bain & company, inc: growing the business
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Bain & Company, Inc. Global management consulting firm headquartered in Boston, Massachusetts. It provides advisory services to businesses, non-profit organizations, and governments,Bill Bain and six former BCG consultants founded Bain & Company in 1973.
Stock Market Performance Bain & Company Clients
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Bain ad Company clients had outperformed competitors by a significant margin.
Challenges Bain & Company face from competition
McK
inse
y • McKinsey & Company
• Has established 42 offices in 23 countries
BCG • The
Boston Consulting Group
• a laggard in the early 1980s, had been showing signs of resurgence.
Mon
itor,
LEK • Monitor
Company and the LEK Partnership
• Had been increasing their staffs at rates of 50%-100% per year.
Possible Business Strategies?
Should Bain focus on developing its position in traditional “advanced markets,” or were “developing markets” a more attractive option?
Should Bain rely exclusively on internal resources to build its international market position, or were external opportunities, like acquisitions, a joint ventures, and hiring well-positioned outsiders, an appropriate way to expand?
How would change affect the strong commitment to “one firm” and “client exclusivity” that had differentiated Bain over the years?
Top-Tier Management Consulting Industry
Top-tier firms charge much higher fees compared to other management consulting firms.
The firms differ by capabilities, Marketing, Specialization (function, Industry and Analytical methods), Firm culture, Willingness to work for multiple clients in an industry.
Economics of the Top-Tier Firms
The cost structures of the top-tier management consulting firms were similar.
The strategic planning segment prices its services at three and one-half to four times staff salary.
Large segments of the consulting industry bill services at two to three times staff salaries.
According to a Bain director, the key driver of profitability was capacity utilization.
Founded by J.O McKinsey in 1926 One of the largest management consulting firms, with
1989 revenues estimated at $635 million. Early and broad international expansion gave McKinsey
a strong competitive position. 57% revenues originated from outside the United
States. Expansion began in London, In 1971 there 17 offices on
four continents Objectivity, independence and professionalism were
critical elements of the package. Maintain “one firm” culture: exchanging professionals
between offices, worldwide training programs, multioffice development seminars, and interoffice personnel evaluations.
Founded in 1963 by Bruce Henderson, a former Arthur D. Little consultant.
First large management consulting firm to specialize in strategy consulting.
BCG was responsible for two major concepts of the 1960s: the “growth-share matrix” and the “experience curve”.
In 1984 BCG had 160 clients and 350 professional staff. In 1990 14 offices in 9 countries
The firm’s non-U.S. offices were responsible for about half BCG’s total revenues.
BCG encourage its consulting staff in Europe and japan to spend a portion of their careers in United States and urges U.S. consultants to do the same.
In 1987 they had six worldwide practice areas: consumer products, corporate development, financial services, health care, high technology, and operational effectiveness.
In 1989, two other practices were set up: organisation and information technology.
Geneology of top-tier Management Consulting firmsFormer BCG professionals had founding roles in various firms
Relationship Consulting
Help the client to implement its strategy recommendations
Judge its performance through external measures
Don’t work for clients competitors
A “One Firm” Culture Promoting a Common Standard of Quality – develop a set of common
values and employee capabilities Recruiting Top Students Worldwide – top minds and team players Emphasizing Global training programs – two week training programs for
associate consultants (boot camp). Fostering Interoffice Communication – The most critical element of
communication is breaking down the barriers between offices (phonemail, Videoconferencing).
Sharing Worldwide Expertise – “experience center” contained over 10000 documents chronicling 15 years of work for Bain clients. Annual meetings.
Organizing Internatioanally by Client – not by office Role of Country Managers – dual roles, developing client relationships
and office management responsibilities. Role of Central Decision-Making
International Expansion1978 •Bain & Company opened its first office outside the United States in London
1979 •John Theroux was appointed managing director of the London office
1980 •The London office was working for a large European bank
1981 •A British consumer product company was added.•The Tokyo office opened
1982 •Bain opened office in Munich
1985 •Bain opened office in Paris
1990 •Bain expanded its business in Italy with 50 full-time professional staff
Growth Strategies: Where to Build Traditional Strategy – Based on high quality client relationships Bain
focused on penetrating the British, French, Italian, German, Japanese, and American markets.
Penetrating Advanced Markets –
Developing Markets – Latin America, Asia
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