L2 - Understanding the Project

Question 1

What are the consultants main aims?

Answer 1

(1) Develop value proposition
(2) Identify target market
(3) Promote proposition
(4) Sell project to target client

Question 2

What are the consultants main motivations?

Answer 2

Economic
Weaken competitors
Reputation development
Pro bono

Question 3

What are the clients main aims?

Answer 3

(1) Identify the issue
(2) Identify potential suppliers
(3) Request project proposals
(4) Buy a project

Question 4

How can clients see a consultant from a functionalist perspective?

Answer 4

Functionalist - consultants can help improve functions 
 Formal roles:
  Doctor role 
 Expert Role 
 Facilitator role

Question 5

How can clients see consultants from a critical perspective?

Answer 5

Stimulate anxiety
Consultants won’t improve or add anything
This person is the wrong consultant
Consultants may provide flawed solution
Consultants provide one-size fits all solution without realising the uniqueness of clients problem

Question 6

What is a prospect?

Answer 6

A client that has not yet signed the contract and wants to hear more about the project

Question 7

Explain the probability of generating a lead in the marketing phase?

Answer 7

Cold-calling - low probability
Marketing - mid probability
Reputation - mid-high probability
Referrals - high probability of generating a lead
Successful previous project - this is the highest probability of generating a sales lead

Question 8

What is the issue with new entrants and generating a sales lead?

Answer 8

Does not have previous evidence of success with client (which is the most effective strategy)
Most rely on successful prior project experience for another client (e.g. referral and reputation)
No experience
With no experience no entrants most use marketing and cold calling
Rely on referral from a formal consultancy they have worked with (referral by the referred)

Question 9

Explain the sales process

Answer 9

Sales lead - follow up on the generated lead
Contact (first meeting) - do preparatory research, develop the relationship, understand the real hiring reason and intentions
Proposal - detail around the planned project
Contract - the agreement of the project

Question 10

What is Porter’s 5 forces used for?

Answer 10

Understand industry - Make decisions about whether to enter an industry or not by understanding the industry forces
Strategy - Where to position firms relative to each force

Question 11

What are Porter’s 5 forces?

Answer 11

Threat of entry 
 Substitutes 
 Buyers 
 Suppliers 
 Firm rivalry

Question 12

Name some characteristics of the threat of entry force?

Answer 12

Economies of scale 
 Product differentiation 
 Capital requirements 
 Proprietary learning curve advantages 
 Government policy 
 Expected retaliation 
 Distribution channels (access to input and outputs)
 High switching costs (costs involved in switching to another company)

Question 13

What is the difference between competitors and substitutes? Give example?

Answer 13

Substitutes come from a separate industry
Competitors exist within the same industry
Airlines and trains

Question 14

Name the characteristics of substitutes?

Answer 14

Relative price/performance of substitutes
Switching costs
Buyer propensity to substitutes

Question 15

Name the characteristics of buyers?

Answer 15

Buyer concentration (e.g. high volume of sales means more bargaining power)
 Buyer switching costs 
 Buyer ability to vertically integrate 
 Substitute products (does the buyer need this input?)

Question 16

What do the characteristics determine?

Answer 16

The strength of each force.

Question 17

Name the characteristics of the industry competition?

Answer 17

Industry growth
Concentration and balance
Exit barriers
Switching costs

Question 18

Apply the forces to the management consultancy industry?

Answer 18

New entrants- low exit costs but have to build up reputation
Buyers - buyers might have high bargaining power in very specialised sector
Suppliers - if there are few specialist suppliers then consultants could have power (e.g. the suppliers are not companies but intelligent employees)
Industry - not focused on industry growth but competition for market share

Question 19

What is the value disciplines model?

Answer 19

How to position firm to get a competitive advantage
Value leadership model posits that for a company to be competitive it must have (a) operational excellence (b) product leadership (c) customer intimacy
Need to be excellent in one of these disciplines

Question 20

What is operational excellence?

Answer 20

Deliver quality product or services

Quality price

Question 21

Product leadership?

Answer 21

Striving to provide customers with cutting-edge product and services

Question 22

Customer intimacy?

Answer 22

Create tailored product and services to customer

Create bonds and customer loyalty

Question 23

Describe the level of codification and familiarity of clients problem?

Answer 23

Exploration - low accumulated knowledge and familiarity
Exploitation - low for both
Accumulation
Codified practice - high amounts of codified or accumulated knowledge and based on familiarity of clients problem

Question 24

What are the various consultant strategies?

Answer 24

Consultant strategy - level of knowledge used to solve a clients problem 
 Brain consultant 
 Grey haired consultant 
 Procedure consultancy 
 Software-based consultancy

Question 25

What steps are required to understand the hiring reason?

Answer 25

Verify - make sure the prospect is clearly defined
Research - if the prospect is not clearly defined then do more research
Proposal - if the prospect is clearly defined you can investigate that correct issue

Question 26

Why is it necessary to define the prospect?

Answer 26

Definition provides a foundational basis to investigate an opportunity or problem
Invalid definitions can lead to the wrong problem being investigated

Question 27

Why does the person matter in client relationships?

Answer 27

Emotionally expressive - some cultures are more emotionally expressive than others
Confrontational - some cultures are more confrontational
Cognitive trust - cognitive trust is task based and people build reliability rather than rapport (transactional relationships)
Affective trust - is more to do with emotional relationship building in business

Question 28

Risk analysis of stakeholder involvement?

Answer 28

Affected by project? (a) +ve or-ve (b) extent
Required for project? (a) yes or no (b) extent
Potential for negative affect? (a) yes/no (b) extent

Terms - risk of sabotage (Alert/foe) risk of non-cooperation (friend)
Answer - decide whether the extent and direction of stakeholder influence

Question 29

How should management consultants approach problems?

Answer 29

Scientific enquiry: 
  Where/What/Why/When/How
 Key properties 
 Key function 
 Advantages/Disadvantages 
 Alternatives 
 Explanation/demonstration of how something works (what are the key steps) 
 Evidence

Question 30

Explain how to look at problems differently? Give example

Answer 30

Problem framing - how an issue is conceptualised
Solution space - the possible ways to solve the problem
Example - (a) lift is slow -> get faster lift OR (b) lift wait is annoying -> find ways to make the wait more enjoyable

Question 31

What is the first stage of the evidence based process?

Answer 31

Identify critical assumptions

Check if there is sufficient evidence to support these problems

Question 32

What are hidden assumptions?

Answer 32

Means clarifying the key terms in the decision problem

Underlying the relationship between these terms

Question 33

What are the key parts to a proposal?

Answer 33

Project description
Consultants profile
Terms and conditions

Question 34

Why is it important to have a robust proposal document?

Answer 34

Well drafted proposals easily convert to contracts

Question 35

Project description?

Answer 35

Part of proposal document
Understand the problem - description of the problem
Purpose of the project - objectives; desired results; scope (responsibilities) ; time needed
Approach to be taken - methods, data etc; division of roles and responsibilities; plan

Question 36

Consultants profile?

Answer 36

Part of proposal
Profile of project team - competencies; experience
Profile of consultancy firm - practice area competencies; previous reference projects

Question 37

Terms and conditions?

Answer 37

Part of proposal
Financials - fee; payment schedule
Control - procedures for contingencies; procedure for disputes
Policies - legal; ethical

Question 38

How are projects priced?

Answer 38

Maximum fee - value perceived by project
Actual fee - higher than minimum but lower than maximum
Minimum fee- marginal cost of consultant
Bargaining power of client - lots of competitive threats
Bargaining power of consultant - competitive advantages

Question 39

What are the five main contract areas?

Answer 39

Contracting partners (e.g. client and consultant)
Scope (objectives, description of work, time schedule)
Outputs (e.g. expected results, deliverables including reports and presentations)
Inputs (e.g. time, skills, resources, data, information)
Financials (e.g. fees, billing)
Legal (e.g. confidentiality, liabilities, disputes, termination)

Question 40

Ethics - responsibilities towards client?

Answer 40

Contractual obligations (e.g. billing more hours)
Confidentiality - disclosing sensitive agreements
Misuse of knowledge - insider trading or illegal knowledge broking

Question 41

Ethics - responsibilities towards stakeholders?

Answer 41

Avoid harm - avoid unnecessarily harmful actions (e.g. staff lay-offs without a gain)
Be cautious to accept project for informal reasons (e.g. legitimator or scapegoat)