The Evolution and Practice of
By the end of the unit, you should understand:
• Management Consultancy
• Management Consultancy and Mgt. Consulting
• Management Consultancy and Outsourcing
• Elements of Management Consultancy
• Reasons for Consulting
• Types of Consultants
• Multi national Management Consultancy
Background and History
• Management consulting is of a younger vintage than
either management practice or management theory.
It is a high-pressure, high-level practice, but it is
striving hard now to be viewed also as a profession.
• Some put the origin of consultancy in general, and
management consulting in particular, in the middle
of the nineteenth century when Samuel Price, Foster
Higgins, and James Sedgwick each began operating
a business that included “advisory practice” in
England or the United States.
Background and History
• According to business historians, the first pure
consultancy was that of Arthur Little in the United
States, who started out in 1886 with a focus on
technology and “engineering economics.”
• It was not until 1904, however, that he and his firm
moved beyond chemical testing and engineering
into administrative advisory services.
• In offering astute advice, management consultants
are being asked to cover a range of topics, as well
as coaching, implementation, and matching goals
• In doing this, the perishable facets of the service
must be made tangible and lasting. To succeed,
teams of generalists and specialists plus country or
local experts are assembled.
• Management Consulting got its start in the late
1880's when Frederick W. Taylor began to perform
studies of the time required to complete processes in
manufacturing. The practice developed over time
and eventually, James O. McKinsey formed
McKinsey & Company with Tom Kearney -in the mist
of the great depression, when companies needed
consultancies most. McKinsey's group set out to help
troubled businesses grow and recover from
economic crisis. Shortly after that, Management
Consulting grew as a field and other firms began to
What is Management Consultancy
• The Institute of Consulting has defined management
• „the provision to management of objective advice
and assistance relating to the strategy, structure,
management and operations of an organisation in
pursuit of its long-term purposes and objectives.
Such assistance may include the identification of
options with recommendations; the provision of an
additional resource; and/or the implementation of
• Management Consulting is the practice of offering
business executives third party advice, expertise, and
support with the aim of enhancing the business's
performance resulting in an overall increase in the
value of the business for its shareholders - and other
• Management consulting refers to both the industry and
the practice of helping organisations to improve their
performance, primarily through the analysis of existing
organisational problems and development of plans for
improvement. Organisations may draw upon the
services of management consultants for a number of
reasons, including gaining external (and presumably
objective) advice and access to the consultants'
• Consultant provides external advice for
organisations that require specialist expertise or an
objective outside perspective on their business.
Consultancy usually involves the identification and
assessment of a problem or the analysis of a specific
area of an organisation, the reporting of findings
and the formulation of recommendations for
• Consultants are commonly called in for business
improvement, change of management, information
technology and long-term planning projects.
Distinction between Management Consulting
and Management Consultancy
• The two terms- Management Consulting and
Management Consultancy- are often used
interchangeably. It is, however, useful to keep in
mind the distinction between them. Consultancy is a
profession or a professional practice; consulting is
what a consultant does, it is an instance of
• In management consulting, consulting is a specific
act of giving advice; in management consultancy,
consultancy is the professional practice of giving
Distinction between Management Consulting
• These two terms- management consultancy and
outsourcing- are also often used interchangeably.
While the host organization- also called the client
organization- is rather closely involved in
management consultancy, such involvement is
minimal in case of outsourcing. In fact, it is possible
to view outsourcing as an abdication of
13Elements of Management Consultancy
• Competencies – How they go about their work.
• Attitude – How they prepare for work.
• Skills – What they can do.
• Knowledge – What they know.
• Differentiation – What unique benefits they bring.
• Organizational consulting is a professional
service that assists businesses in evaluating
and possibly restructuring the current internal
layout of the company.
• A consultant of this type may also work with
new business ventures that wish to design and
establish a corporate working structure that is
likely to support the goals of the company.
• The idea behind organizational consulting is to
make the best use of all resources available by
organizing them in the most logical and
advantageous structural organization.
• The process of organizational consulting can
address the overall operations of the company or
focus on specific aspects.
For example, consultants may address the policies and
procedures that govern the customer relations and support
functions of the organization. Evaluations of the senior
management team and its effectiveness may take place. The
organizational consultant may take a close look at the
manufacturing process, including how raw materials are
moved through the process in order to produce finished goods.
• In all cases, the consultant will attempt to identify
strengths within the system while also uncovering
any inherent weaknesses in the current operation
of the corporation.
16Reasons for Consultancy
• Professional approach with adherence to ethics and
• Self-discipline and self-control.
• Trust and confidentiality.
• Impartiality and objectivity.
• Flexibility, quality and “value for money”.
Types of Management Consultancy
• Strategy consultants
• Human resource consultants
• Information technology consultants
• These consultancies are much smaller than the
generalist firms and the majority of them are American.
As the term suggests, they primarily offer strategic
advice to companies on a project-by-project basis. This
involves long-range planning, the reorganisation of a
company‟s structure, rationalisation of services and
products and a general business appraisal of the
• Strategy Consulting – offers services aimed at
improving the long‐term growth prospects of a
company and the capabilities to enable that growth.
These services include, but are not limited to, strategic
planning, organisational strategy, marketing, sales and
branding strategy, and financial strategy.
Human resource consultants
• These are organisations offering specialist advice
ranging from personnel policy, manpower planning,
job enrichment, job evaluation and industrial
• Human Resources Consulting (HR) – aims at
managing the employee lifecycle consulting around
the people component of change management and
improving the effectiveness of the HR function.
These services include, but are not limited to,
advising on human capital strategy; providing HR
financial guidance; HR technology and
transformation advisory; and consulting on benefits,
compensation and talent management.
Information technology consultants
• These firms give specialist advice ranging from
defining information needs, the provision of
software, systems analysis and design, computer
feasibility studies, implementing computer
applications and making computer hardware
• Information Technology Consulting (IT) . includes
design and construction of IT•]related business
functions; construction, installation and testing of
enterprise application that support those business
functions; and infrastructure services that support
• The specialist advice offered by financial
consultancies ranges from the installation of
budgetary control systems, profit planning or capital
and revenue budgeting, office reorganisation and
Operations Management Consulting (OM)
• offers services that improve the effectiveness of the
value chain, including major processes such as
researching and designing products and services;
sourcing raw materials or product or service
components; taking the actual services to the
marketplace; and interacting with the customers and
• OM consulting projects create more effective client
operations by advising on and aiding in the
implementation of changes to the client‟s global
operational footprint, management systems,
processes and employee behavior.
Business Advisory Services (BAS)
• results in business recommendations based on
financial analysis and alternative decision scenarios.
BAS services require a unique identity because of
their core connection to quantitative accounting and
financial analysis and their growing importance for
supporting key corporate decisions.
Developing Consultancy through Networking
• Some groups provide opportunities to interact with
prospective employers and clients,
• Some groups enable their members to keep abreast of
the latest developments, such as technical products or
• Some groups provide opportunities for career skills
development that will enable attendees to learn more
about self-marketing, interviewing and making a
successful transition, an example of this is alumni
What does e-business Encompass?
• Electronic business (e-business) is any process that a
business organization conducts over a computer-
mediated network. It includes buying and selling, as
well as a wide range of customer-, production-, and
management-focused processes carried out by for-
profit, government, or nonprofit entities.
• E-business is based upon the processing and
transmission of digitized information, including text,
sound, and visual images, from one computer or
some other electronic device to another.
• Most e-business processes are self-service, and
some are or may soon become fully automated.
• Electronic-commerce (e-commerce) is that part of e-
business which involves buying and selling goods
and services. E-commerce may be classified into
• Business to consumer (B2C) includes retail
transactions of goods, such as books and computers,
and services, such as insurance, banking, and travel
and ticket reservations.
• Business to business (B2B) includes transactions
between manufacturers, wholesalers, retailers,
construction firms, farms, service industries,
governments, and nonprofit organizations.3
• Completely separating the impact of B2C and B2B is
difficult, because online business establishments
may use the same resources to deal with both
consumers and businesses.
• Consumer to consumer (C2C) consists primarily of
individuals buying and selling through auctions.
Management- or production-focused e-business activities
involve the following functions or tasks:
• Procurement, including ordering, automated stock
replenishment, payment processing, and other
electronic B2Brelated activities.
• Personnel-related activities, including online job
postings, applications, and candidate screening;
education, training, and testing; and employee self-
processing of changes in benefits, travel arrangements,
expense reports, supply orders, and the like.
• The use of networks for sharing information and
databases, internally and with selected outside
organizations, including suppliers, distributors,
logistics partners, and customers; these links
broaden and speed up the flow of information.
• The expansion of communication and collaboration
through discussion forums, video- and audio
conferencing, global calendaring, and team and
Multinational management Consultancies
• The Institute of Business Consulting (IBC) is the
professional body for business consultancy, responsible
for the standards to which professional business
consultants work. These standards are set in
consultation with practitioners in business consulting
and academics researching the profession and other
interested professionals. They specify what is expected
from professional practising business consultants and it
is IBC‟s job to make sure the professional standards are
• Membership, therefore, clearly demonstrates that you
will work professionally and your clients can be assured
that you will put professional standards first in all that
you do with them.
• Management Consultancies Association (MCA), the
industry‟s trade association. Established in 1956, we
are the voice of this important industry.