best applicants from the best MBA, undergraduate, and other graduate programs. There’s no need for lazybones to apply (Buono 343). Key players in this category include: A.T. Kearney, Arthur D. Little, Bain & Co., the Boston Consulting Group, Booz-Allen & Hamilton, Mercer Management Consulting , McKinsey & Co., and Monitor Co., just to mention a few. The Big Five Consulting processes of these Big Five accounting organizations- Even though these firms deliver some of the matching strategy and operations assistance as the elite, they lean much towards putting a stronger weight on implementation work, chiefly in the Information Technology world. The players here include such like Accenture, Ernst & Young, PricewaterhouseCoopers, Deloitte Consulting (Buono 45). The Big Five can possibly move out of this consulting business, somewhat because the SEC is apprehensive about the interest conflicts that are likely and could consequence to overly rosy reviews and audits of organizations that are looking up for the clients of the accounting company carrying out the audit. These so-called Big Five disagree that the interest conflict problem subsists. At any rate, Ernst & Young may want sell its consultation business to the French consultancy Cap Gemini, Arthur Andersen is whirling off Accenture, and as well industry observers anticipate more of the same (Buono 56). The Boutique consultants These are considered firms that concentrate and specialize alongside industry or the practical lines. Although every so often minor, these firms tend to have top reputations and statuses and do the same strategy work and operations the top firms look after, but with it there is more of industry center (Buono 55). In this category, the representative players include; Corporate Executive Board (cross-company research); Advisory Board Company and APM (health care); Braun Consulting, formerly Vertex Partners (strategy); Marakon Associates (strategy), marchFIRST, formerly Mitchell Madison Group (financial and strategy); CSC Plan metrics (energy and utility industry); Cluster Consulting (telecommunications and the internet); Oliver Wyman (financial services); Strategic Decisions Group (decision analysis), Roland Berger and Partners (strategy and operations); MarketBridge, formely Oxford Associates (sales); PRTM (high-tech operations). IT Information technology experts have one of the fast-growing segments of the consulting world, even though this sector's growth is not quite as impressive as compared to that of strategy consulting, which confers to the Kennedy Information Group (Buono 56). These IT firms offer advice, enactment and programming work on subjects related to computer systems, the Internet and telecommunications. Representative players in this category include Computer Sciences Corp., American Management Systems, Diamond Technology Partners, IBM, EDS, Mondial and as well the so-called Big Five. Human Resources This field of consulting emphases on personnel matters such as operative management (employee management) and assessment systems, pensions, payroll and compensation programs, and other profits programs (Buono 53). Descriptive firms here include Hewitt Associates, The Hay Group, William M. Mercer, Watson Wyatt Worldwide and Towers Perrin Sibson & Co. In addition, other representatives of the Big Five firms also have practices keen to this field. Independents One-man and/or one-woman shops. By absolute numbers, self-governing consultants are far more numerous than the larger firms. Entirely 45 percent of totally all consultants are described to be independents (Buono 26). They characteristically have some nature of functional or industry specialty and therefore can get hired or appointed on project basis. If you happen to have an MBA and some years of valuable and topical business involvement (experience), there's no apparent motive not to dangle out pebbles yourself. Conclusion Management consulting is the track through of forming or generating value for establishments and organizations, usually achieved by providing unprejudiced advice and applying business solutions over and done with improved performance. Simply, management consultants help take organizations further up than they would go just on their own (Buono 23). They do this by solving problems, enhancing business capability, and providing outside perspective. Management consultants convey niche skills and a coverage of experience into organizations, useful for specific projects but not for an organization or company to employ full time. Works Cited Buono, Anthony F. Emerging Trends and Issues in Management Consulting. Charlotte: information age publishing, 2009. Bushko, D. "Outsourcing: Consulting Firms Take Advantage of a Trend That Keeps Growing." Consulting to management burlingame (2004): 1-4. Dicarlo, L. "Smart Timing." 2004. forbes new york. 26 October 2014 . Rodenhauser, Tom. "Harvard Management Update ." How to Choose-and Work with-Consultants (1998). Read More