All Cases For Global Strategy, 5th Edition Mike Peng
GS5E Integrative Case 1 THE CONSULTING INDUSTRY Mike W. Peng (University of Texas at Dallas) CASE DISCUSSION QUESTIONS 1. Of the five forces affecting the consulting industry, which one is the most significant? Only the bargaining power of suppliers (universities, business schools, as well as individual students and job candidates) is relatively weak or nonthreatening. Four other forces— bargaining power of buyers (clients), rivalry among competitors, threat of new entrants, and threat of substitutes—are strong. Which one is the most significant can generate a great debate. One likely outcome is perhaps all four are more or less equally important or threatening, creating a ―perfect storm‖ (see reference #2: C. Christensen et al., 2013, Consulting on the cusp of disruption, Harvard Business Review Ooctober: 107-114). COVID is likely to make the perfect storm even more stormy. 2. As a potential new entrant, which segment of the broad consulting industry will provide the best likelihood of success? A new entrant primarily faces two choices: (1) high-end, high-stakes, high-margin, but one-off projects (such as traditional stratgey consulting); or (2) low-end, more-routine, low-margin, but continuous work (such as accounting and data analytics). Before COVID, even at the Big Three firms—McKinsey, Bain, and BCG—revenue from traditional strategy consulting decreased from 20% of total revenue in 2013 to 10% in 2019. In the post-COVID era, given the devastated budgets at numerous (potential client) firms, revenue for consulting firms from (1) is not likely to be strong. Therefore, (2) is likely to be a most viable choice. 3. Based on this analysis, how would you prepare yourself to have the right combination of educational qualifications and practical experiences in order to compete successfully in that segment? In practical terms, students are advised to double major. They not only need to acquire the bigpicture, ―strategic‖ perspectives that the current course endeavors to develop, but also need to demonstrate proficiency in basic, ―tactical‖ activities such as accounting, data analysis, IT, and marketing. A second major (or minor) outside the business school may be helpful as well, as it can bring in a novel perspective to the usual curriculum provided by a business school education, and ultimately to the solutions recommended by you as a consultant.
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