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caver_m2_a2.pptxModule 2 Assignment 2 Designing Value-Based Service Katrina Caver
Product Risk Factors and Risk Drivers
AGENDA
Risk factors for a tax and audit firm compared to risk factors for a management consultancy
Distinctions between management consultancy and tax and audit business
Three major risks in management consultancy
Analyzing whether to buy or to grow organically
Recommendation
Product Risk Factors for a Tax and Audit Firm
DEMAND FACTORS
Competition from other tax and audit firms
Product uniqueness
Marketing and brand name recognition
The regulatory framework
Product platform
SUPPLY FACTORS
Knowledge and skill of human resource
Motivation of the employees to deliver
management structure
The finance base
(Ramsey, 2014)
This is a monopolistic market conquered by many large firms that compete. Is the product different? The reputation of the firm is very important, which makes gaining customers simple and easy. The character includes the ethic affects, which can very well empower the business. Businesses should always be structured according to the law. Highly, skilled employees brings more to the company, which brings new ideas to the company. It is always recommendable for employers to motivate their workers, which will lead them to go the extra mile to provide quality services and products. Management structure is an advantageous step that is why it is the guidance of the workplace. Financial base is an essential component, which covers inadequate funding, thus determining the quality and quantity of workers.
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Additional Risk Factors For A Consultancy Business
DEMAND FACTORS
Industry maturity
Cost structure
Industry cyclicality
The marketing effort
SUPPLY FACTORS
Financing
Regulatory environment
Ability to attract top talent in the field
(Independent consulting boot-camp, 2014)
An industry environment characterized by well, large established business will provide a good business opportunity for this kind of consultancy. The pricing of products should be quality, at the same time affordable. If businesses stay loyal to their customers, customers will remain loyal toward them. Financial resources can determines the range of services on offer. Businesses should seek great investors who are willing to provide them with great investment opportunities. There are few industry specific requirements, but the businesses must fulfill certain obligations.
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Distinctions Between Tax and Audit Business and Management Consultancy
Three Major Risk Facing the Business
Management consulting is diverse from providing tax and audit services. The management of a business has limited experience in this field, which will require management leadership skills and consulting skills. Many times, firms fail to seek management that can cover multiple skills. A new business in this field will require the firm to have a wide network where they can obtain a possible market for their service. Customer satisfaction is related to meeting customers’ expectations and ensuring that they experience great customer services.
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- Lack of expertise
- Marketing
- Choosing the right employee
Analyzing Whether to Buy or To Grow Organically
Advantage of Organic growth
Advantage of Acquisition
By means of organic growth, a consultancy can start small and expand as demand increases just like many other businesses. It also can introduce new and unique products to establish the marketing cost. Through buying, the business will acquire the customers of the business and reduce marketing cost. Buying also allow the business to operate on an established platform. Employees will remain in the new business retaining experience and expertise within the business, which creates cash inflow in a short period of time.
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Analyzing Whether to Buy or To Grow Organically(Cont’d)
Organic Growth
Buying
CONS
High marketing cost
Has no reputation and clients are unsure
Has to spend a lot of time recruiting in a trial and error method
Business has to wait for sometime before it can break even
CONS
High cost of purchasing the business
Any adverse image issues are passed on to the business
(Queensland government, 2014)
Organic growth can possibly cost the business a lot of money. Most clients like conducting businesses with well-known brands, which can cause an interruption with the recruiting process. Businesses owners like to remain loyal to well-known brands and not take any risks of using new brands due to loosing profits. most of the time, firms make investments to buy new products and they don’t always bring revenue. This also leads to a bad ROI. A business has to wait before it can breakeven, where it doesn’t gain or lose any profits. sometimes, it takes a firm a longer time(in years) to gain capital for investment.
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Recommendation
Using any business project, it always necessary to follow the appropriate steps with effective planning. This includes identifying goals and objectives that managers are expecting to meet as well as following the research process. Research can assist with seeking new data, which can help managers gain new ideas that can help assist with meeting goals and objectives efficiently. Lastly, managers must ensure that the pros outweigh the cons, which can lead to an acceptable plan.
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Acquire an already established business
Identify market goals and objectives
Identify product drivers and risks
Establish an effective plan
Ensure that pros outweighs the cons and accept the plan
References
Independent consulting boot-camp. (2014). Starting a Consulting . Business How to Make it Happen.
Retrieved from http ://www.netplaces.com/consulting-business/managing-business-risk/degrees-of-risk.htm on 2i July 2014
Queensland Government. (2014). Advantages and disadvantages of buying a business. Retrieved from http://www.business.qld.gov.au/business/starting/business-startup-options/buying-a-business/buying-business-advantages-disadvantages on 31 July 2014.
Ramsey, D. (2014). Start your own consulting business: degree of risk. Retrieved from http ://www.netplaces.com/consulting-business/managing-business-risk/degrees-of-risk.htm on 31 July 2014
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