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  1. 1. Organizational Consulting MA Program
  2. 2. 2 Unit 1- The Evolution and Practice of Management Consultancy
  3. 3. 3Learning Objectives 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 • E-Business • Multi national Management Consultancy
  4. 4. 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. 4
  5. 5. 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. 5
  6. 6. • In offering astute advice, management consultants are being asked to cover a range of topics, as well as coaching, implementation, and matching goals with results. • 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. 6
  7. 7. • 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 take shape. 7
  8. 8. What is Management Consultancy • The Institute of Consulting has defined management consultancy as: • „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 solutions.‟ 8
  9. 9. • 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 stakeholders. • 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' specialised expertise. 9
  10. 10. Management Consultancy • 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 improvement. • Consultants are commonly called in for business improvement, change of management, information technology and long-term planning projects. 10
  11. 11. 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 consultancy. • In management consulting, consulting is a specific act of giving advice; in management consultancy, consultancy is the professional practice of giving advice 11
  12. 12. Distinction between Management Consulting and Outsourcing • 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 responsibility. 12
  13. 13. 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.
  14. 14. Organizational Consulting • 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. 14
  15. 15. Organizational Consulting • 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. 15
  16. 16. 16Reasons for Consultancy • Professional approach with adherence to ethics and standards. • Self-discipline and self-control. • Trust and confidentiality. • Impartiality and objectivity. • Flexibility, quality and “value for money”.
  17. 17. Types of Management Consultancy • Strategy consultants • Human resource consultants • Information technology consultants 17
  18. 18. Strategy 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 company. • 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. 18
  19. 19. Human resource consultants • These are organisations offering specialist advice ranging from personnel policy, manpower planning, job enrichment, job evaluation and industrial relations. • 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. 19
  20. 20. 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 evaluations. • 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 enterprise applications. 20
  21. 21. Financial consultants • 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 administrative arrangements. 21
  22. 22. 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 clients. • 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. 22
  23. 23. 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. 23
  24. 24. 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 managerial processes. • 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 associations. 24
  25. 25. 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. 25
  26. 26. • Electronic-commerce (e-commerce) is that part of e- business which involves buying and selling goods and services. E-commerce may be classified into three groups: • 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 26
  27. 27. • 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. 27
  28. 28. 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. 28
  29. 29. • 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 project management. 29
  30. 30. 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 adhered to. • 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. 30
  31. 31. • Management Consultancies Association (MCA), the industry‟s trade association. Established in 1956, we are the voice of this important industry. 31