global management & marketing consultancy market
TRANSCRIPT
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
Global Management & Marketing Consultancy Market
Value Chain Analysis
ML00027-053
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
Table of Contents
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Complete Value Chain: Overview
Complete Value Chain: Overview (cont’d)
Resource and Inputs: Overview
Resource and Inputs: Analysis
Resource and Inputs: Burning Issue – Budget Uncertainty
Consultancies: Overview
Consultancies: Analysis
Consultancies: Burning Issue – Digital Consulting
Clients: Overview
Clients: Analysis
Clients: Burning Issue – Populist Backlash
Appendix
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
Complete Value Chain: Overview
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The global management & marketing consultancy market consists of three distinct stages: resource and inputs, consultancies, and clients.
Resource and Inputs
Skilled and experienced employees
Specialist software
Business frameworks/ philosophy
Management theories
Consultancies
Professional Services
Specialist consultancies
Big Four Accountancy firms
Advertising agencies
Clients
Large corporate
SMEs
Governments
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
Complete Value Chain: Overview(cont’d)
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The global management & marketing consultancy market consists of three distinct stages: resource and inputs, consultancies, and clients. This market is characterized by some degree of integration, although this can be considered circular, as clients generate the demand for consultancy services.
Resource and Inputs
Skilled and experienced employees
IBM
Oracle
Austrian School
Six Sigma
Consultancies
The Boston Consulting Group
IBM
KPMG International
McKinsey & Company
Deloitte
Clients
Microsoft
National Health Service
Daimler AG
US Department of Defense
Wal-Mart
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
Resource and Inputs: Overview
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Resource inputs is characterized by creative, software, and recruitment inputs. Consultants may be brought in to provide specialist functions.
Resource Inputs
Ideological
Universities Philosophers,
Economists, etc.
Schools of thought
Think Tanks
Software
Specialist Software
Data analytics
Recruitment
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
Resource Inputs: Analysis
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Resource inputs can sometimes forward integrate, with theorists or software companies offering consultancy services.
• For consultancies, there is generally a philosophical framework or economic framework behind their solutions. The
provision of this can come from a variety of educational researchers, such as universities, policy and research
institutes.
• Some frameworks of economics are decades, if not centuries old, although there is ongoing research in this area.
Institutions can be education public sector resources, such as universities, or think tanks which are generally privately
funded. There can also be scope for particular authors or theorists, such as Michael Porter.
• Consultancy firms tend to invest heavily in ICT systems and after sale updates. The providers usually offer technical
help and maintenance services as part of their supply contract. The sophisticated enterprise resource planning systems
are tailored to customers’ needs but may require a long term contract. Signing into such a contract increases supplier
power significantly. In some cases, providers of specialist software have forward integrated in order to consult on the
software- the most prominent example is IBM’s Global Services.
• The other significant input is labor, with consultants being experienced individuals with specialist knowledge. Many
SME-sized consultancies will be a former employee going freelance. In the larger firms, this can also translate to
graduates who have spent several years studying relevant fields and disciplines, including specific fields of economics
for business management.
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
Resource Inputs: Burning Issue
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Higher education funding looks increasingly chaotic and precarious in the Anglosphere.
For the advancement of both management theory and developing the appropriate recruits for consultancies, universities and
education funding is crucial. The chaotic nature of the Trump administration has seen universities struggle to plan competently.
A $1.3tn spending bill, for the remainder of the 2018 fiscal year endured a government shutdown in January 2018, and planned
cuts to the Department of Education of $3.6bn became a $3.9bn increase in the signed bill. Furthermore, the U.S President’s
fiscal year 2019 budget proposed further cuts to programs critical to colleges and universities. Cuts include the elimination of the
public service loan forgiveness program and elimination of Americorps, the National Endowment for the Arts and the National
Endowment for the Humanities. Budget turmoil dramatically complicates government planning. Agencies don’t know how much
money they have to work with, so they don’t know what initiatives they should expand or contract or initiate.
In the UK, higher education has seen increasingly
strained industrial relations as the government
increasingly shifts the costs on to the student.
Increasing corporatization of the sector, seeing
universities as firms competing for student
demand, has led to funding black holes and both
staff and student unrest. In addition to this,
uncertainty surrounding Brexit has caused much
uproar within the higher education system.
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
Consultancies: Overview
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Consultancies can specialize in one particular discipline or offer multiple services to clients. They can also take several forms, from specialist SMEs to large diversified professional service companies.
Consultancies
Services Offered
Operations Management
ICT
Corporate Strategy
HR Management
Project Management
Company Types
Big Four Accounting
SME Specialists
Professional Services
IT firms forward integrating
Advertising Agencies
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
Consultancies: Analysis
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Consultancies are concentrated in developed economies, and the largest wield considerable brand power.
• The leading management and marketing consultancies are multinational companies with exceptionally strong brand
images. The consulting market is dominated by a number of globally familiar names, including the likes of the Big Four
(Deloitte, EY, KPMG and PwC), as well as BCG and IBM. Despite this, smaller firms with more specialist services are
able to successfully compete within the market.
• The vast majority of firms in the industry are small, non-employing firms that service small geographic markets or niche
industries. This is largely a result of the industry's low barriers to entry, as there are few capital requirements or regulatory
issues outside of gaining relevant industry knowledge.
• There are significant similarities between management and marketing consultancies; many employ similar methods, and
depend on similar IT infrastructure, for example.
• The majority of demand for consultancy services is based in the US, which accounted for 50.4% of the markets total
value in 2018. Demand is concentrated in mature economies, although emerging markets also present opportunities for
growth.
• There is some degree of integration with other stages. For instance, while IBM provides specialist software, it also offers
consultancy services. In terms of backwards integrating, some large firms may set up internal departments employing
business or marketing analysts to achieve efficiencies.
• However, running such a department can be very costly, and only well established companies with a clear need for these
services are likely to invest the resources in them.
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
Consultancies: Burning Issue
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Digitalization is increasingly an area of focus for consultancies, with acquisition of design firms and a rush to capitalize on Big Data.
Digitalization is a major trend within the consultancy market ,with one study by Waymark Tech finding that the usage of the
term “digital transformation” increased by 513% between 2014 and 2017 amongst eight major companies in this market
including Deloitte, EY, KPMG, McKinsey & Company, and PwC. This can refer to a number of practices, but is increasingly
referring to automation, robotics, and Big Data. As more and more industries incorporate robotics into their operational
processes, consultants will have to increasingly adapt to new technologies in order to remain relevant in the market. There has
been a scramble for acquisitions, with PWC acquiring BGT, a digital creative consultancy in 2013, McKinsey purchasing Agiliti
in 2014 and Lunar in 2015, and the Big Four accounting firms also acquiring design firms.
The advent of Big Data has also seen consulting firms being
hired to clean and combine datasets into dashboards and
infographics that can provide real-time analyses to
management teams. Digitization has also entered marketing
consultancy, with a vast number of channels and metrics
requiring digitalized consultancies to execute a holistic
campaign. This trend is likely to accelerate as technologies
develop and clients demand faster and more tangible
results.
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
Clients: Overview
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Clients for consultancy services span a wide variety of functions of goods and services, including governments.
Clients
Products
Automotive Manufacturers
FMCG Companies
Consumer Electronics
Manufacturers Pharmaceuticals
Services
Financial Services
Telecoms
Retailers Travel Services
Governments
This stage is somewhat cyclical, as companies are
also instigators of this value chain- consultants are needed to achieve
efficiency and compete.
Increasingly austere governments have seen
consultancy firms brought in to achieve backroom savings or project management.
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
Clients: Analysis
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Many companies use consultancies to promote their offerings but spending is dominated by large, multinationals in both.
• Buyers of management and marketing consultancy services can range from small to large companies, operating across
a wide range of markets and industries.
• In general, third party consultancy services are fairly dispensable, which also reduces buyer power, although they
occasionally (and irregularly) become highly important to customers, such as when the existing management structure
of a firm proves inadequate to accommodate a large change process. As such, spending on consultancies is highly
cyclical with wider economic performance.
• Integration in this part of the chain is somewhat cyclical, as clients generate the demand for change, seeking
efficiencies or an organizational change in order to better deliver shareholder value or commercial viability.
Furthermore, clients may integrate backwards by establishing an in-house department of business and marketing
analysts. In the case of SMEs, this may just be one or two members of staff. For large firms the costs may outweigh the
benefits of in-house production, while SMEs may not achieve as much due to staffing constraints.
• There are increasing cases where governments are bringing management consultants into the public sector in order to
achieve efficiencies or effect change. The National Health Service, the UK’s public health provider, attracted headlines
due to its spending on management consultants. Booz Allen Hamilton was also deeply integrated into the US
government, having employed Edward Snowden in a contract for the National Security Agency (NSA). It also has other
contracts with the Department for Homeland Security and the Internal Revenue Service.
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
Clients: Burning Issue
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Governments are facing increasingly populist reactions to the managerialism of employing consultancy firms.
Government services is a growing market for consultancy firms, but
there is increasing backlash to austere economic policies. The NHS,
the UK public health provider, has been saddled with real term
budget decreases since 2010 and faced challenges of an ageing
population and a depleted skilled workforce due to a hostile
migration environment.
Management consultancies have been brought in by trusts in order to achieve efficiencies, but result in increased spending on
bureaucracy and management in a bid to achieve targets. A study led by Bristol University evaluated 120 NHS trusts and
suggested that the more they spend on management consultants, the less efficient they became. The study found that the
average trust spends GBP1.2m a year on management consultants; equivalent to the salary of 35 senior nurses, and does not
include central NHS functions. In the UK, the NHS has become a contentious political issue, with the Labour Party currently in
opposition promising to end years of real pay cuts for the sector and end private involvement in the NHS. The UK is not alone,
with the proposition of single payer healthcare also popular in the US. Any expenditure on consulting is often perceived as taking
vital funding away from front-line services which citizens have paid for through taxation. In the first half of 2017, the perilous
state of play for the NHS was summed up, when it was targeted by the global WannaCry cyberattack. As a matter of cost-cutting,
reports made as early as December 2016 said that 90% of NHS trusts still used the obsolete Windows XP, for which Microsoft
had stopped providing security updates in April 2014. This key weakness was exploited by the WannaCry ransomware, and led to
the compromising of patient data, as well as the cancellation of operations, as the Health Service ground to a temporary halt.
Global Management & Marketing Consultancy Market: Value Chain Analysis- ML00027-053
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