Research paper

March 7, 2014

Table of Contents INTRODUCTION 3 MY CRITERIA 3 Company I: GRant Thornton, LLP 4 Background, Product and Service, Company relationships, and culture 4 SWOT Analysis 4 MY OPINION 5 Company II: Ernst & young (EY), LLP 6 Background, Product and Service, Company relationships, and culture 6 SWOT Analysis 6 MY OPINION 7 CONCLUSION 8 RECOMMENDATIONS 8 REFERENCES 9

INTRODUCTION

As a Junior at San Jose State University, graduation is quickly approaching within the next coming year. At this point in time, every student begins to question what he or she is going to do when that date finally arrives. Being a business major with an emphasis on accounting, my career opportunities are endless. Accountants are needed in all facets of business whether I would be working for the public or private sector.

Through this report, I have selected to compare two multinational private accounting firms; Grant Thornton and Ernst & Young. To complete these comparisons, I have collected information from various online sources such as company websites, SJSU databases, as well as databases from the University Library. Material gathered from these sources covered a wide range of topics including background, culture, services available, and each firm’s relationship among all business aspects concerning customer and competitor relations. Based on the data compiled and my personal criteria, I assembled advantages and disadvantages of each firm. After an assessment of these findings and reports like SWOT analysis I have decided that both, Grant Thornton and Ernst & Young, are the ideal companies for my future career.

MY CRITERIA

When deciding on major career decisions, such as choosing an employer, it is imperative for that employer to embody several features that meet your professional and personal preferences. One preference included in my criteria for an ideal company, is growth. Company growth and individual growth are two very important characteristics a company should encourage. Rather than simply growing in size, a company should also promote growth through product expansion and philosophy. As the company adapts to market and consumer needs, it avoids becoming obsolete and therefore gains an edge on its competitors. From a personal perspective, it is essential for the company to have an opportunity for the employee to grow with them as well. This creates a trusting relationship between employer and employee because it supports a commitment to encourage an individual’s need for change.

Secondly, a company should demonstrate a functional and positive working relationship with clients, suppliers, and employees. Establishing and maintaining a positive environment for everyone involved is key to the company’s success. Satisfied clients are more likely to return for more business and will often help the company gain new clients by giving good reviews. Maintaining good relationships with suppliers is also important because it will allow internal and external operations to flow more smoothly. Moreover, employers should focus on sustaining relationships with their employees. After all, a company’s success lies within the dedication and hard work of its employees. To show their appreciation, companies should offer benefits like health and dental insurance on top of employees’ salaries and bonuses.

The last important characteristic is a company’s location. I would prefer to work in a location within or close to a large city, rather than in a rural area. Additionally, a company that has multiple locations gives an employee the chance to travel and experience different aspects within the organization around the world. More locations can also offer extra job security by giving employees the option of relocating.

Company I: Grant Thornton, LLP

Background, Product and Service, Company Relationships, and Culture

In 1986, Alexander Grant & Co. and Thornton Baker initiated a merger known currently as Grant Thornton (Grant Thornton, n.d.). Today, Grant Thornton has become one of the leading second-tier accounting firms in the United States. As a global organization positioned in seven states and nearly 35 nations, Grant Thornton employs over 35,000 people who provide service to clients in over 100 countries. Much of Grant Thornton’s reported revenue growth is due do to international businesses, yet it strives to find larger clients like the Fortune 500 (Grant Thornton LLP, 2014). To maintain growing success and distinguishing itself from competitors, Grant Thornton exemplifies global values in “collaboration, leadership, excellence, agility, respect, and responsibility” (Grant Thornton, n.d.). These values guide the firm in offering insightful, forward thinking advice to dynamic organizations (EMPLOYER PROFILE: Grant Thornton, n.d.). Through accounting, tax preparation, independent audit, and consulting services Grant Thornton’s clients will be able to make effective business decisions and realize their potential growth.

Grant Thornton prides itself in providing a friendly and supportive culture for its personnel. As such, there are endless opportunities for career advancement and professional growth. The workforce is diverse, intelligent, and well compensated through participation in 401(k) and a flexible work environment that offers individual enrichment in a team setting. In addition, it is not uncommon for personnel to work directly with clients and senior management very early in their careers. Grant Thornton is committed in offering ongoing opportunities for professional and personal growth, but places emphasis on creating a healthy balance between the two (EMPLOYER PROFILE: Grant Thornton, n.d.).

SWOT Analysis

Grant Thornton’s strengths lie within its diversified geographical presence, wide selection of services, and a strong presence in Asia Pacific. The company reports stable profits across 100 countries with networks of 121 interdependent firms and 30 international business centers (COMPANY PROFILE: Grant Thornton, 2013, p.5). Global presence combined with steady profits allow the organization to attract a broader scope of clients and reduce risks due to its strong global image. Grant Thornton’s variety of services also attracts numerous clients through assurance, advisory, tax, audit, financial management, IT, and performance management services. A large range of services allows the firm to provide cross selling opportunities in new and present-day markets. Moreover, Grant Thornton’s recent growth in Asia Pacific has generated an increase in revenue of $399 million in FY 2010 to $579 million in FY 2012. This caused an increase in the company’s overall revenue by 10.4% in FY 2012 compared to the previous year (COMPANY PROFILE: Grant Thornton, 2013, p.5).

The organization’s largest and most apparent weakness is its size compared to competitors. As a result, it is nearly impossible for Grant Thornton to compete with larger accounting and advisory firms like the Big Four. For instance, in FY 2012 Grant Thornton generated $4,182 million with an estimated 35,000 employees compared to Deloitte Touche Tohmatsu, one of the Big Four firms, who reported $31,300 million with over 193,000 employees (COMPANY PROFILE: Grant Thornton, 2013, p.5). This places the firm at risk of potential acquisition by larger firms carrying more financial muscle.

Along with Grant Thornton’s strengths and weaknesses, the firm also has opportunities for expanding into new and existing markets and rapidly growing in these emerging markets. In recent years, Grant Thornton has placed its focus on industry target markets. In July 2012 Grant Thornton appointed new members in Hati and acquired FPA Group, a Poland provider of outsourcing services. In October 2012, new member firms were appointed in Africa and Dominican Republic. The company also formed new member firms from existing firms in Armenia, Tajikistan, and Uzbekistan (COMPANY PROFILE: Grant Thornton, 2013, p.6). Development in these new markets will provide an opportunity for additional customer base and a future increase in revenues.

Intense competition, increasing regulation in government contracting, and a weak global economic outlook threaten Grant Thornton’s success. Grant Thornton operates in a highly competitive environment that is growing rapidly in additional competitors. This intense competition could wear down the firm’s market share and reduce profitability. The company is also exposed to risks regarding government contracting entities. Changes in government and political developments such as budget deficits and uncertainties, can cause price reductions in the firm’s services or termination all together. Another threat to Grant Thornton is the recent turmoil of the global economy. Global growth dropped to 3% in 2012 and dropped even further to 1.2% in 2013. Weak global economic growth coupled with economic and political uncertainties could potentially reduce the demand for services offered at Grant Thornton (COMPANY PROFILE: Grant Thornton, 2013, p.7).

MY OPINION

I like how Grant Thornton places importance on creating a great working environment for their employees. The firm offers an environment for employees to grow and develop their careers, while encouraging the importance of balancing your professional and personal life. Grant Thornton appears to truly care for their personnel’s wellbeing and strives to create meaningful bonds with each individual on a comforting and appreciative basis. I also like the abundance of locations Grant Thornton occupies. Having the opportunity to travel the world and experience different cultures through my career would be a dream come true. Although it appears to be one of Grant Thornton’s biggest weaknesses, I appreciate that the company is relatively smaller than its competitors because I feel it gives them more flexibility. Larger companies take much more time to incorporate major changes to the organization, whereas with a smaller company this process can happen much more quickly. One disadvantage of being significantly smaller than your competitors is the stability of the company. Job stability is very important to me and Grant Thornton’s significantly smaller size could result in a possible merger initiated by one of the larger, Big Four advisory firms.

Company II: Ernst & Young (EY), LLP

Background, Product and Service, Company Relationships, & Culture

Formed in 1989, Ernst & Young quickly became one of the leading organizations in rapid globalization, continuous change, and innovative business technologies (Ernst & Young, n.d.). Ernst & Young is a professional consulting firm presenting a diverse collection of services to public and private organizations from locations around the world. Reported as the world’s second largest accounting firm, Ernst & Young employs 144,000 people in 140 countries offering assurance, tax, transactions, and advisory services (Ernst & Young, 2014). The firm stresses the importance of “building a better world” through the success of employees and clients. This philosophy has accompanied the firm through its accomplishments, eventually landing an elite position as one of the Big Four accounting firms rivaling KPMG, PwC, and Deloitte Touche Tohmatsu. Ernst & Young values “people with integrity, respect, and teaming; people with energy, enthusiasm, and courage to lead; and people who build relationships based on doing the right thing” (Ernst & Young, n.d.). These are the values that guide the company in assisting clients with important business decisions.

Continuously recognized in Fortune magazine’s list of “100 Best Companies to Work For”, Ernst & Young has developed a topnotch working environment that encourages employees to achieve both personal and professional success (EMPLOYER PROFILE: Ernst & Young, n.d.). The globally diverse culture is rich in experience, skills, and leadership. Ernst & Young defines its culture in three words: Inclusiveness, Development, and Engagement. The firm gives employees the opportunity to learn, contribute in a strong team environment, demonstrate leadership, and participate on projects that are of global scale (Ernst & Young, n.d). Thus, the company strives to create strong bonds with clients by creating lasting connections with employees.

SWOT Analysis

Ernst & Young benefits from strengths in integrated global business and advisory services. Ernst & Young’s global positioning has allowed the company to strengthen its ability to serve clients throughout the world. The firm’s ability to avoid the effects of globalization has allowed it to help clients in emerging markets expand in existing markets and help them understand the challenges of operating in those markets. For example, Ernst & Young finalized a China-Africa tax desk specifically for Chinese clients wanting to expand to Africa. Ernst & Young also holds the title as one of the Big Four global companies offering a variety of services. As such, the company’s revenues are distinguished between business lines and geographies. Due to this diverse structure, the company has the ability to cater to large audiences and increase revenues by cross selling its services to clients. This in turn reduces Ernst & Young’s vulnerability to specific market related risks and establishes a competitive advantage over smaller competitors in the industry (Ernst & Young Global Limited SWOT Analysis, 2013, pp.4-5).

Ernst & Young’s only real weakness is disguised in one of its largest strengths. The organization’s large scale holds numerous benefits, but also creates risks through its susceptibility to public scrutiny. Due to its powerful position in markets, Ernst & Young has a long list of lawsuits tarnishing its reputation and causing the firm large cash outflows. The company’s past lawsuits have exposed the firm to large contingent liabilities. These lawsuits also brought forth the fact that Ernst & Young has little control over its many auditing firms and members. The organization runs a high risk with its affiliation to numerous entities. The actions of those firms can ultimately ruin Ernst & Young’s reputation as an honest and trustworthy company. If an abundance of legal issues persist, clients’ confidence in the company will decrease causing a potential drop in cash flows (Ernst & Young Global Limited SWOT Analysis, 2013, pp.5-6).

Ernst & Young empowers its opportunities through complex tax laws that enhance the demand for tax professionals. As tax laws continue to grow more complex with each coming year, the amount of people needing tax consulting services will increase. According to industry estimates, the complexity of tax laws are causing businesses and individuals to spend over six billion hours a year complying with new requirements. Consequently, this estimated that 90% of filers will feel obligated to pay for tax related services within years to come. As these trends continue to become ever more promising, Ernst & Young can almost guarantee an increase to their topline (Ernst & Young Global Limited SWOT Analysis, 2013, pp.6-7).

Paralleling Ernst & Young’s weakness, the size of the organization also proposes potential threats. Due its expansive public positioning, the firm faces pressure from public and regulatory scrutiny. For example, the UK Competition Commission, UKCC, accused the Big Four audit firms of tampering with the alignment of shareholders interest. As a result, the UKCC is expected to take legal action and break the dominance of the Big Four accounting firms through new market reforms. Similar courses of action may take place in the United States as well. Ernst & Young’s dominance within markets is at risk if these reforms pass. This would appear as though the company can expect big changes to their share of market (Ernst & Young Global Limited SWOT Analysis, 2013, p.7).

MY OPINION

I like the idea that Ernst & Young can offer employees job stability due to its dominance in the market. The firm’s size and success promise future growth and an abundance of job openings. I would enjoy working for a company that allows their employees to grow both professionally and personally. Ernst & Young achieves this by giving their employees ample opportunities to move up within different levels of the organization. Similarly to Grant Thornton, Ernst & Young also offers the opportunity to travel owning multiple locations around the world. I also appreciate that the firm strives to better the world through its services. Working for a company that makes you feel as though you are doing something important, is essential to many individuals want to feel needed. I believe Ernst & Young values their staff and strives to make each employee feel as though they are irreplaceable. One aspect I do not like is Ernst & Young’s questionable reputation with lawsuits. It is very important to me to work for a company that I can feel proud of. If Ernst & Young continues on its path towards more lawsuits, I would rather work for a company that is less successful, but holds a higher level of reputability with its clients.

CONCLUSION

Grant Thornton and Ernst & Young possess many of the same characteristics. Both companies are nationally and internationally based, offering an opportunity to travel to different places around the world. These firms also appear to value their employees in high respects through efforts to expand their personnel’s professional careers while encouraging the importance of their personal lives. Grant Thornton and Ernst & Young offer their employees remarkable benefits on top of fair salaries. Either company I chose to work for, would compensate their employees well. However, Ernst & Young has a bit more versatility due to its larger global position and expansion rate. Due to this, they may be able to give their employees better salaries, opportunities for career advancement, and higher organizational stability.

Perhaps the only real difference between Grant Thornton and Ernst &Young is the gap between company size and financial muscle. Ernst &Young is obviously much larger and more successful than Grant Thornton on almost all business aspects, but sheer size isn’t enough to sway an advantage. Both companies continue to propose satisfying job stability, professional and personal growth, and encourage healthy relationships with their employees. Due to the fact that the differences between both organizations is irrelevant in terms of my personal criteria, I would not be able to place one above the other. For this reason, I would enjoy working for both Grant Thornton and Ernst & Young.

RECOMMENDATIONS

To widen my opportunity of landing a job at Grant Thornton or Ernst & Young, I will continue to succeed in school. Maintaining a high GPA will make me more attractive to recruiting managers. In addition, once I graduate I can further my attractiveness to these firms by completing my CPA and CMA. Networking is also a great way to gain competitive advantages over other applicants. Often times getting a job does not matter on what you know, but rather who you know. Networking is an important tool, especially for business students. A few ways to create networks is through clubs and other students. Another way is by asking around and telling people your objectives. You never know who may be tied to someone who works for your desired employer. Lastly, I will continue to research and apply for any and all internship postings by Grant Thornton and Ernst & Young. Gaining experience is a great way to stand out over your competitors. In addition, these firms will occasionally host workshops for students in accounting majors to attend and better acquaint themselves with the firm. This would also assist me in gaining experience, especially within the firms themselves. I look forward to finding out what the future holds for me and will try my hardest to meet these recommendations to ensure it is a future with either Grant Thornton or Ernst & Young.

REFERENCES

COMPANY PROFILE: Grant Thornton International Ltd. SWOT ANALYSIS. (2013). Grant Thornton International SWOT Analysis, 1-7. Retrieved on February 28, 2014, from Business Source Complete database.

EMPLOYER PROFILE: SpartaJobs. (n.d.). Grant Thornton, LLP. Retrieved on March 7, 2014 from Career Center San Jose State University database.

EMPLOYER PROFILE: SpartaJobs. (n.d). Ernst & Young, LLP. Retrieved on March 7, 2014 from Career Center San Jose State University database.

Ernst & Young Global Limited SWOT Analysis. (2013). Ernst & Young International SWOT Analysis, 1-8. Retrieved on February 28, 2014, from Business Source Complete database.