Running Head: CONSULTING IN VARIOUS AREAS OF MANAGEMENT 1

MOI UNIVERSITY
EWC
SCHOOL OF BUSINESS AND ECONOMICS

COURSE TITLE: CONSULTANCY IN STRATEGIC MANAGEMENT

COURSE CODE: BSM 413
LECTURER: DR. AMBROSE KEMBOI
TASK: GROUP ASSIGNMENT
TOPIC: CONSULTING IN VARIOUS AREAS OF MANAGEMENT
GROUP: FOUR
GROUP MEMBERS:

Name Reg. No Signature Phone No.

BSM/35/18 KOMBO E NYANGOTO 0701053378

0708461099
BSM/36/18 KURGAT M CHEMUTAI

BSM/37/18 MAGAFE J NYALE 0799467427

BSM/38/18
MANYENYE K KIVUTHA 07154551822
BSM/39/18
MBALUKA GRACE 0797877112
BSM/40/18
MERCY A OTIENO 0729315903

BSM/41/18 MOVAN L MUSA 0778537860

BSM/42/18 MUKOLWE C ATSHIENO 0797381444

CONSULTING IN VARIOUS AREAS OF MANAGEMENT 2

1.0 INTRODUCTION

Consulting involves providing expert advice to people working in a specific field.

Management consulting is what most people think of when someone says ‘consulting’. This filed
is dominated by large consulting firms like McKinsey, Bain, Boston Consulting Group, which
are hired to help businesses improve strategy and operations or manage significant business
events like mergers and acquisitions. This topic will discuss consulting in various areas of
management with an objective of analyzing different management techniques, practices and
problems in each area. The focus will be on how management consultants can help clients and
how they normally operate in each area and the recent developments which they should be aware
of. The areas of focus in this paper will be:

 Consulting in marketing
 Consulting in Human resource
 Consulting in finance
 Consulting in IT
 Consulting in Strategic Management
 Consulting in small firms

2.0 CONSULTING IN MARKETING

When a company needs to outsource marketing efforts, its often time to seek out
marketing consultants. While some companies would seek marketing consulting service when
they are facing crucial problems with their marketing performance, consulting is more important
during the early stages of establishing marketing activities (Kubr,2002). A marketing consultant
is an outside advisor who works with companies to create and implement marketing strategies.
The marketing consultant helps create a detailed marketing plan, determine a business marketing
message and identify appropriate marketing mix to get the message out to the market. They need
a mix of technical and soft skills to work effectively with their clients. The skills include
communications skills, psychological and marketing skills

Most marketing consultants are also involved in implementing marketing strategies. They
help to monitor results to ensure that the company gets the best results from their marketing
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 3

efforts. Both small and large business can hire a marketing consultant. The small businesses can
hire a marketing consultant when they have no marketing experts on their staff, the large
companies with a dedicated marketing department can also use the advice of a marketing
consultant.

A marketing consulting assignment usually develops into two separate tasks; one at the
strategy formulation level and the other at implementation level. There is however a third type
of consulting activity, that is, market research. Market research consultants do not necessarily
carry out marketing consultancy but their findings can affect t6he strategic direction of a firm.

2.1 Marketing strategy level

At this level, the consultants starting points is to classify the client’s
orientation towards the market as either product oriented (emphasis on the product
itself), production oriented (consideration on product design i.e. ease, cost efficiency
or capacity of production) or market oriented (decisions based on market needs and
demands).
A firm that’s market oriented capitalizes on the opportunities that the market
offers that fall within the production and R&D capabilities as well as identify new
opportunities. The management of the firm identifies the problems their market is
facing, who else have the same needs and if their current product is able to solve
these problems or they should develop a new one.
For instance, consider a manufacturer of nuts and bolts in a metalworking
business and is looking for a new business in this basis. But what about its customers?
Their problem is joining things together which makes the firm face competition from
firms making welding facilities. This threat, however, is also an opportunity since the
firm’s sales and distribution force are already in contact with the people who form a
potential market for these items. The cost of marketing is high so anything that can
reduce it can be surprisingly profitable. This can include selling more items per sales
visit.
The consultant should first analyze the company’s whole product line since
the firms’ products are the hub for the marketing strategy. Are the products consistent
with the overall objective? Are of interest to the consumer? Fit with the production
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 4

facilities? Such an analysis provides a sound basis for the consultant recommendation
for potential product addition or deletions that need further investigation.
2.2 Marketing Operations
Marketing operations include selling, advertising, promotion, dealings with distributors,
packaging, packaging design, market research and new product concept development.
The organizational fuzziness in these areas could slow the process of the marketing
assignment or stagnate it.
 Sales management
 The consulting activities in sales management include proper training and
motivation of sale staff. Another point to check is whether the client sale staff effectiveness by
generating curiosity and interest in the mind of the customers. Motivation of sale staff includes
the use of incentive program and the primary motivator is the payment system like salary. The
consultant should check that the incentive system is fair to the sales person and is designed to
obtain the result desired by the firm.
 Custom relationship management
Customer relationship management is a process with a goal of making business
relationships more profitable. To achieve this marketing sales and customer services must work
together to share available information to the customer which is aided by new customer
relationship management computer application. With the development of faster computers with
larger storage capacity, the opportunity to collect, store and utilize data on customers has
provided new marketing opportunities. Consultants should therefore treat it as an equally
applicable concept in small firms with few customers and simple IT facilities.
 Advertising and promotion
In this area the consultant should check that the role of advertising and promotion in the
clients marketing mix has been fully thought out, and is consistent with product being sold. For
instance, push-pull advertising for fast –moving consumer products producing leads for sales
persons of industrial goods. Next the consultant should ensure that this role has been properly
communicated to the advertising agency. In working with clients advertising agency, the
consultant must continually be aware of the sensitive nature of the client/agency relationship and
should avoid becoming an adversary of the advertising agency.
 New product development
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The consultant role in this function include in the first place verify that the marketing
department and supply reliable information of the type of the new product described and if not,
advised on how to develop that capability. Secondly, he must ensure that accurate and usable
data are provided to all functional groups involved in the process and that all parties are in
agreement on the assumptions made.
 Packaging
Attractive packaging designs is a way of getting customers attention and creating a
coherent brand image by developing a matched set of containers for a range of products. At the
same time the package must satisfy the retailer’s requirement for stack ability and protection
against pilferage, damage and tampering in transit in storage or at the retail store. The consultant
who expects to undertake marketing assignments should be aware of these developments.
Subscription to one or two of the relevant trade journals and visits to exhibitions could be good
professional investments.

The benefits that come from marketing consulting include:

 Allow a business to focus on product development and overall operations

 Supply special skills and expertise that a company lacks
 Provide an external viewpoint to internal challenges
 Prompt a new perspective on customers or marketing strategies

When a company is considering hiring a marketing consultant, they should look for one
who can show both creative thinking, practical and results drive analysis. They should ensure
that the consultant is familiar with the consumer behavior of their target audience and willing to
work collaboratively to achieve the best possible results, not just for their own portfolio but for
the business goals.

Whether a company is seeking to hire a marketing consultant or becoming one

themselves, flexibility, collaborative energy and creative thinking are all essential to a successful
relationship between marketing consultants and the business they work with.
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 6

3.0 CONSULTING IN GENERAL AND STRATEGIC MANAGEMENT

Consulting has long been recognized as a useful professional service that helps managers
to analyze and solve practical problems faced by their organizations, improve organizational
performance, learn from the experiences of other managers and organizations, and seize new
business opportunities. However, management consulting is a dynamic and rapidly changing
sector of professional services. To be relevant and useful to clients, consultants have to keep
abreast of economic and social trends, anticipate changes that may affect their clients’
businesses, and offer advice that helps the clients to achieve and maintain high performance in an
increasingly complex and competitive environment.

1. Nature and scope of consulting in corporate strategy and general

management

A considerable amount of management consulting concerns the very existence of the

basic goals or mission, the business policy and strategy, and the overall planning, structuring and
control of the organization (Venkateraman &Henderson,1998) . These terms were defined as
general management, but are now referred to as corporate strategy or strategic management thus
are known as strategy or general management consultants.

A company will know it needs the help of an all rounded management consultant when
there is a deteriorating overall performance, growing dissatisfaction of the staff, the generally
bleak prospects of the industrial sector and so on. The business maybe in crisis, or close to it, and
it is not clear how to restore prosperity. In such organizations it is common to find that the top
management has no clear idea of where the company is going or what it is trying to achieve. In
short, there is a lack of strategic direction. In others, top management has some sense of strategic
objectives but has failed to communicate its vision to lower and middle management and to the
workforce and in return the strategies are never implemented.

Any sign that the organization’s strategies are evolving in directions that do not
maximize value such as excessive diversification away from the core business or pursuit of
incoherent and conflicting business objectives, provides a signal that the board and top
management would benefit from the fresh viewpoint that a skilled strategy consultant can
provide.
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The most prominent characteristics of problems handles in general management

consulting are that they are:

 Long term- they involve decisions about major capital investments and
other resource allocations, acquisitions, divestments and other corporate reorganizations
that will have an impact on organizations success or failure far into the future.
 Multifunctional- the consultants deal with several functions of the
business (production, technology, organization, marketing, etc.) and focuses on the
interactions between these functions and on problems involved in more than one
function.
 Interdisciplinary- the consultant must be able to view business problems
from several angles; typically, a business strategy problem may have technological,
economic, financial, legal, psych sociological, motivational, political and other
dimensions.

General management consultants are also a kind of specialist: the specialty lies in the
combining other specialties into a balanced and coherent multifunctional and interdisciplinary
approach. Like the general manager however, general management consultants turn to other
specialties when appropriate. They must know how to use the specialist’s skill and advice, and
help the client to do the same, to prevent situations where particular specialists (e.g. market
researchers or financial analysts) would dominate the business.

Diagnosing organizations

Many consultants prefer conducting a quiet preliminary survey of the organization

before proposing a specific problem solving assignment. The first technical contact between the
client and the consultant is often at the general management level, before the consultant moves
into specific areas identified by the survey. It is essential that the consultant understands what
the client management believe the mission and strategic objectives to be. If they are internally
inconsistent with maximization of shareholder value, these issues have to be resolved before any
detailed diagnosis is undertaken.
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The consultant mandate is to diagnose the organization; he or she may even be asked, as
an independent expert, to provide an objective and a neutral report on the status, strengths,
weaknesses and development prospects of the business. The assessment of the management
system used and of senior managerial personnel may be included. The assignment may end with
the consultant submitting a report of the diagnosis. Diagnostic surveys of this type may be fairly
extensive and difficult assignments. While a quick survey is a matter of few days,
comprehensive and in-depth surveys may take several months depending on the size and
complexity of the organization and on the nature of its problems. In certain cases, a crisis could
have been prevented by undertaking a thorough diagnosis at an earlier date, and arranging for a
periodic business diagnosis, or self-diagnosis, as a preventive measure.

Organizational level of interventions

In many organizations the general management consultant intervenes at the highest level
in the organization: with the chief executive and the top management team. Every leader who is
keen to introduce change in an organization often has no idea of what will be involved. They
have this image that is not shared by everyone in an organization. The consultant’s problem then
lies in persuading management of the need to change thinking and behavior at the very top.

Working directly with the chief executive and the top management team provides an
excellent introduction to the organization, rapid access to key data, a true picture of the
operating style of top management and usually strong support from the top for the consult’s
work. Yet it is often risky to confine intervention to top management level. The general
management consultant needs to find out how the top management is perceived throughout the
organization, and how management policies influence the work style, performance and job
satisfaction of employees.

Consulting style

In general and strategic management, the consultant cannot avoid dealing with issues
affecting management’s personal interests, self-image and authority. Advice on crucial issues of
a company’s direction, strategy and leadership can easily be perceived as criticism aimed at a
particular person. Yet the objective is to strengthen and improve management, not to undermine
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 9

it. Also, the consultant does not want to see his or her proposals getting rejected by senior
management. Experienced consultants therefore attach great importance to choosing the right
consulting style.

A frequently debated issue is the choice between participative and process consulting
approaches, and those where the consultant acts primarily as an expert in the subject. If the
client is not able or willing to participate, the consultant may decide to use or ignore. However,
in strategy and general management consulting, the risk of rejection is extremely high.
Furthermore, core issues concerning the very existence, mission, strategy direction or
restructuring of a client company can hardly be fully understood and properly resolved if
handled by outsiders only. All the reasons that speak favor of participative consulting in an area
of management are doubly of value when dealing with strategy, organization, corporate culture,
corporate governance and similar general management issues.

1. Corporate strategy

Consulting in corporate strategy (business strategy, strategic analysis, strategic planning,

strategic restructuring, etc.) is a rapidly growing area of management consulting. Even though
the role of planning department has diminished, however the need for external consultants has
increased. Senior operating executive always find some difficulty in stepping back from their
immediate priorities and thinking about the longer term. Their workloads make it difficult for
them to keep track of all the developments in the company’s environment that need to be taken
account in the formulation of strategic plans, and it is notoriously, difficult for them to make an
honest evaluation of their organization’s weaknesses relative to competition. The consultant
brings an open mind to the issues.

a. Strategic vision

It is important to remember that strategy is not an aim in itself but a set of paths and
choices for achieving the organization’s goals in the future. This is where a consultant can start
helping the client. Many organizations practicing strategic planning actually lack a vision for the
future. Some do not have a clear understanding of the present yet an understanding of this must
be the starting point of any sound strategic analysis.
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 10

A strategic vision must be as sound as possible. Total rationality is not achievable for
one simple reason- the future is unknown and is shaped by a myriad of independent actions all
over the globe; the client’s own action will form only a tiny fragment of this future, however
important the business is. Nor is it possible to evaluate every course of action. The personal
values and judgement of the key decision makers therefore play a vital role in positioning the
organization for the future. It is for this reason that current thinking on corporate excellence and
strategy puts so much emphasis on organizational leadership. A leader is an individual with a
vision of the future and is able to express this vision in goals understandable to the people in the
organization.

b. Industry and competitor analysis: determining competitive advantage

Consultants can be most helpful when examining whether the client business does indeed
enjoy any competitive advantage, or developing a strategy for achieving one. He or she draws
attention of the client to the ways in which organization’s regarded as excellent achieved and
maintain their competitive advantage. He or she points out certain factors that tend to be
characteristic of all firms that possess such an advantage (for example prioritize attention paid to
the clients’ needs and satisfaction and to the quality of products and services). Consultants can
help the clients to think honestly about the industry’s characteristics, the key success factors and
how the client’s enterprise matches up to the competition in these key areas.

After analysis, the consultant specifies the strategy to be followed. He or she helps the
client choose among the alternatives available bearing in mind the capabilities of the technical
and production staff, production facilities, marketing network and the business experience.
Michael Porter highlights the generic strategies that are cost leadership and differentiation as a
means of attaining competitive advantage. Example, the consultant might suggest selling high
quality and particularly reliable product for relatively high prices, or products tailored to the
particular needs of clients who find standard products unsatisfactory (differentiation).

c. Technology in corporate strategy

Increased emphasis on technology strategy and its impact on manufacturing, marketing

and other strategies is a new challenge in management consultants, who often used to handle
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 11

strategy simply as a factor affecting marketing and finance decisions. Some consultants have
responded by developing research and development departments which can both participate in
consulting assignments in corporate strategy and undertake specific R&D tasks for their clients.
Evaluating the potential of new technologies and providing technological information analyzed
from the viewpoint of its potential business application.

Consultants also advise on business development opportunities and projects that are
involved in questions of technology transfer, helping to choose both the appropriate technology
to be used and the terms under which such a transfer can be effectively implemented.

d. The environment of business

Due to the complex nature of the business environment, consulting firms provide
services to clients in matters of corporate strategy which focus on environmental information
and analysis. They help clients to devise systems and procedures in which environmental
analysis is internalized to become a standard part of the strategic management system. Example,
as regards with the legal environment of business, many companies finds it impossible to keep
track of all strategically significant changes in their home country, let alone changes having an
impact on foreign operations. Management consultants can help clients with this task, in
collaboration with law firms if appropriate.

e. Implementing strategy

Consultants must help the client to develop operating systems, procedures and technical
capabilities for putting these constantly evolving strategies into effect. This includes the
communication system, production, planning and control, inventory management, quality
improvement, leadership and management style which are critical to the successful
implementation of strategy. Consultants also ensure that a strategy is consistent with the internal
capabilities.

f. Company transformation strategies

Management consultants are often called in when the development patterns of a

company deviate substantially from normal. These assignments usually involve radical changes
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 12

in most activity sectors of the firm and strongly affect its management. It includes mergers and
acquisitions, turnarounds, divestment, downsizing and privatization. Usually carried out under
severe time pressure.

2. Process, systems and structures

Decision making systems and Practices-consultants play a vital role in examining and
reforming the decision making system. This is done through classification of decisions in terms
of nature, urgency, financial implications and degree of complexity.

Management information systems-consultants analyze the existing information system,

define the information required for strategic management and operational control, harmonize
and integrate systems used in various departments and choose and introduce appropriate
information processing technology.

Organizational structure-consultants treat structure as one of the factors of excellence,

which is linked in many ways with strategy, organizational culture, the competence and
motivation of employees, new technology and other factors and not just a formal organization.

3. Corporate culture and management style

Consulting in corporate culture became extremely popular at the beginning of the 1980s.
Consultants try to ascertain the aspects of the corporate culture that stimulate and inhibit further
growth and performance improvement. He will point to values and norms that need to be
discarded or changed, to those that should be preserved and even reinforced.

Consultants come up with a tactful way of making the client aware of the problems in
leadership and management style, and help to resolve them by coming up with feasible solution.

4. Corporate governance

Consultants with international and wider social perspectives are needed in structuring
Boards and improving their work. They offer a great amount of guidance and support,
identifying board members’ competence, independence and accountability.
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 13

4.0 CONSULTING IN HUMAN RESOURCE

Involves Specialist advice and services provided by a third-party to help businesses

maximize the efficiency of their HR operations and implement appropriate new policies and
procedures in the best way possible.

Also referred to as human capital advisory or HRM consulting, spans advisory and
implementation activities related to the management of an organization’s human capital and the
HR function.

The human resource consulting industry has emerged from management consulting and
addresses human resource management tasks and decisions.

Human resource consultants have two major roles.

These roles are: -

1)The Expert Resource Consultant suggests solutions based on expertise and experience
and assists in the implementation.

The role is very typical in information benchmarking and design consulting.

2)The Process/People consultant assists in searching for solutions with methods that
facilitate and raise creativity of the client company so that they will be able to implement
solutions themselves. The role is traditionally demonstrated by organizational development and
change consulting.

Core Areas of Human resource consulting: -

Employee engagement: Measure employee engagement levels through surveys and

interviews, define and improve performance in employee engagement and retention. While this
area of HR consulting is necessarily broad, encapsulating total rewards strategy, employee
performance management, leadership transformation, and organization structure design, most
companies do have very specialized independent practices.
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 14

Compensation: Design and manage compensation programs related to basic salary,

bonuses, and stock plans. Evaluation of positions and building of salary structures, bonus plans
and stock plans for clients are common.

Specializations are often based on employee types (e.g. Executive compensation

consultants and sales compensation consultants.

Employee benefits: Optimize benefit plan design and administration (inclusive of health-
related benefits) by assessing competitiveness and effectiveness of benefit plans (analytics and
design), and cost-effectiveness and quality of vendors (brokerage).

Actuarial and retirement: Provide actuarial and administration services to manage cost
and effectiveness of retirement programs, including defined benefit and defined contribution
plans.

Mergers and acquisitions: Conduct human capital due diligence, coordinate and
administer cross-functional activities during execution, including payroll and Human resource
management system technology. Align organizational cultures and work styles during post-
merger integration.

Talent mobility: Provides the insight and execution for full international expatriates
(usually for executives) or local plus (partial-package expatriates), from pre-move informative
guide, to post-move expat management program.

Other services may also include legal counseling, global initiatives, investments
consulting, and the implementation of human resource technologies to facilitate human capital
management.

Example 1:

Jane worked with a small company with 12 employees to review its structures to improve
effectiveness and deliver greater efficiencies. Designing revised job descriptions, consulting on
changes in working practices and introducing a team ethos, Jane successfully transformed the
team to deliver the services required.

example 2:
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 15

Following a serious downturn in business, Jane supported a manufacturing company in

downsizing its operations. A key objective of the exercise was to ensure that the manufacturing
processes could continue but on a reduced basis. Following consultation, job redesign and open
selection, some posts were unfortunately redundant. People were offered support to assist them
in securing alternative posts and work continued with those remaining to rebuild team spirit and
morale.

Solutions include:

 Coaching and mentoring for career change, performance improvement and

handling difficult situations.
 Designing an incentive pay scheme.
 Running recruitment and selection exercises including assessment centers.
 Designing and implementing HR policies, employee handbooks and
induction materials.
 Supporting disciplinary, grievance and conflict cases.
 Designing and evaluation staff appraisal schemes.
 Providing training in managing sickness absence, performance
management and handling redundancy consultation.
 Supporting change including job redesign and organization structures.

5.0 CONSULTING IN FINANCIAL MANAGEMENT

Finance and accounting provides a common media in which the people can communicate
business matters effectively. Consulting in finance involves the use of financial and accounting
data, and all the management consultants in their areas of specialization. Consulting in finance is
very important due to the interconnectedness and linkages between finance and other areas.

A financial consultant or a financial advisor is a professional who provides financial

services to clients based on their financial situation. It is easier for a financial consultant to assist
a client if the client is financial literate. This means that the client should be able to have a clear
understanding of the accounting and financial terms and procedures, and is able to use them in
simple financial analysis.
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 16

Parties offering consulting services.

1. Accountants.

These are individuals who are concerned with the collection and processing of accounting
data and reporting to interested parties inside the firm.

2.Independent accountants.

This refers to qualified sole-practitioners who provide financial advice to his clients
based on their financial information and is recognized by an accounting Board.

3. Accounting Firms.

These are the firms which audit the company’s financial statements. Most accounting
firms regularly provide financial assistance, and are a valuable source of advice on the design of
budgeting and reporting systems, and on taxation. Managers who need financial advice will first
turn to them due to their close working and ongoing relationships. Accounting firms range from
small firms to large firms which have full range financial specialist.

4. The company's commercial bank.

The company’s commercial bank is an alternative source of financial advice. The advice
of the local bank manager may be very useful, particularly as it will be supported by specialized
knowledge about the financial situation. They also offer management advisory services
especially to enterprises which borrow from them to ensure that their loans are properly utilized.

5. Merchant banks.

Merchant banks are much more actively involved in consulting services as compared to
commercial banks. Their earlier role was to act as agents and intermediaries in the issue of
securities, advising on the terms of the issue and providing underwriting services but heir role
has expanded to include a wider range of advisory services. They are actively involved in merger
and acquisition activities and also in risk management.

BASIC TOOLS IN FINANCIAL CONSULTING.

These are the resources that aid in the consulting process. The consultant should be a
professional who is vast in knowledge in financial skills and should learn on how to go about
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 17

educating clients who do not have such skills. The materials available for consulting include the
following:

1. Accounting principles.

There are some basic accounting principles that clients must understand because financial
statements will otherwise be meaningless.

2. Bookkeeping

Since the accounting cycle begins with bookkeeping, it is important that the consultant
advises the client to focus on bookkeeping. The emphasis should be not upon how financial
information is collected, but upon how it is used in managerial decisions.

3.Financial statements.

This includes the statement of comprehensive income and the statement of financial
position.

These statements are very important because they help in assessing the performance of
the business in terms of profits and in tax computation.

Core areas in Financial consultancy.

1. Managing cash.

The banks are indeed the experts in this field. Most major banks have actively developed
and marketed cash management systems in the form of various products and services. The work
of the consultant is to assist the client company in evaluating the array of different packages
which the banks offer such that it is appropriate to the needs of the client.

2.Capital investment analysis.

Most business organizations tend to generate more investment proposals than they can
immediately finance. They therefore require a systematic method of calculating the economic
attractions of such investment proposals, and of ranking them in order of preference so that the
limited funds available go to the most productive investments. In this field, the consultant
becomes useful by providing the following inputs:
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 18

i. Assisting in the analysis of capital Investment proposal.

The consultant plays this role by choosing the best analytical method. He/ She should
persuade the client that the simplistic methods of investments appraisal such as the simple rate of
return are becoming outdated and unsatisfactory and leads to misleading results. In order for the
shareholder value to be maximized, only the investment proposals that provide a return that
exceeds the company cost of capital should be selected. The consultant should therefore
encourage on the use of techniques based upon the time value for money (Discounted Cash
Flow) e.g. NPV and IRR.

ii. Following up of projects effectiveness.

This is one of the most valuable services provided by a consultant since many companies
overlook it. Here, the consultant comes up with ways of doing a systematic follow-up and
monitoring of the project performance and providing answers and solutions to any variations
from the expected.

3. Mergers and acquisitions.

Mergers between companies or the acquisition of one company by another provide many
opportunities to consultancy work. The consultant helps in the determination of the fair value of
one or both companies involved. The consultant may also be called upon to advice on the
method of payment used. He or she may be working for either the acquiring company or the
company to be acquired, but in some cases of friendly merges, he may be working for both.

4. Capital structure and financial markets.

Every business organization needs an adequate capital base to support its operations and
its inadequacy causes business failure. In addition to having adequate capital, the business must
have an appropriate capital structure: the right mix of equity funds and debt.

When using debt funding, the consultant has to advice his client that the ability to use
debt financing depends on the ability to service the debt. i e the ability of the organization to
meet all interest charges and repayments of principals when they fall due. This in turn depends
upon cash flows. The consultant has the duty of persuading the client company to undertake a
long term projection of cash likely to be generated by its operations not only during normal
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 19

economic conditions but during periods of uncertainties and recessions. This is achieved through
simulation techniques and the development of computer based model of the company’s financial
dynamics.

5. Use of external financial markets.

As companies grow in size, the internal sources of financing such as commercial banks
become insufficient and expensive. The consultant plays the role of educating the clients on the
various international markets available, e.g. Eurocurrency markets, Eurobond and several foreign
markets existing in various regions. Since these markets are complex and require a lot of legal
formalities, the client has to guide the client company through a mass of new terms and
procedures

6. Working capital and liquidity management.

The work of the consultant is to advise the client on effective management of working
capital such that the organization is able to meet its debt commitment when it falls due. i.e.
paying its bills on time. The approach taken by the consultant is on cash flows rather than on
accounting concepts.

Working capital and the operating cycle

The operating cycle refers to the process through which materials are purchased, stocked,
converted into finished goods and finally sold. Consultants can help their clients understand their
organization’s own unique operating cycle and find ways of increasing the operating efficiency
as well as shortening the cycle. Under the operating cycle, the consultant's main task is to

i. Assist on the improvement in inventory control leading to a reduction in average stock

levels.

ii. Assist in the improvement in quality control leading to reduction in wastes and scrap.

iii. Educate the client company on the improvements in collection of account receivables
and transfer of funds from remote locations to a central concentration account. This aims at
reducing cash tied up in the operating cycle.

7. Financial operations under inflation.

CONSULTING IN VARIOUS AREAS OF MANAGEMENT 20

Successful management under high inflation is not simply a matter of changing

accounting procedures. There are practical operating steps to be taken. Consultants can provide
services to clients in many areas, primarily the following:

I. The development of forecasts of inflation rate, either by primary analysis on the basis
of monetary aggregates or by combining the forecasts available from official bodies and
financial institutions

ii. The incorporation of inflation expectations in the company’s strategic planning

procedures

iii. The recognition of the close relationship between inflation rates and interest rates, and
the anticipation of likely interest rate changes in planning the company’s capital structure.

8. Budgetary systems. Consultants participating in general management services

activities are likely to be asked to assist in the design of budgetary systems rather than formal
accounting systems. The emphasis here will be on management accounting –methods of
collecting and analyzing data to support internal decision-making rather than formal financial
reporting.

IMPORTANCE OF FINANCIAL CONSULTING.

1. Creating value - consultancy helps in creating the value to the shareholders- Value is
created when there is a difference between the market value and the book value of a company’s
equity. The work of the consultant is to create value by developing a set of financial strategies or
actions that maximize returns on the capital invested.

2. Collecting and organizing relevant data such as client's income and expenditure
statement, income tax returns, and credit reports, in order to get an idea of the current financial
status of clients

3. He/she helps in analysis and determination of data by keeping in mind the immediate
financial requirements of clients
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 21

4. Helping the clients to implement the plan by setting up a timeline and also supervising
the progress of the plan and making necessary modifications in the plan to suit the present
financial situation of the client

6.0 CONSULTING IN IT

Development of IT since 1996 has grown in scale and in sophistication. The need for
consulting support in order to realize the promise of information tech has arguably been the
engine of growth for the management consulting industry as a whole.

Developing role of information technology

Senior managers have adopted a new technology specifically the use of computers. This
change has come about through education and new attitudes to technology, but the main driver of
change to desktop is the increasing standardization, accessibility and power of graphical
interfaces and the easy availability of application for communications, word-processing and
other common business tasks.

Communication within organizations by email and through the corporate Intranet, is now
much richer and often more democratic than in the past. Email has become the communication
medium of choice in a world of global business where managers are constantly on the move
between different time zones.

Legacy systems and installed a set of interconnected packaged application, this has
enabled business to have end to end flow of information across their value chain and out to
customer and suppliers. Consultants have played a significant role in helping to implement this
large scale information system, such as electronic point of scale (EPOS) systems, customer
relationship management (CRM). All these systems provide access to an ever increasing volume
of data.

The commercialization and rapid development of the internet, whereby there’s a

transition of a free and cheap of communication. There’s a need to be able to access the same
information in an accustomed manner whenever one is in the world,

It seems inevitable that the amount of information available to us will continue to

CONSULTING IN VARIOUS AREAS OF MANAGEMENT 22

increase, Data warehousing, data-mining and knowledge-management technologies are available

but are not easy to apply and are still expensive. Technology has in a sense created the problem
of information overload: this is a great need for technology to provide a solution.

SCOPE AND SPECIAL FEATURES OF IT CONSULTING

In order to exploit the promise of information technology, a company must purchase,

develop and integrate a vast range of hardware, software and trained people. A reliable and
flexible network infrastructure must be built. Databases must be constructed, populated and
protected from loss of malicious damage. Individual software application must be written or
purchased and installed. Information must be trained. The primary goal is to integrate
information systems that stretch end to end, from the suppliers, to the company itself, and out to
customers and consumers.

The traditional role of IT consultants has been to bridge the gap between a company in
house IT capability and the range of IT suppliers that it must deal with. This symbiotic
relationship of consultants and hardware and software has led to complex web of business
relationships. i,e the installation of an enterprise resource planning (ERP) system is a large
program that can take up to three years to complete.

Consultants are faced with a range of strategic options, from maintaining strict
independence from one extreme to becoming almost an in house consultancy for a software
house or a network supplier at other extreme. Each point from these spectra brings different
costs, markets, opportunities and different risks.

THE OVERALL MODELS OF INFORMATION

SYSTEM CONSULTING. This model is adopted by Michael Earl, shows that thinking
about applying information technology to a business, it is possible to gain a great deal of clarity
by answering four simple question; why? What? Which? How? clarity about the questions being
asked will help clients in choosing, briefing and managing consultants and will help the
consultants to ensure they deliver what the clients expects.

1. What technology application shall we build?

CONSULTING IN VARIOUS AREAS OF MANAGEMENT 23

John wards concept of an application portfolio can be used to balance present and future
needs. The portfolio can be divided into ''support'', ''mission-critical'' and experimental
applications.

2. Which technology, which vendors and which hardware and software

Managers must make basic choices about things such as the standard operating system or
network architecture, together with numerous decisions on items of hardware and software.

3. How can the technology and its implementation best be managed?

There is a wealth of experience in practical ways of coping with unique features of

information technology. Consultants can review existing management practices or help develop
new ones. They include

 Audit of management practices

 Benchmarking and setting of service standards for the IT function.

 Assistance with project planning and assistance

 Providing contract managers to cope with peaks in a company workload

 Staff training and helping clients to develop and maintain functional

clients

OUTSOURCING

Outsourcing provides solution on how to manage the technology, although it does not
absolve management from the need to ask why the business needs technology and what aspects
of technology are appropriate. Companies often consider outsourcing the functions where they
have relatively little expertise or interest. Independent consultant will be needed to supply the
expertise to choose a supplier and write the outsourcing contract.

Ten years ago, outsourcing was all or nothing affair and contracts were for five years or
longer. Now it is much more selective and contracts are much typically shorter, perhaps as short
as two years. This is happening partly because of increasing competition among the outsourcing
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 24

suppliers and partly because companies are finding it hard to look ahead and decide what may or
may not be strategic IT in five years’ time.

THE PROVIDERS OF IT CONSULTING SERVICES

The variety of providers tend to grow as the relationship between IT and management
consulting becomes more complex and as new generations of IT systems become commercially
available.

1. Strategy consulting

In the past, the international high level strategy consultancies tended to work at the
corporate rather than the functional or operational level. However, the growth and strategic
importance of IT has given consultancies no choice but to become closely involved in IT
strategy. The best of this firm are leaders in understanding the impact of IT on business strategy
and the best firms will be honest about how far they regard implementation of IT strategy as
being within their competence and their interest.

2. General management consultancies

IT consulting is the biggest and fastest-growing segment of management consulting as a

whole. It follows that any large firm of general management consultants will have large IT
consulting and will have built up a lot of experience. One selling-point for the larger consultancy
is the ability to carry project through from strategy to actually running the hardware if necessary.

3. Specialist IT consultancies

The growth of the IT consulting sector has fueled tremendous growth and diversification
in consultancies that started out as IT specialist. In the same way that the general management
consultants have been forced to embrace IT.

4. Virtual consultancies

The great diversity of skills needed to implement IT systems has facilitated the rise of
''virtual'' consultancies. These are formed on a project basis and teams usually come together
because a leader either a firm or an independent consultant, has an opportunity to bid for work
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 25

that is too large or complex for him or her to handle alone. It is therefore safest to start by
employing a virtual consultancy on a relatively small scale, low risk project.

MANAGING AN IT CONSULTING PROJECT

Clients and consultants team should set aside time to meet and clarify the objectives,
which contain conflicts, for instance between cost and flexibility or between the demands of
different users. If the objectives change as the assignment proceeds, then both should go back to
clarify and re-plan.

Overestimating on each task gives a false illusion of safety to those whose duty it is to
deliver the task- an illusion that is often rudely shattered when a critical bug is found the day
before the go live deadline.

Risky projects need a longer time buffer, typically up to a third of the overall time
available. This way of working requires a different approach by all concerned; more honesty in
estimating task times, constant monitoring of the project buffer and immediate action if the
safety time begins to be eaten away at a faster rate than the project is progressing.

For long projects, set intermediate objectives or milestones. Monitor any drift that occurs
in this milestone but do not simply sacrifice quality to achieve an arbitrary milestone.

7.0 CONSULTING IN SMALL FIRMS

The meaning of small enterprise varies in terms of nature, purpose definition, and level of
development. An enterprise may be small also depending on the number of employees, money
value of sales, and capital investment (Nahavandi &Chesteen, 1988).

Consultants play a significant role in economic development by advocating for small

enterprises. Consultants help in the start-up phase since it’s the most complex and challenging
stage in enterprise development. Consultants help train entrepreneurs who want to initiate new
enterprises (Nahavandi & Chesteen, 1988). Existing small businesses apply consultancy to help
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 26

in solving operational problems. However, if there is a need for expanding business operations,
the consultancy may take a long time.

Small scale entrepreneurs face new challenges and opportunities at each stage of business
establishment and growth. New entrepreneurs must be able to cope up with the demand in
business and balance work time.

Problems of small enterprises

These problems may be general or specific, whereas available problems involve market
access, weaknesses in identifying new market opportunities, access to raw materials.
Management consultants must be aware of the particular issues at the level of the enterprise
(Harounian, 2018).

1. Small enterprise managers operate with quantitative data; hence to save on operating
costs, they are likely to dispense with information systems, affecting the business when it starts
to grow.

2. Some small enterprises may pay minimum wages, low job security, and few
promotional opportunities; therefore, have difficulties recruiting high-caliber employees.

3. Small firms are usually limited to one or a few products or services; this will make it
challenging to diversify in the business world if there is a need.

4. High productivity is difficult to achieve since small enterprises do not enjoy the low
costs of firms.

The role of consultants in small firms

The main reason for the existence of firms is to maximize profits. Consultants help in the
development and growth of the business. The consultant should be professionally trained and
have experience.

1. Consultants help in the provision of training activities to the entrepreneurs

who want to initiate new enterprises.
2. Consultants help in enterprise development
3. Consultants help in solving operational business problems in small firms.
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 27

4. They help in the provision of market guidance since the consultants are
action-oriented.

Benefits of small business that use consultants

1. They gain independent professional viewpoints.

2. They get ideas for coping with growth
3. They acquire the advantage of gaining a fresh perspective on marketing
and market development
4. They develop a strategic approach.

Case Situation: Example of Application of Consultancy in a Small Business Startup

Peter, a businessman, is planning to develop a new small business firm with new products
in the market. This is a business that he may expect disruptive consequences. He will be able to
seek consultants that will inform him on the best strategies to take as a way to meet the desired
business development without experiencing disruptions from the environment.
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 28

CASE STUDY

East African Breweries Limited (EABL), Diageo’s brewing powerhouse, is the leading
producer of alcoholic beverages in the East African region and the second-largest listed company
on the Nairobi Securities Exchange by market capitalization (KSh229bn, $2.6bn). With
operations in Kenya, Uganda and Tanzania, 42.8% of EABL is owned by Diageo Kenya, 4.6%
by Diageo Holdings Netherland’s BV, 2.6% by Guinness Overseas and the remaining 50% is
split among more than 25,000 shareholders on the securities exchanges of Kenya, Uganda and
Tanzania. EABL has a combined installed capacity of 10m hectoliters (hl) across the region with
production at 6m hl in 2013, representing 60% capacity utilization. The company has grown
from a single entity with one brewing plant to a regional powerhouse in the alcoholic
beverages industry with various breweries across the region. In its growth EABL, has acquired
smaller inefficient breweries and transformed their fortunes. It has also acquired sufficient stake
in other breweries in the region making it a powerhouse in the regions alcoholic
breweries industry. The company is also an international exporter of some of its brands
with contractual agreements in the UK, USA and the region. EABL currently operates in the
highly competitive alcoholic beverages industry and positions itself as the leading alcoholics
beverage producer with a regional market share of 44% as per FY 2013, Diageo Africa report.
The company’s focus to continuously meet emerging consumer needs in addition to its alignment
to its internal process and other stakeholders enables it to meet the needs of all its stakeholders.

One of EABLs focus areas is innovating at scale to meet new consumer needs. As a
consumer driven business EABL takes time to study the market and understand consumer needs
and wants as well as how best to satisfy them.
The focus on emerging brews and drinks will be a key factor of EABLs growth. The Business M
odelCanvas is the proposed approach to formulating the strategy. It is a visual chart
with elements describing a value proposition, infrastructure, customers, and finances. It will
assist EABL in aligning its activities by illustrating potential trade-offs. The reason we propose
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 29

the Business Model Canvas is that it will create focus, give EABL flexibility and transparency. It
is a hands-on tool that fosters understanding, discussion, creativity, and analysis.

EABL will need to partner with farmers to supply the raw materials for its products. In
addition, the company will partner with distributors, supermarkets, restaurants, bars and liquor
stores to ensure its products are widely available to consumers. EABL will ensure that all its
activities are cost effective in a bid to provide quality products at reasonable prices to the
consumers. Through use of aggressive marketing and advertising, EABL will reach all spheres of
its consumers and ensure availability of products through effective distribution channels. EABL
will also provide a platform of engagement with its customers on the website and social media to
identify any issues and ideas for possible implementation. All these activities will enhance its
business and increase its revenues.
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 30

CONCLUSION

The consultants in the above mentioned areas have a number of roles to play. They would
be responsible to do a feasibility study to suggest the right strategic decisions for firms. They
also focus to improve the processes and resources of organizations. While some companies
would seek consulting services when they are facing crucial problems, it is more important to
seek such services during the early stages of establishing organizational activities.
 CONSULTING IN VARIOUS AREAS OF MANAGEMENT 31

References

Anand, N., Gardner, H. K., & Morris, T. (2007). Knowledge-based innovation: Emergence and
embedding of new practice areas in management consulting firms. Academy of management
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Block, P., & Gardner, G. (1981). Flawless consulting: A guide to getting your expertise used (p.
371). San Francisco, CA: Pfeiffer.

Harounian, S. (2018). Small business consulting for a private pest control corporation.

Kubr, M. (Ed.). (2002). Management consulting: A guide to the profession. International Labor
Organization.

N. Venkateraman and J. C. Henderson: “Real strategies for virtual organizing”, in Management

Review, Fall 1998, pp. 33-48

Nahavandi, A., & Chesteen, S. (1988). The impact of consulting on small business: A further
examination. Entrepreneurship Theory and Practice, 13(1), 29-40.
CONSULTING IN VARIOUS AREAS OF MANAGEMENT 32