CHAPTER 1

PROBLEM AND ITS SETTING

Background of the study

From the past decades the management consultancy business was

successful. However, the fact was true that the new trend of acquiring

information through social media brought us many deviations. It could be brought

into argument that the need for management consultants can be explained by the

constant changing environment, introduction of new technologies which

encourage different segments (Patel, 2015). Every company needs to deal with

its environment and new IT innovations, yet most companies are struggling to

adapt these changes. Therefore, there is a demand for consultants to guide firms

with current management practices, and other experience that the company do

not have such as; experience in implementing change and market information

(Sturdy, 1997; Patel, 2015). Management Consultants have been popular for

their proficiencies that help the managers in analysing and solving practical

problems to improve the operations (Kubr, 2002).

The United Nations Central Product Classification confims that, management

consulting industry includes firms and individuals. It shows that the industry has a

wide scope of services to offer like advisory, guidance and operational services

related to general management, financial management, marketing management,

human resources management, production management and the other. But it is

limited to, computer activities, legal advice, accounting, auditing and

bookkeeping, market research, and technical advisory (example of which are

engineering and architecture). The basis for classification of industries and

subsectors are coming from PSIC or Philippine Standard Industrial Classification

of the National Statistics office. It includes activities of management hosting

company, other than the activities mentioned in the UN CPC (United Nations

Central Product Classification).

The very nature of management consultancy services is global. There are offices

from larger consulting firms that operates internationally in different countries. In

the year 2012, an estimated amount of total consulting revenues worldwide is US

$ 62 billion and continuous to grow between 10 to 30% annually from one

country to another according to the Kennedy Research Group.

Study shows that here in the Philippines there is a very competitive environment

in the management consultancy industry. Which is characterized by the following

(1) the existence of large international firms with multiple capability to offer full-

services packages and have a significant market share; (2) the non-traditional

providers of management consultancy services that are increasing; (3) the

growing numbers of player in the industry and poor image of consultants due to a

low entry and exit barriers that enables anyone just to be a consultant; (4) The

demand and supply: high supply of consultants and consulting firms yet a low

demand for the services both private and public sector markets (5) only few

players with highly specialized services exist.

Scope and Limitations of the Study

This study will determine on the quality performance evaluation of Management

Consultancy. The professional response of a consultant to client’s need. The

appropriateness of recommendation and professional input provided by a

consultant. The commitment of an engaging consultant. Management

Consultancy is not limited to financial management, but also cover advisory,

guidance and operational services related to general management. Management

Consultancy services are limited to computer services (i.e., software

development), legal advice, auditing, and bookkeeping. The study is limited to

businesses that do not hire Management Consultancy Services.