The Key Strategic Issues of Andersen Consulting - Essay Example

Strategic Company Analysis Report: Accenture plc Table of Contents 0.Introduction 2 2.0.About Accenture plc 2 3.0.Accenture plc business environment 3 3.1.Accenture plc PESTEL analysis 3 3.2.Accenture plc SWOT analysis 4 4.0.Key capabilities of Accenture plc 8 5.0.Evaluation of Accenture plc strategies 10 6.0.Recommendations 12 7.0.Conclusion 13 1.0. Introduction This report sets out to highlight the environment in which Accenture plc operates, the key strategic issues (both opportunities and threats) to which the company might be expected to respond to, as well as its resources, key capabilities, and the underlying factors that give the company its competitive advantage. Additionally, this report will also assess the extent to which the organizations current strategies match its environment while suggesting improvements where possible, to enhance its performance, and to solidify its market position and market share further. 2.0. About Accenture plc Formally known as Andersen Consulting and with its incorporated headquarters are in Dublin, Republic of Ireland and its operations headquarters in Chicago, Illinois, Accenture plc is a global management consulting, technology services and outsourcing company (Accenture plc, 2014), which began as the business and technology consulting division of an accounting firm Arthur Andersen. The division emerged out of the recommendations of a 1953 General Electric’s feasibility study that sought to industrialize the payroll handling and developing at the General Electric’s Appliance Park facility located at Louisville, Kentucky. Andersen Consulting adopted its present name “Accenture,” which was coined by a Danish employee at its Oslo, Norway office known as Kim Petersen from the phrase “accent on the future,” on January 1, 2001. The name was befitting for the company because it captures and reflects its determination to be a global consulting leader, and a high performance organization. Today, Accenture is one of the leading multinational corporations that offer management, consulting, technology and outsourcing services, and has operations in over 200 cities in 56 countries, with a staff of 281, 000 employees and net revenues totalling to $28.6 in the fiscal year 2013 (Accenture plc, 2014). Accenture mainly helps organizations to assess the manner in which they can maximize their performance and supports their vision through the establishment and implementation of technology to promote their clients’ productivity and efficiency (Panetti 2007, p.78). In other words, the company exploits its wide business-process knowledge, specialized service offering, as well as its insights on new technologies as well as business and technology trends to help its clients to enhance their operational performance by achieving their business goals more efficiently while expanding in their markets and beyond. 3.0. Accenture plc business environment Accenture plc operates in the highly complex, diverse, and competitive service sector, and as one of the major consulting, technology and outsourcing services companies in the world, the company has its equal share of threats, besides the many opportunities in the industry. The tables below present summary analyses of the organization’s external market environment structure using the PESTEL framework as well as its internal environment SWOT analysis respectively: 3.1. Accenture plc PESTEL analysis Political Political instability weakens business markets Government regulations increase compliance costs Global security crises threatens organizational operations Tax policy (rates and incentives) vary in different market environments Competition regulation in the different markets determines markets shares Economic Global IT spending all over the world is a boost to the industry Fluctuating currencies in the global business environment affects revenues Economic attractiveness due to cost advantage and other factors Social Language difficulties in the different market environments inhibit business Level of education in the diverse populations determine workforce capacity, and overall performance Working age population determines supply of talents and skills Technological Varying infrastructure levels across different locations Faster rate of global technological change Increased spending on research & development Advanced technology level in the service sector Comprehensive communication infrastructure Access to newest technology in the diverse locations Internet infrastructure and penetration in the diverse locations Environmental Weather changes in the diverse locations affect operations Issues of climate change and laws regulating environment pollution Attitudes toward “green” or ecological products Attitudes toward and support for renewable energy Legal Several laws in its diverse locations such as discrimination law, copyright, patents / intellectual property law, employment law, and health/safety law influence operations 3.2. Accenture plc SWOT analysis Strengths Wide-ranging/ broad portfolio of offerings enabling it to serve diverse customer needs Multinational reach and scale provides continues business Strong financials of the company provide a solid capital base Strong customer base delivers improved brand image. Weaknesses Low margins related to competitors Company is unable to break into small to mid-size companies Slow market share growth Opportunities Rapid increase in IT outsourcing Increasing demand for new media technologies Positive outlook for healthcare IT spending Strategic achievements reinforces Accenture’s market situation New business opportunities in the rapidly-growing economies such as Brazil, Russia, India, and China Threats Economic slowdown reduces business opportunities Global talent shortages reduces its performance especially in the critical new skills areas The ever-growing regulation in government contractors increases compliance costs Issues with sub-contractors such as contract expiries may negatively influence revenues Strong competition expected to wear down market share Negative promotion associated to place of integration Premium offering may not resonate with midmarket customers Poor data management is increasingly becoming a threat to new opportunities, hikes operational costa, and reduces value added From the SWOT analysis completed above, a number of conclusions can be drawn concerning the company’s market environment and business growth potential (Cross, 2014); evidently, it is clear that a number of key issues that present both opportunities and threats to the continued existence and profitability of the company characterize Accenture plc’s business context. Firstly, the company has numerous opportunities it can leverage including the rapid increase in IT outsourcing all over the world, as well as the positive outlook for healthcare IT spending, which increases business opportunities thereby ensuring a constant flow of revenues and industry survival. The emerging new markets in the rapidly growing economies such as Brazil, China, as well as Russia present new opportunities for players in the industry to expand beyond their national frontiers thereby taking their services to global locations to satisfy globalization demands (Annual Report 2007, p.6). The increasing demand for new media technologies is also a wonderful opportunity for industry players since it simply means more business and guaranteed revenue flows, due to expansion avenues across the markets. Similarly, the strategic acquisitions further strengthens companies’ market position in the industry (Lahovnik & Malenkovic 2011, p.33), thereby solidifying their market shares in the face of increasing competition, thereby guaranteeing revenues and business survival accordingly. The numerous industry opportunities notwithstanding, the company faces a number of threats, some ironically, because of the new opportunities in the 21st century, which lead to increased expansion growth beyond national frontiers to global markets, thereby exposing businesses to new threats and complexity because of the pervasive interconnectedness and interrelatedness of the global market environment (Cairo 2007, p.11). Key threats in the company’s business environment include the ever-growing competition from other leading companies such as IBM and Capgemini, who have specialized on the mid-market customers. Since the company has attempted to serve the small to mid-size companies with little success due to stiff competition from other companies in the industry, it has consequently suffered the misfortune of a slow market share growth accordingly. The second critical issue that the company has to respond to is the aspect of data management, which is increasingly becoming trickier nowadays due to the continuously shifting organizational landscapes in the industry, because of mergers and acquisitions, global expansion, and outsourcing, which generates more data that should be managed. The organization needs to respond urgently to the ever-growing data, by establishing and maintaining an effective way to organize the data at all levels, from corporate data models, to the individual systems. The third issue in the industry is global compliance and regulatory issues, which increasingly demand formalized policies and procedures that guide overall management and operations of the organization; for instance, environmental focus is increasingly becoming a critical area of concern for organizations (Banerjee 2001, p.36). The increasing regulation in government contractors increases compliance costs for the organization, thereby threatening its expansion and success in those global locations that are highly constrained by excessive government control of business. Besides the ever-changing government regulations that face firms in the industry, the company’s revenues industry uncertainties such as sudden termination of contracts harm the company’s revenues and the emerging risks including the global security threat that puts the entire industry in jeopardy. Additionally, the ever-growing global talent shortage, especially in the critical new skill areas such as IT and strategic management operations for the future, in face of the constantly shifting industry climate and global competition, is a big challenge for the organization. 4.0. Key capabilities of Accenture plc Accenture plc has a vast quantity of resources, capabilities, in addition to a number of critical favourable factors that give the organization a competitive advantage in the industry, which enables it to survive the intense industry competition while safeguarding its returns on investments. Firstly, the company has a wide-ranging/ a broad portfolio of offerings, which enables it to serve diverse customer needs in all its global locations, thereby enhancing its revenue base and strengthening its market position accordingly. Throughout its evolution, the company has majorly focused on continuous innovation and transformation—building its reputation as a technology consultant and systems integrator; its new type of business integration resolutions have affiliated organizations’ technologies, processes and individuals with their policies accordingly. Apart from that, the company has a multinational reach and scale across diverse global locations and market environments, which provides continuous business opportunities that enables it to increase its revenues even in the face of increasing industry competition. The increased openness of the global markets has enabled the company to extend its tentacles both in its current locations, as well as in emerging new markets in fast-growing economies such as China, Brazil, and Russia, and this subsequently increases its market position and competitiveness. Besides that, due to its broad area of operations, the company is able to counter industry threats and business risks in volatile locations since revenues from the successful market environments provide cushioning against industry uncertainties in the unstable zones effectively. Besides that, the company has a financial base evidenced by the strong financials posted over subsequent years, which provide a solid capital base, thereby providing a powerful investment base in the industry while promoting business operations across its diverse offerings both in all the current locations and in new ones. Additionally, the company has a strong customer base due to its long years of existence and continuous supply of quality services to its clients over the years, due to its vast experience and age-old expertise in global management consulting, technology services, and outsourcing. This has enabled it to establish and maintain a strong brand image across its diverse global locations, as the world’s largest independent technology services provider with proven record of accomplishment for complex, end-to-end transformational projects and this positive corporate image inevitably promotes performance (Iwu-Egwuonwu 2011, p.197). The company has a sound information management services operation that combines high-quality data management and architecture capabilities with its comprehensive knowledge of clients’ industries to address not only the technical, but also the business side of in-depth solutions. This information management capability coupled with its deep understanding of the business and technology dimensions of the information challenge enables the company to access, share, as well as exploit timely information to achieve high performance across the industry. On top of that, Accenture plc has established technology labs with excellent Research and Development teams that constantly explore new and emerging technology platforms, which they use to create prototypes and high-performance organization solutions for the future (Annual Report 2007, p.8). Furthermore, the organization has a strong and effective workforce that is not only well-trained, but also knowledgeable and flexible, to respond to the ever-shifting industry environment since human resources are the most valuable asset of any organization (Buck et al., 2003, p.530); its strategic view of talent aligns its workforce to its needs, thereby attracting and retaining relevant talents. Overall, the company has four broad growth platforms namely—Accenture Strategy, Accenture Digital, Accenture Technology, as well as, Accenture Process Outsourcing—which are its innovation engines that help it to develop high quality skills and capabilities, as well as knowledge capital, while creating, acquiring, and managing key assets that are at the core of their clients’ integrated services and solutions. The company is highly distinguishable in the market due to its numerous high performance features including but not limited to its enduring collaborative client relationships at the C-suite level with many leading multinational corporations, efficient Global Delivery Network of high-quality solutions at lower costs, as well as its powerful culture of innovation. 5.0. Evaluation of Accenture plc strategies By large, corporate governance strategies are crucial for organizational performance (Needles et al 2012, p.510); the current Accenture plc strategies match its business environment effectively since the company continues to serve its diverse clients across different market locations through the supply of highly differentiated, industry-based, end-to-end business services. The organization effectively combines its excellent management consulting, technology, and business process outsourcing capabilities to its own survival and profitability in the industry, which has enabled it to establish extensive relations with major multinational companies all over the world. The company’s industry focus has enabled it to establish and maintain a team of professionals with a vast knowledge of, and experience of industry evolution, business issues, as well as applicable technologies, thus remaining at the head of the pack in delivering technology solutions for its clients. Its unparalleled experience, comprehensive capabilities across industries as well as in diverse business functions, alongside its intensive research on emerging technologies for future orientated organizations have given the company an upper hand in industry competition. Continuous expansion of the company’s offerings and increasing focus on evolving management trends and technologies has enabled the company to be a global leader in systems integration and business integration. This has led to utilization of enterprise resource planning, corporate/customer relationships, as well as electronic services, which have further solidified the organization’s position and market share in today’s highly competitive global market environment. The organization’s excellent data management and architecture, which includes the specialized roles and responsibilities, as well as the policies and procedures that guide acquisition, maintenance, dissemination, and quality of data has enhanced its operations in the industry. Its effective data management and architecture capability has given the organization a structured and holistic approach with diverse offerings that has enabled it to be an industry maverick, helping their clients to manage their data effectively. Accenture plc’s broad management consulting portfolio that cuts across key corporate management areas such as strategy and operational consulting, process reengineering, business systems consulting as well as change management has given it a wide business platform (E-Week 2004, p.9). Their specific specializations including supply chain management, customer relationship management, as well as strategy, finance, and performance management, among other critical areas have given then competitive advantage since they are able to focus on a wider clientele in the industry. Accenture plc’s comprehensive and strong technology alliances coupled by their wide-ranging skills and capabilities, as well as their leading practices and innovative approaches have enabled the company to offer its clients high-quality solutions, thereby enhancing its brand image across the global market locations. The company’s intense investment in well-trained, highly skilled, and flexible human resources has enabled it to amass a pool of talents, thereby achieving maximum effectiveness and a sustainable competitive advance, especially because the human resources have capacity to yield unique capabilities that are specific to the company (Ou & Hsu 2013, p.46; Huselid 1995, p.635). Its strategic view of talent has, and still is a critical aspect of the organization’s performance level, since it has helped it to overcome the increasing challenge of human capital management thereby setting it high up in highly competitive industry hierarchy. The various ongoing acquisition strategies in selective areas have enabled the firm to source special talents and to bring them into the organization (MENA Report, 2011); for instance, back in the fiscal 2007, the company’s acquisitions enabled it to bring new skill, knowledge, and client opportunities that have largely boosted its operations and organizational performance accordingly. Overall, the organization has a strong focus, aggressive innovation capability, and a team of talented workforce, as its key success pillars ((Annual Report 2007, p.6); high performance of the organization has resulted to key strategic advantages for the organization. Consequently, this competitive advantage has continuously solidified its market position as a leader in the industry since the current industrial restructuring and shift towards flexible production demands corporate flexibility (Sefertzi 1996, p.97). 6.0. Recommendations Despite its successful strategies that have given it competitive advantage thereby enabling it to win competition and to position itself as an industry leader with a large market share, Accenture plc could still enhance its competitiveness through a number of ways. Firstly, the company needs to intensify its research and development capabilities to maximize its chances of benefiting in the constantly evolving technology-oriented global business environment. Secondly, since the company has been unable to break into the small to mid-size companies due to stiff competition from other players, Accenture plc must re-examine its current focus since its current premium offerings may not resonate well with these companies. 7.0. Conclusion Ultimately, this report has managed to highlight the key issues—threats and opportunities, that Accenture plc will have to respond to in the increasingly competitive global market environment in general, and in its industry specifically. Besides that, this report evaluates the existing resources, key capabilities, and the underlying factors that give the company its competitive advantage. The report concludes by assessing the extent to which these strategies match its environment and makes recommendations for improvements, to enhance the company’s performance. Generally, this report highlights that Accenture plc has a vast quantity of resources, capabilities, in addition to a number of favourable factors that give it a competitive advantage in the industry, thereby enabling it to survive the intense industry competition while safeguarding its returns on investments. The current strategies—a strong focus on the industry trends and changes, aggressive innovation capability, and the establishment of a well-trained, highly experienced, and flexible team of talented workforce, have been effective in transforming the organization into an industry maverick. These composite strategies comprise its key success pillars in the continuously shifting global business environment, continuously transforming the company into a high performance organization, thereby yielding key strategic advantages that have continuously solidified its market position as a leader in the management consultancy, technology, and outsourcing services industry. References Accenture plc. (2014). Accenture.com. [Online]. Available at: http://www.accenture.com/us-en/company/Pages/index.aspx Annual Report. (2007). Research and Experience: We have what it takes to deliver high performance. Available at: http://www.accenture.com/SiteCollectionDocuments/Accenture_2007_AR_Singles.pdf Banerjee, S. B. (2001). "Corporate environmental strategies and actions", Management Decision, vol. 39, no. 1, pp. 36-44. Buck, T., et al., (2003). 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