An investigation into the industry attractiveness of the management consulting industry in South Africa

Kirsten, Kim Maria (2002-03)

Thesis (MBA)--Stellenbosch University, 2002.

Thesis

ENGLISH ABSTRACT: This Study Project is entitled: "An Investigation Into The Industry Attractiveness Of The. Management Consulting Industry In South Africa". The management consulting industry is by no means a new or fledgling industry, with its roots dating back to the early 1900's where it had a strong engineering orientation. The global consulting industry experienced a massive growth phase during the late 1980's and during the 1990's, and was not only enormously lucrative, but also a highly attractive industry. It now appears that the management consulting industry has been negatively affected by global economic factors (such as recession, globalisation, technology, terrorism) over the last few years, particularly in 2000 to 2002, where is has now reached a stage of maturity and is in a period of major consolidation. This global industry trend has been increasingly evident in South Africa (SA), and judging from the way consulting firms have been restructuring, consolidating and revising their recruitment policies (on a global scale) in the last few years, it appears that the industry could be becoming less attractive than it has been in the past. An important objective of this Study Project was to investigate the key issues and problems facing the consulting industry, largely from the perspective of the clients who ultimately make the decision to bring in a consultant. By conducting a strategic assessment of the management consulting industry in South Africa, the ultimate objective was to determine the fundamental attractiveness of the consulting industry at present. To achieve the above objectives, it was determined that qualitative, investigative research would be conducted, rather than a quantitative, numerative approach to data gathering. The research methodology used in this Study Project was a combination of secondary and primary - research. Firstly, secondary research, in the form of an in-depth, global literature review was conducted on the topic. Having established the key themes and issues facing the consulting industry, primary research could then be conducted. This was achieved by conducting indepth, personal interviews with key decision makers across client industries in South Africa, to determine the current industry attractiveness of the management consulting industry. The current down phase in both global and South African general economic business cycles, has dictated that cost and value-added issues are top of mind in organisations where clients are no longer content to pay high fees, and not see meaningful results. And so, whilst management consulting plays a definite role in a client organisation, a large gap has been created for the small to medium specialist firms to grow, particularly in the local marketplace. Clients feel that the small specialist firms are able to offer better value for money, more personalised service, lower fees (as a result of lower overheads) and build a more sustainable long-term relationship with them. Clients are also relying less on consultants to solve all their problems, and are realising the excellence of their own internal resources. Overall, the management consulting industry, both globally and particularly in South Africa, is only averagely attractive at this present moment. It has definite attractions and uses to clients, whilst simultaneously drawing serious concerns from the client firms who require their services. Being in a mature phase of its life cycle, and given the current down phase in the global economic cycle, the consulting industry is poised to either go into decline or experience a resurgence of growth. Thus, it is how the consulting firms respond to the new economic challenges placed upon them and how they respond to the criticisms which have been brought to light, that will dictate which firms survive and which will not. Finally, it is recommended that the relative attractiveness of the management consulting industry (as conducted in this Study Project) be re-evaluated on a fairly regular basis in order to understand the next stage in the life cycle of the industry, to provide clients and industry players with insight into the factors influencing the consulting industry. And to provide an independent resource to the consulting industry, to guide them in shaping their future strategies for survival.

AFRIKAANSE OPSOMMING: Hierdie Studieprojek is getiteld: "'n Ondersoek Na Die Aantreklikheid Van Die Bestuurskonsultasie-industrie In Suid-Afrika". Die bestuurskonsultasie-industrie is geensins 'n jong, nuwe industrie nie. Sy wortels dateer terug na die vroeë 1900's waar dit 'n sterk ingenieurs-oriëntasie gehad het. Die internasionale konsultasie-industrie het in die laat 1980's en gedurende die 1990's 'n enorme groeifase beleef en was nie net geweldig winsgewend nie, maar ook uiters aantreklik. Dit blyk egter nou dat die bestuurskonsultasie-industrie oor die laaste paar jaar negatief beïnvloed word deur internasionale ekonomiese faktore (soos resessie, globalisering, tegnologie, terrorisme). Dit is veral die geval in die tydperk 2000- 2002, waar dit nou 'n fase van volwassenheid bereik het en 'n tyd van konsolidasie beleef. Hierdie internasionale industrie tendens word al meer in Suid-Afrika gemerk. Dit blyk, veral uit die wyse waarop konsultasie firmas die afgelope paar jaar herstruktureer, konsolideer en hul aanstellingsbeleid (op 'n internasionale skaal) in heroorweging neem, dat die industrie minder aantreklik is as in die verlede. 'n Belangrike doelwit van hierdie Studieprojek was om die sleutelfaktore en probleme wat die konsultasie-industrie in die gesig staar, te ondersoek - grootliks vanuit die perspektief van die klant wat uiteindelik die besluit neem om 'n konsultant te raadpleeg. Deur 'n strategiese ondersoek na die bestuurskonsultasie-industrie in Suid-Afrika te doen, was die hoofdoelwit om die huidige fundamentele aantreklikheid van die konsultasie-industrie te ondersoek. Om bogenoemde doelwitte te bereik, is kwalitatiewe, ondersoekende navorsing gedoen in plaas van 'n kwantitatiewe, numeriese benadering van dataversameling. Die navorsingsmetodologie wat in hierdie Studieprojek gevolg is, is 'n kombinasie van sekondêre en primêre navorsing. Eerstens is sekondêre navorsing in die vorm van 'n indiepte, internasionale literatuurstudie oor die onderwerp gedoen. Na bepaling van die sleuteltemas wat die industrie in die gesig staar kon primêre navorsing aangepak word. Dit is gedoen deur indiepte, persoonlike onderhoude met sleutelbesluitnemers in die Suid-Afrikaanse klantesektor om sodoende die huidige aantreklikheid van die bestuurskonsultasie-industrie te bepaal. Die huidige afwaartse neiging in beide die internasionale en Suid-Afrikaanse algemene ekonomie en sakesektor, het dikteer dat koste en waardetoevoeging prioriteit het in organisasies waar klante nie meer geneë is om hoë fooie te betaal terwyl hulle nie betekenisvolle resultate sien nie. En dus, terwyl bestuurskonsultasie 'n besliste rol speel in klante-organisasies, is daar 'n groot gaping vir klein tot medium spesialiste om te groei, veral in die plaaslike mark. Klante voel dat die klein spesialis-firmas beter waarde vir geld bied, 'n meer persoonlike diens lewer, laer fooie (weens laer lopende koste) het en 'n langtermyn-verhouding met hulle bou. Klante steun ook al minder op konsultante om al hul probleme op te los en besef die uitnemendheid van hulle eie interne bronne. In die algemeen kan gesê word dat die aantreklikheid van die bestuurskonsultasie-industrie, beide internasionaal en veral Suid-Afrika, net gemiddeld is. Dit het besliste waarde en gebruik vir klante, terwyl dit gelyktydig bekommernis bring vir die firmas wat die dienste benodig. Die konsultasie-industrie, gegewe die volwasse fase van sy lewensiklus en die huidige afwaartse fase van die internasionale ekonomiese siklus, kan óf 'n afname beleef óf 'n oplewing wat kan lei tot groei. Dus, dit is hoe konsultasie-firmas reageer op die nuwe ekonomiese uitdagings wat aan hulle gestel word en hoe hulle reageer op die kritiek wat tans uitgewys word, wat sal bepaal watter firmas sal oorleef en watter nie. Dit word aanbeveel dat die relatiewe aantreklikheid van die bestuurskonsultasie-industrie (soos in hierdie Studieprojek gemeet) gereeld herevalueer word om die volgende fase in die lewensiklus van die industrie te verstaan. Sodoende sal klante en rolspelers in die industrie se aandag gevestig kan word op faktore wat die konsultasie-industrie beïnvloed. Dit sal ook 'n onafhanklike bron bied om die industrie te lei in die bepaling van 'n toekomsstrategie om oorlewing te verseker.

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