As part of my Strategy and Innovation course, I conducted a focal firm analysis on Mercer. In this analysis, I have used tools such as VRIO, STEEP, Five Forces, SWOT, S-Curve, Business Model Canvas, and Hypothesis Testing.

1. Focal Firm Analysis
Mayesha Awal
Mercer

2. STEEP Analysis
Goal: Understand and synthesize the macro-environmental factors and trends affecting the business
• Sociocultural – Understand the impact of societal and cultural dynamics of the environment in which the business is
operating. This step may include understanding aspects such as population demographics, values in society, lifestyles,
tastes and preferences, levels of education, greening of business and society, etc. and the relative impact societal and
cultural changes have on the industry and market.
• Technological – Understand the impact of technological advancements on the industry. Aspects such as new
discoveries, new product potential, new communication technology, alternative means of providing goods/services,
government expenditure on research, etc. will have an impact on the business.
• Economic – Understand the economic trends that may have an impact on the business. Consider economic variables
such as interest rates, inflation, consumer confidence, economic growth, unemployment levels, disposable income,
seasonality, business cycles, etc. and their impact on the industry and market.
• Environmental – Understand the environmental trends that may have an impact on the business. Consider broad
environmental issues pertaining to the natural environment, global climate change, and sustainable economic growth.
• Political/Legal – Understand how current and potential regulations and laws influence the success and profitability of a
business. Try to consider the impact of laws such as employment laws, taxation, environmental regulations, industry
and trade regulations, copyright and intellectual property laws, monopoly laws, censorship, and any other relevant
regulation/laws on the industry and market.
Gather information and fill out the table on the next page (don’t be afraid to go beyond the limited space of one
page)
Session 2 homework

3. Mercer
• Mission: an organization that advances the health, wealth, and performance of its people
• Operating imperatives: deliver operating growth, invest in the best people – outperform
the competition, and build broader client relationships
• Values: Pride that employees have around the world
• Passion to win and be the best at what they do, people, thought leadership, solutions, and clients
• Respect for diversity - listening to and collaborating with others, being inclusive
• Integrity in everything they do – knowing what is right; innovation that reshapes marketplace
• Dedication with clients
• Empowerment to act like business owners
• Unique, five-step consulting:
• Understanding objectives and goals
• Data and deep knowledge of the market and benefits programs and vendors – customize a strategy that’s
right for you and other people
• Design and implement the solution you select

4. STEEP Analysis
Category Trend Implication/Impact on Business
Sociocultural Trends
Population Demographics
Values in Society
Lifestyles
Tastes and Preferences
Levels of Education
Greening of Business and
Society
• COVID-19  helping organizations using data-
driven strategies and evolving HR models that
keep employees safe when they return to the
workplace
• Health and benefits for employees are
important: delivers innovative solutions
• Strategize on providing flexible options to
employees of whether to return to the workplace
• Improving communication strategies with
employees and employers during the COVID-19
crisis for clients
• Having a holistic care model to ensure the health
and well-being of employees for Mercer’s clients
Technological Trends
New Discoveries
New Product Potential
New Communication
Technology
Alternative Means of
Providing
Goods/Services
Government Expenditure on
Research
• Trend of digitization in the workplace:
• Transition to digital technologies in HR
• Digitization of Healthcare:
• disruptive innovation to create new products
and services and engage startups
• Enable clients to select a bundle of different
technologies at reduced costs
• Efficiently create technological-driven solutions to
digitize clients HR
• Mercer LABS  industry’s leading health
innovation startup database
• Offer clients a seamless transition to digital
environment with human capital management
technologies have been greatly successful for
companies  data analytics, AI, and streamline
work processes
• HRTech Incubator, Mercer Innovation Hub 
support workforce innovation startups
• Offer innovative solutions such as Mercer Digital
 creative and tested approaches for digital

5. Category Trend Implication/Impact on Business
Economic Trends
Interest Rates and Inflation
Consumer Confidence
Economic Growth
Unemployment Levels
Disposable Income
Seasonality
Business Cycles
• Rising costs in health benefits (3.9% in 2020)
• Unprecedented collapse in the economy 
global economy is recovering
• S&P 1500 Pension Funded Status Decreased
by 1% in June 2020 –
• Stimulus checks to Americans – retirement
plan participants and sponsors
• Historically low interest rates
• Considering the future for businesses affected by
the COVID-19 pandemic and how to strengthen
their HR systems: developing innovative models
and solutions of revamping businesses
• Ensuring that employees in businesses are able to
be supported especially during the pandemic
• use data to tailor their consulting services for HR in
companies, opportunities for plan sponsors
Environmental Trends
Consumer preferences and
demands for sustainable
products and services
Environmental regulation and
incentives
Access to sustainable
resources (e.g. natural
resources)
• Transition to digital HR for companies 
opportunity for less paperwork
• Environmental, social, and corporate
governance (ESG) factors to investment,
leading to higher ability to sustain pensions
• Support clients to incorporate climate change
in their investment process to build portfolios
that are resistant to climate change
• Keeping in mind strategies for companies with
regards to location, and emphasis on climate
change
• Bolstering data analytics of why its clients should
focus on sustainable operations
• Responsible Investment (RI) Team at Mercer helps
investors to understand why and how to adopt
sustainable investment approaches
• Mercer has higher-ESG strategies to help
businesses
Political/Legal Trends
Employment Laws
Taxation
Environmental Regulations
Industry and Trade
Regulations
Copyright and IP Laws
Monopoly Laws
Censorship
• The Affordable Care Act (ACA) proposed
recent changes such as out-of-pocket
maximums in 2021 that would affect the
private insurance market,
• Politics and elections – changes in health and
benefits for employees
• Finding solutions to consider employee benefits that
are optimal for both clients and their employees,
while considering the changes to ACA
• ACA affects Mercer’s clients to consider employees
benefits
• Politics and elections: could change Mercer’s
approach to HR consulting especially with the
upcoming elections

6. Five Forces Analysis
Steps to undertake 5 forces analysis:
• Define: Define the relevant industry
• Identify: Identify the players constituting each of the five forces; where
appropriate, segment them into groups
• Assess: Assess the underlying drivers of each force. Which are strong?
Which are weak? Why? Further, it is also important to step back and
assess the overall industry structure. Which forces control profitability?
Which firms are substantially more profitable than industry averages?
Why?
• Analyze: Analyze recent and likely future changes for each force. How are
they trending? What might happen in the future?
• Interpret and conclude: How can a firm position itself in relation to the
five forces? Is there a position where the forces are weakest? Is it possible
to exploit industry change? Can the industry be reshaped to favor a firm?
Session 2 homework

7. 5 Forces Analysis
Force Strength (High, Med, Low) Support & Substantiation
Threat of New Entrants LOW (HR consulting – considering
that Mercer is the #1 HR consulting
firm)
MED (general consulting firms with
over 9000+ in the U.S. alone)
Barriers to entry?
1. Contracts
2. Big players (KPMG, Bain &
Company, Deloitte)
3. Fast-paced industry, changes rapidly
with technology
4. Legal and political changes and
barriers
Explanation of the strength of new
entrants?
Low for Mercer HR because mercer is #1
for HR
Threat of Substitutes MED (there are different alternatives
to consulting)
Typical Substitutes for this industry
1. Clients undertaking work themselves
2. New technologies and data with
advanced tools for strategy and
solutions
3. Pro-bono consulting services such as
TapRoot
Industry Analysis for the ………….. Industry

8. Force Strength (High, Med, Low) Support & Substantiation
Threat (Bargaining Power) of
Buyers
Med (other HR firms to choose from
but Mercer is ranked #1 for HR
consulting)
Typical Buyers?
1. Start-ups
2. Small, medium, and large businesses
Explanation of the strength of buyers: a
diverse economic portfolio, Mercer can
create models for these buyers
Threat (Bargaining Power) of
Suppliers
Low (diverse pool and methodologies
as long as Mercer can leverage the
skills)
Typical Suppliers?
1. Digital Technology
2. People (employees)
Explanation of the strength of suppliers:
Consulting is through talented people
and you have a diverse pool and
methodologies
Threat (Intensity) of Rivalry High (there are other firms that have
HR consulting, such as the big 4:
KPMG, Deloitte, Bain, and McKinsey)
Who are the main firms within this
industry?
1. Deloitte
2. Aon Hewitt
3. McKinsey
Basis of Competition: There are top firms
that offer HR consulting services and
these firms are stronger in other areas of
consulting as well
Explanation of the strength of rivalry:
They also offer cutting-edge technology,

9. VRIO Analysis
Steps to undertake a VRIO Analysis:
• Identify valuable resources or capabilities.
• Assess whether valuable resources or capabilities are rare
• Assess whether valuable and rare resources or capabilities are
costly to imitate
• Assess whether the focal firm is organized to exploit these
resources or capabilities
• Interpret and use: Use a resource or capability that has been
identified as valuable, rare, costly to imitate, and for which a firm is
(or can be) organized to capture value as the cornerstone or focal
point for developing a broader strategy. In so doing seek to exploit
and protect the resource or capability that is valuable, rare, and
costly to imitate.
Session 3 homework

10. VRIO
Component Definition
Resource/Capability 1:
Acquisitions & Mergers
Resource/Capability 2:
Brand Recognition
Resource/Capability 3:
Digital Technologies
Resource/Capability 4:
Awarded Contracts
Valuable The first question of the framework asks if a
resource/ capability adds value by enabling
a firm to exploit opportunities or defend
against threats. If the answer is yes, then a
resource is considered valuable. They are
also valuable if they help organizations to
increase the perceived customer value. This
is done by increasing differentiation or/and
decreasing the price of the product
Yes/No?
Why?
GAMA Consultatories Associados
(retirement)
Merge with Tesi
Adam Financial (expand presence in Fl)
Purchased Jardine Lloyd Thompson (JLT)
- 2018
Acquired Pillar Administration (2016)
Acquired Hopkinton – workforce metrics
company (2015)
Yes/No?
Why?
Top #1 HR consulting
firm voted by other HR
consultants but classified
overall as a tier 2
consulting firm
Reaches OCIO Industry
Milestone by passing
$300 billion
leader in health, wealth,
and career
Striving to invest in its
people
Yes/No?
Why?
Digital fitness and
employee wellness
technologies
Mercer LABS, HR Tech
Incubator
Vector machine learning
Focused on innovation
Alliance with
Morningstar- a company
that gives its clients digital
subscription to research
and opportunities in the
firm
Yes/No?
Why?
Awarded a contract worth
$66,000
Secured a contract for ACNC
Workforce Strategy
Secured contract for human
resources services (Australia)
Rare Resources/Capabilities that can only be
acquired by one or very few companies are
considered rare. Rare and valuable
resources/capabilities grant temporary
competitive advantage.
Yes/No?
Why?
These mergers are important to Mercer’s
growth. Pillar was worth more than $100
billion in funds when Mercer acquired the
company. It is outperforming its
competition this way
Yes/No?
Why?
It is a top HR consulting
firm but there are many
competing consulting
firms that offer HR
services
Investment assets
reached above $300
billion (2019)
Yes/No?
Why?
Mercer had unique
technologies crafted
specifically for HR, with the
most
Yes/No?
Why?
Contracts with these
consulting firms are not rare,
as the top consulting firms
Difficult to
Imitate
A resource/capability is costly to imitate if
other organizations do not possess it,
cannot imitate, buy or substitute it at a
reasonable price. Imitation can occur in two
Yes/No?
Why?
These mergers cannot be imitated,
especially with the firms that have many
Yes/No?
Why?
Yes/No?
Why?
Mercer has specialized
digital technologies
Yes/No?
Why?
VRIO Analysis

11. SWOT Analysis
Goal: develop a list of potential strategic options. Rank the viability of this list—
distilling down to the top 1-3 strategic alternatives/recommendations.
• List and evaluate SWOT elements.
• Analyze and rank factors within each category of Strengths, Weaknesses, Opportunities,
and Threats.
• Combine categories to identify actions and options that link internal and external factors.
• Combine strengths and opportunities to identify how a firm might leverage strengths to seize
opportunities or utilize opportunities to reinforce strengths.
• Combine weaknesses and opportunities to identify how a firm might use opportunities to overcome
weaknesses.
• Combine strengths and threats to identify how a firm might leverage strengths to mitigate threats.
• Combine weaknesses and threats to identify how a firm defends against a combination of
weaknesses and threats.
• Look at all actions and options and use them to inform overall strategic decisions.
Session 3 homework

12. SWOT
ANALYSIS
External Opportunities (O)
1._Improving specialty consulting services
(management, organizational change,
economic consulting, brand strategy)
2. Expanding research and development
3. New digital and innovative technologies
4 Teleconsulting models – all online for
companies
5.________________________
6.________________________
External Threats (T)
1. Big 4 consulting firms
2. Specialty consulting firms
3._Political and legal changes in health,
insurance, and other benefits
4.COVID-19 impact on businesses
5.________________________
6.________________________
Internal Strengths (S)
1. Acquisitions & Mergers
2. Digital Technologies (human capital
management technologies)
3. Prominent HR Consulting Firm
4. Relationships with a diverse economic
portfolio of different businesses
5. Awarded/won contracts in international
locations
6.________________________
SO Strategic Options
Leverage strength to seize opportunity
1. (S1&O1)_Acquisition of top or up-and-
coming specialty consulting firms
2. (S2&O1) Updating technologies in their
specialty consulting services
3. (S4&O4) Help companies transition from
COVID-19 and reopen businesses given
their expertise with a wide array of
businesses
ST Strategic Options
Leverage strength to mitigate threat
1. (S1&T1) Have valuable acquisitions and
mergers that are long-lasting
2. (S2&T2) Digital technologies that are
tailored for specialty consulting
3. (S3&T3) Have creative solutions for HR
consulting to keep ahead of close
competitors in the Big 4
Internal Weaknesses (W)
1. Brand Recognition (not well known)
2. Not as strong in specialty consulting
services
3. Slow growth in specialty consulting areas
4.________________________
5.________________________
6.________________________
WO Strategic Options
Seize opportunity to overcome weakness
1. (W1&O2) Strong R&D to improve brand
2. (W2&O1) Improve specialty consulting
3. (W3&O3) Bringing new digital
innovations to specialty consulting
WT Strategic Options
Play defense to overcome weakness and
mitigate threat
1. (W1&T1) Offering a better competitive
brand for specialty consulting to compete
with top firms
2. (W2&T2) More contracts in their specialty
consulting services
3. (W3&T3)Keeping on top of political and
legal changes to increase the growth rate in

13. S-Curve Analysis
Categorize the stage where your firm’s core business is in
the S-Curve
The template on the next slide will help you organize your
thoughts.
Be sure to include all relevant aspects of this framework.
The table will expand as you fill it out.
Session 4 homework

14. S-Curve Analysis
Criteria Your Answers
Focal Company Mercer
Core Business or SBU Human Resource Consulting
S-Curve Stage Maturity
Explanation of Categorization of S-Curve Stage The growth of the firm has leveled off and it is no longer on an upward growth trajectory. Their recent growth
rates have been slow, despite the fact that they are the #1 HR consulting firm and survived the shakeout with
the rival consulting firms in terms of HR consulting.
Wealth, Defined Benefit Consulting and Administration (decreased 2%),
Investment Management & Related Services (increased 1%),
Health revenue (increased 4%) – benefits and outsourcing
Career (increased 5%)
What are the consequences for your focal firm of
this S-Curve positioning i.e. what does this mean
for the firm’s strategy? Please write at least three
lines exploring what this means.
How rapidly are the markets, products, or technologies
in the industry changing? How quickly will the focal
market, product, or technology move through the
different phases?
The technologies are rapidly changing, so this means that the HR consulting workplace may also evolve. In
terms of health and benefits for the employees of its clients, health insurance and coverage laws may change
with the current presidential administration or in the upcoming elections. Mercer must keep up-to-date with its
research of the laws.
Discuss how your firm can better prepare for the
next S-Curve stage (or a completely new S-curve).
Please identify some emerging disruptions and
technologies that will become increasingly important in
the next stage or new S-Curve. Please cite two
sources.
The firm can better prepare for the next S-curve by focusing on improving their specialty firm consulting
services as those are weak compared to their human resource consulting services. They could expand their
research and development by improving their technologies with the latest AI machine learning and cloud-
based technology.
Analyze the array of markets, products, or
technologies within a business as a portfolio and
use a portfolio perspective in making strategic
decisions about where to play and how to win.
Consider competitor positions with respect to 1) their
They can respond to their current market in HR consulting services and diversifying their technology portfolio
by updating Mercer LABS. They have significant investment in new technologies and recently expanded their
technologies such as HRTech Incubator and Mercer Digital.
They can focus on their competitors in specialty consulting services because they need to strengthen their
services in that field. Mercer can conduct analyses on their current market in this respect in order to grow on

15. Hypotheses Testing
Process:
• Identify most promising possible solution or opportunity.
• Identify the conditions that must be true for the solution or
opportunity to be defensible.
• Collect and analyze data to test if the conditions are likely to
hold.
• If conditions unlikely to hold, return to Step 1 above and select a
new solution or opportunity. If conditions likely to hold, use
insights from data analysis performed above to justify the
recommendation.
Session 4 homework

16. Application of Hypothesis Testing Logic
What is your most promising strategic option for firm (from SWOT)?
Improve and attract more companies to their specialty consulting services
What would need to be true for this strategic option to be viable?
1. Increase Research & Development in the specialty consulting fields
2. Have more companies seek their specialty consulting by offering the best
technological consulting services
3. Create an algorithm that matches the companies to the right services in their
specialty consulting
How could you test if these conditions are are valid?
1. Increase cash flow in R&D
2. Collecting data in the change of the number of companies seeking specialty
consulting and their satisfactions in the technological tools; the effectiveness of the
technological tools; innovations are not up to par with other companies
3. Testing the effectiveness of the algorithm and surveying whether there is an
improvement in the clients organizations in terms of the services that they seek

17. Business Model Canvas
Goal: Assess how the different elements of a firm’s strategy fit together to create and deliver on a firm’s value
proposition
Steps
• Develop and describe the firm’s value proposition.
• Identify and describe the customer segments to be served with the value proposition of the firm.
• Identify and describe the channels and customer relationship mechanisms for reaching and working with customers.
• Identify and describe the key resources, key activities, and key partnerships required to create and deliver the value
proposition.
• Identify and describe the different revenue streams from the focal customer segments.
• Identify and describe the different costs incurred to provide the resources, activities, and partnerships to create and
deliver the value proposition.
• Map all of these on a business model canvas and evaluate whether they fit together; make changes as necessary
Using the template on next slide, please apply the Business Model Canvas to account for a current business (unit) of the
focal firm or for a a potential new business unit for your focal firm.
Session 5 homework

18. Business Model Canvas
2019: Revenue was $1.2 billion in the fourth quarter;
Wealth, Defined Benefit Consulting and Administration (decreased 2%),
Investment Management & Related Services (increased 1%),
Health revenue (increased 4%) – benefits and outsourcing
Career (increased 5%)
Health – traditional fee-based consulting and commission-based
brokerage services with the selection of insurance companies and
healthcare providers
-Technology Costs
-Employee salaries
Help clients advance
the health and
performance of their
most valuable asset,
their people, through
consulting using
cutting-edge digital
technologies, data,
and analysis.
REVENUE STREAMSCOST STRUCTURE
VALUE PROPOSITION
-Small, middle, and
large organizations
(economically
diverse portfolios of
company)
-Start-up companies
-Majority of
companies are in the
Fortune 1000 and
FTSE 100
-medium- and small-
market organizations
CUSTOMER SEGMENT
Digital technology –
Morningstar, human
capital management
technology
Acquiring digital and
consulting services
from our partners
Data Analytics and
strong web-based
platforms
KEY PARTNERS
Focusing on helping
businesses with
economically diverse
portfolios
CUSTOMER
RELATIONSHIPS
-Advice to
companies
-Digital solutions
including Mercer
Marketplace 365
and Market 365+
offerings as well as
Darwin platform
CHANNELS
-Employee health
and benefits
-investments and
retirements
-workforce and
careers
-M&A Advisory
services
KEY ACTIVITIES
Digital Technologies:
Digital fitness and
employee wellness
technologies
Mercer LABS, HR Tech
Incubator
Vector machine learning
KEY RESOURCES

19. Simple Balanced Scorecard
Customers
(marketing)
Business
Processes
(operations)
Learning and
Growth (people) Financial ($)
Objective
What should they aim to
achieve?
Increase the number of
Fortune 1000 companies
that come forward for
specialty consulting
services using data
(surveys) to determine
what strategy is best
Aim to update
technologies every
month of their current
software for their
specialty consulting
services based on
current technological
trends
Internal strategies that
target improving the
performance and training
of employees for
specialty consulting
services
Have increased revenue
streams in their
consulting firm in their
specialty consulting
services in order to
strengthen their
consulting firm to
become tier 1
Measure
What should they
measure?
How many new Fortune
1000 companies they
were able to bring on for
specialty consulting
services
The efficiency of their
software, how it has
changed after updates,
and the percentage
change in the number of
updates they provide
each month
Retention rate of
employees, percentage
change of adding new
training programs and
certifications, current
satisfaction of clients
Measure the change in
revenue streams each
month of their other
sectors of consulting
Target
What should their target
be?
They should have a 50%
increase of new Fortune
1000 companies each
To show a 25% increase
in efficiency and the
number of updates
98% retention rate of
employees, 15% change
in adding additional
To increase revenue
streams 10% each
month
For your focal firm to be highly successful in the next 12 months, what objectives, measures, targets and initiatives
should they put in place? Capture your recommendations in the simple balanced scorecard below
Session 5 homework