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Management consulting companies that desire global growth must realize that the services they currently offer in their local country are not automatically going to transfer to all countries. Different countries are dominated by different industries. This is one very important reason it is harder for smaller firms to go global.
Given the rapidly growing market for consulting, small management consulting firms often have little incentive to expand overseas. In addition, the tremendous costs associated with international travel, office rent, staffing, and telecommunications is often daunting for small firms.
Just as technology is fundamentally effecting the degree to which small firms can participate in the global consulting market, information technology has also greatly impacted many of the structural changes within
Globalization has also created hiring problems for management consulting firms. Recently, a new approach has been used to solve this hiring problem. Instead of relocating consultants and hiring only locals, many companies are trying to bring foreigners to their countries for schooling and to send their consultants to other countries for schooling.
With increasing globalization of offices and clientele, concern with the standardization of culture is a relatively new issue. Firms strive to maintain a strong organizational culture, while accepting individual differences and fostering an entrepreneurial spirit in international offices. There is a need to standardize a lot of the work we do through the methods we use in order to ensure consistent service. It is also important that there is an ability for individual locations to customize how they do things so that it fits their culture and needs and creates a sense of ownership.
Price Waterhouse Coopers is considered the largest consultancy firm. Andersen Consulting, formerly the world's largest global consulting firm with over $3 billion in worldwide revenues, is currently experiencing very high worldwide growth. Towers Perrin is considered one of the biggest management consultancy firms in the world, ranked ninth in the world by Consultants News with close to $1 billion in world wide revenues ("40 Largest," 1997). What makes Andersen Consulting’s global growth different from Towers Perrin's? One difference that surely affects the firms' global growth is the diversity of services and industries addressed by the firms. Different countries have different needs and the firm or firms that can address the widest range of needs will have the most opportunities for global growth.
Management consulting companies that desire global growth must realize that the services they currently offer in their local country are not automatically going to transfer to all countries. Different countries are dominated by different industries. This is one very important reason it is harder for smaller firms to go global. Large firms like Andersen, McKinsey, and Ernst & Young have thousands of consultants coming from diverse backgrounds, who specialize in industries and therefore have the personnel and expertise to enter global markets.
The past few decades have witnessed numerous developments that have dramatically effected the field of management consulting. Technology, internationalization, regulation, and rapid change have all resulted in an increasingly complex world in which clients must function. The advent of increasingly sophisticated clients has required management consultants and management consulting firms to acquire more knowledge, to foster broader perspectives, and to engage in continuous training and updating. A recent report by the Kennedy Research Group suggests that management consulting firms are meeting these challenges and continue to grow. The study, which analyzed the progress of forty of the largest consulting firms, noted that new IT solutions and clients' increasing reliance on mega firms offering "one-stop shopping" will push the global management consulting market to become a more than $114 billion industry by the year 2000. In order to sustain profit and growth, both the internal and the external structure of management consulting firms has had to adapt to the demands of an increasingly complex global workplace.
Globalization has also created hiring problems for management consulting firms. Firms must now consider not only potential candidate’s' business skills but also their ability to work internationally. Since many of the large management consulting firms' clients are international, a specific engagement with a client is likely to involve not only the client's local operations but also their global operations. What this means for today's firms is that they have to be conscious of these clients' needs globally instead of simply locally.
Many firms approach this dilemma by simply opening new offices in new countries or cities. Doing this requires that the firm have enough clients working in that region in order to fund the new office(s). Firms can simply staff these offices with local consultants, who were born, raised and schooled on that culture. Local hiring, however, is not a perfect solution. Since clients often have offices in both countries and since their engagement may involve issues in both countries, the firm's members from both countries must be able to work together. Because of the high costs of translators, guides, and experts in legal conversions between countries, many companies spend much more money on these types of engagements.
Recently, a new approach has been used to solve this hiring problem. Instead of relocating consultants and hiring only locals, many companies are trying to bring foreigners to their countries for schooling and to send their consultants to other countries for schooling. The approach allows foreign consultants to gain an understanding of the firm's home country, its culture, laws and business epistemology and the firms local consultants will learn about the foreign countries' cultures, laws and business epistemologies. Another way of doing this is to bring the firm's education system to other countries.
One Andersen educator described Andersen's Global Services Organization (GSO) within Andersen Consulting as follows: "The goal of this organization is to create a consistent level of quality service in each of our locations globally." This creates a need for analyzing various offices world-wide on this issue of global quality assurance. The clients should be offered consistent methodologies and knowledge, yet they do "make sure that each solution is customized to the needs of the client or the location". There is a fine line between forcing standardization, which drives support and follow up costs down, and customizing solutions, which may locally appear better but globally become difficult to support or to update.
With increasing globalization of offices and clientele, concern with the standardization of culture is a relatively new issue. Firms strive to maintain a strong organizational culture, while accepting individual differences and fostering an entrepreneurial spirit in international offices. There is a need to standardize a lot of the work we do through the methods we use in order to ensure consistent service. It is also important that there is an ability for individual locations to customize how they do things so that it fits their culture and needs and creates a sense of ownership. The organizations that will succeed globally are those which strive to remain flexible while maintaining a common vision.
Just as technology is fundamentally effecting the degree to which small firms can participate in the global consulting market, information technology has also greatly impacted many of the structural changes within larger management consulting firms. Growing at a rate of 30% each year, information technology and related business is out performing classical consulting services. In response to this trend, consulting firms have either increased their own efforts to participate in this area or formed strategic alliances with computer service firms. Currently, IT consulting tends to involve either helping clients to design and implement routine services, helping clients design and implement state-of-the-art systems, or advising clients on the application of IT as a strategic resource.
In addition to the structural changes precipitated by the need to acquire expertise in information technology, management consulting firms are also restructuring to meet the demands of globalization. In order to provide the services that clients need and to protect themselves from downward economic trends, consulting firms have attempted to diversify, differentiate, position themselves, and build solid reputations. Large management consulting firms have been consolidating and restructuring in the last few decades to increase resources and to establish an international presence. Both national and international competition, as well as the perceived need for greater financial strength, has lead to numerous mergers and acquisitions.
Given the rapidly growing market for consulting, small management consulting firms often have little incentive to expand overseas. In addition, the tremendous costs associated with international travel, office rent, staffing, and telecommunications is often daunting for small firms. Technology and electronic commerce presents an intriguing opportunity to develop consulting services over new media forms. Glasco (1997) suggests that small or independent consulting firms interested in expanding globally, can develop global business by adopting any of the three following approaches:
The supporting role approach (SABR) involves delivering "background" analysis, research or other services to a more visible primary consulting firm. While the approach involves fewer risks and increases the firms understanding of global issues and trends, it also involves lower profit margins and a diminished global presence. Firms which rely on a home office base (SOHO) can build upon already existing technologies and begin to penetrate new markets, but generally do not achieve significant interaction with clients. In contrast, mobile offices (MOVO) do not have a permanent base. Existing in cyberspace, this approach permits rapid overseas presence and lower operation costs, but entails heavy travel requirements and difficulties can be encountered in getting individuals accustomed to virtual commerce. Although clearly in favor of the opportunities the MOVO approach provides small firms, Glasco (1997) cautions that mobile technologies, "have not reached the point where the small firm can define its requirements for a complete, integrated MOVO"