Experience Curve

The Experience Curve captures the relationship between increasing production experience and declining costs

Experience Curve

(Source: Flickr)

Background

The Learning Curve, the concept which predates the Experience Curve, was first described by German psychologist Hermann Ebbinghaus in 1885 as part of his studies into human memory.

In 1936, T.P. Wright described the effect of learning on production costs in the aircraft industry showing that required labour time dropped by 10 to 15 percent with every doubling of production experience.

In 1966, Bruce Henderson and the Boston Consulting Group conducted research for a major semiconductor manufacturer, in which they introduced the concept of the Experience Curve and revealed that unit production costs fell by 20 to 30 percent every time production experience doubled.

In essence, the Learning Curve and the Experience Curve capture the same big idea: performance improves with experience in a fairly predictable way.

How do the two curves differ?

In his 1968 article, Bruce Henderson distinguished the Experience Curve from the Learning Curve by explaining that the Learning Curve relates only to labour and production inputs, while the Experience Curve focuses on total costs.

On the surface his explanation sounds reasonable, but when you think about it what he was really saying is that the Experience Curve is the same as the Learning Curve, just with a slightly broader focus.

Henderson’s distinction was a clever conceit, and his trick allowed the Boston Consulting Group to take credit for an idea that had been in circulation for more than 80 years.

Legitimate or not, the rebranding exercise was effective and has meant that since 1966 the concept has been widely known in management and business circles as the Experience Curve with due credit going to Bruce and the Boston Consulting Group.

This article is entitled “Experience Curve”. We didn’t want to rock the boat.

Experience Curve Explained

The Experience Curve captures the relationship between a firm’s unit production costs and production experience. Research has shown that a firm’s costs typically fall by a predictable amount for every doubling of production experience.

Experience Curve Example(Source: Wikipedia)

Unit production costs tend to decline at a consistent rate as a firm gains production experience, however the rate will typically vary from firm to firm and from one industry to another.

The interesting thing about the Experience Curve is not that a firm’s performance improves with experience, we would expect as much, but instead that performance tends to improve with experience at a predictable rate.

This is surprising. What could explain such consistency?

Learning from Experience

In his 1968 article, Bruce Henderson noted that:

“… reductions in costs as volume increases are not necessarily automatic. They depend crucially on a competent management that seeks ways to force costs down as volume expands. Production costs are most likely to decline under this internal pressure. Yet in the long-run the average combined cost of all elements should decline under the pressure for the company to remain as profitable as possible. To this extent the [Experience Curve] relationship is [one] of normal potential rather than one of certainty … ”

While falling costs may not be inevitable, the Experience Curve effect is pervasive and so declining costs must result from some kind of innate human and organisational factors rather than from, say, the brilliance of a rock star management team or the well power pointed recommendations of a top consulting firm.

Where do the reduced costs come from?

While by no means an exhaustive list, factors that may contribute to the Experience Curve effect include:

  1. Labour efficiency – As employees at all levels of the organisations gain more production experience they gain skills, learn shortcuts, and find ways to produce more with less.
  2. Standardisation – Over time processes and product parts may become standardised allowing for more streamlined production.
  3. Specialisation – As production volume increases a firm is likely to hire more employees, allowing each of them to specialise in a narrower range of tasks.
  4. Optimised Procurement – As a firm gains production experience it will learn about its suppliers and what they have to offer, which will allow it to optimise its procurement practices.
  5. Product Refinement – A firm may engage in significant R&D and marketing prior to and during its initial product launch, but as it learns more about the product and its customers it will be able to refine the product for the requirements of the market. This may allow a firm to reduce ongoing R&D and marketing costs.
  6. Automation – Increased production volume may lead to the adoption of more automated and advanced production technology and IT systems.
  7. Capacity Utilisation – If a firm has incurred large fixed costs, then increasing production will allow it spread these costs across a larger number of units.
  8. Equipment Upgrades – Higher production volumes may justify investment in more advanced equipment.

Implications for Strategy

The Experience Curve effect shows that a firm’s production costs decline in a fairly predictable way as it gains production experience.

What are the implications for corporate strategy?

In 1968, in light of BCG’s research, Bruce Henderson took the view that a firm should price its products as low as would be necessary to dominate their market segment, or else it should probably stop selling them. The same year BCG also developed its now famous growth share matrix, a framework that recommends allocating resources within a firm towards products that are, or are going to become, market leaders.

The clear and resounding message from Henderson and BCG was “dominate the market or don’t bother”.

The thinking behind this rather clear-cut view was that a company with market share leadership would be able to gain production experience more quickly than its rivals and so would be able to achieve a self-sustaining cost advantage.

As it turns out though, pursuing market share leadership will not always be beneficial. There are four countervailing forces that can neutralise the benefits of this strategy.

Firstly, market share may not confer a cost advantage since firms can learn not just from production experience but also from books, courses, formal training, conferences, reverse engineering, talking to suppliers and consultants, and by poaching staff from the competition.

Secondly, if multiple firms pursue market share leadership at the same time then this can create intense rivalry and destroy industry profitability.

Thirdly, new entrants can often avoid going head to head with the market leader by creating more advanced products or using more efficient production technology. This can allow new players to leap frog the competition and force existing firms to play catch up by investing heavily in R&D, forming strategic alliances or acquiring the upstarts for a princely sum.

Fourthly, even if market share leadership does confer a cost advantage there are other ways to compete effectively. Firms can gain an edge by creating unique products or by focusing on niche segments of the overall market (see Porter’s Generic Strategies).

So, where does this leave us?

Well, a firm that aims to be the cost leader within its industry will probably want to pursue market share leadership since the Experience Curve effect and economies of scale will allow it to reduce costs.

On the other hand, a firm that aims to compete by providing a unique offering or by serving a market niche may find the pursuit of market share leadership detrimental. A firm that provides unique or targeted products will generally be able to charge higher prices and this will limit potential sales volume. If it makes its products more generic in an attempt to appeal to the mass market, then this could destroy the “je ne sais quoi” which made the firm successful in the first place (see “Stuck in the Middle”).

Market share leadership can work, but it will not be the correct strategy in every situation.

A Perfect Storm: Growth in Public Sector Consulting

Cash strapped governments seek counsel in these tempestuous times

THE United States government has utilised management consultants for the past fifty years, beginning when McKinsey organised the National Aeronautics and Space Administration (NASA) in 1958. The number of consultants hired for public sector projects has been steadily increasing ever since, spiking to new heights over the past few years in response to the tumultuous state of public sector finances. Top management consulting firms including Bain & Company and Boston Consulting Group have been marketing themselves to state and municipal governments as the solution to stringent austerity requirements. When approaching government clients in the United States, BCG strives to create a “lean” model: strategies focusing on contracting out nonessential government services and curtailing union power to increase flexibility.

The trend towards the prevalence of management consulting in the public sector most recently has been seen in the city of Detroit, Michigan. The emergency financial manager, hired by the state as a final attempt to avoid bankruptcy, has agreed to spend over $14 million this year on a range of financial and legal professional services. A city wrought by a failing auto-industry has been steadily losing its affluent tax base for decades, culminating now in a massive budget deficit and rapidly maturing long-term liabilities. A complete restructuring is needed to remedy the problems resulting from years of corruption and inefficiency. The three-consulting firm team assembled by Kevin Orr, the bankruptcy lawyer appointed as the city’s emergency financial manager, looks set to gain significant business from Detroit’s public sector restructuring.

Management consulting firms have worked successfully with municipal governments across the United States, particularly in the public education sector. BCG collaborated with the city of Philadelphia to completely revitalise their struggling public school system and develop private charter schools. Consultants in Colorado have captured a significant percentage of federal funds flowing into the state for education management, approximately 36% or $10 billion.

The ability of management consulting firms to successfully serve both private and public sector clients has led the industry to continued success, and further growth looks set to occur. Government organisations continue to seek out management consulting firms with the knowledge and skills necessary to work through the bureaucratic complexity of government organisations. At the same time, firms are seizing the opportunity to have a significant positive impact on the lives of millions of fellow citizens.

Strategy and general business consulting firms in Australia 2012

[Last Updated: 31 May 2012]

THE list of strategy and general business consulting firms is part of the full list of consulting firms in Australia:

Tier One – Global

1. Bain
2. BCG
3. McKinsey

Tier One – Australian

4. Nous Group
5. Pacific Strategy Partners
6. Port Jackson Partners

Classic – Global

7. Accenture
8. A.T. Kearney
9. Booz Allen Hamilton
10. The Birchman Group
11. Deloitte
12. LEK
13. Oliver Wyman
14. PwC

Classic – Australian

15. Crescendo Partners
16. Momentum Partners
17. Oyster Consulting
18. SMT Consulting

1. Bain & Company

Website: www.bain.com

Founded in 1973 when Bill Bain and others left BCG to form Bain & Company. Bain operates in 47 offices across 30 countries. In Ausralia, Bain operates out of Sydney, Melbourne and Perth.

Bain is well-known for offering services like due diligence, IPO preparation, portfolio profit improvement and revenue enhancement geared toward leveraged buyout and venture capital firms.

2. BCG

Website: www.bostonconsulting.com.au

Founded in 1963 by Bruce Henderson, BCG operates in more than 75 offices worldwide. In Australia, BCG operates out of Sydney, Canberra, Melbourne and Perth.

BCG specialises in business strategy and draws most of its clients from the 500 largest corporations worldwide, as well as working with smaller companies, non-profit organisations and government agencies.

3. McKinsey

Website: www.mckinsey.com.au

Founded in Chicago in 1926, McKinsey remains one of the world’s most prestigious consulting firms. It is worth noting that, as at May 2012, McKinsey continues to receive negative publicity due to the ongoing Rajat Gupta insider trading scandal. It is still unclear what the ultimate impact of the scandal will be on McKinsey’s brand. McKinsey operates in 98 locations worldwide. In Australia, McKinsey operates out of Sydney and Melbourne.

McKinsey works internationally in a broad range of industries with large private sector institutions, governments and other non-profit institutions.

4. Nous Group

Website: www.nousgroup.com.au

Founded in 1999 by Tim Orton (ex-McKinsey), Nous Group has grown to be one of Australia’s most influential strategy firms. In 2012, the BRW Client Choice Awards named Nous “best management consulting firm in Australia” including most innovative firm and best client outcomes from across the professional services sector. Nous has offices in Melbourne, Sydney, Canberra, Perth, Adelaide and Manila and a workforce of 150 people that includes some of Australia’s leading critical thinkers, ex senior bureaucrats and business people.

Nous is best known for its ethos to create positive influence and use bold thinking to solve complex societal and business challenges. Nous service lines include business strategy, public policy, leadership & people development, organisational capability, and information management & technology.

5. Pacific Strategy Partners

Website: www.pacificstrategy.com.au

Founded in 2003, Pacific Strategy Partners has offices in Sydney and Melbourne.

Pacific Strategy Partners deploys low leveraged teams to provide clients with Strategy Development, Operational Improvement, and Transaction Support.

6. Port Jackson Partners

Website: www.pjpl.com.au

Founded in July 1991 by Terrey Arcus and Fred Hilmer to counsel the CEOs of select corporations. PJP is a boutique consultancy firm based in Sydney.

PJP’s Australian clients come from a diverse range of industries (e.g. financial sector, service industry, and industrial sector) and are typically top 100 listed companies, but a few are large government owned corporations. PJP focuses on helping companies with strategy and organisation.

7. Accenture

Website: www.accenture.com

Established in 1989, Accenture has offices in more than 200 cities in 54 countries. In Australia, Accenture operates in Brisbane, Canberra, Melbourne, Perth and Sydney.

Accenture offers management consulting services covering finance & performance management, talent & organisation performance, strategy, customer relationship management, and supply chain management.

8. A.T. Kearney

Website: www.atkearney.com

Founded in 1926, A.T. Kearney operates across 57 locations world wide. In Australia, A.T. Kearney operates out of Sydney and Melbourne.

A.T. Kearney’s mission is to help the world’s leading corporations gain and sustain a competitive advantage, and to achieve profound, tangible results for its clients. Services offered include complexity management, enterprise transformation, operations, procurement solutions, strategic information technology, strategy and sustainability.

9. Booz Allen Hamilton

Website: www.boozallen.com

Founded in Chicago in 1914 by Edwin G. Booz, BAH operates in 115 offices across six continents. In Ausralia, BAH operates out of Sydney, Melbourne, Adelaide, Brisbane, and Canberra.

BAH has its main area of expertise in strategy and technology consulting, working in both the commercial and government sectors.

10. The Birchman Group

Website: www.thebirchmangroup.com

The Birchman Group operates across 7 countries. In Australia, Birchman operates in Sydney, Perth, Brisbane, Melbourne, Canberra, and Adelaide.

The Birchman Group provides six core services: value management, business advisory, IT advisory, enterprise applications, software development, and business change.

11. Deloitte

Website: www.deloitte.com

Founded in 1893 in the US, Deloitte has a strong global presence and operates in all capital cities of Australia.

Although offering a large number of accounting services, Deloitte also has a consulting practice. The consulting practice offers HR, outsourcing, strategy & operations, and technology consulting.

12. LEK Consulting

Website: lekconsulting.com.au

Founded in 1983, LEK operates in 20 offices worldwide. LEK has offices in Sydney, Melbourne and Auckland.

LEK’s portfolio of services draws on its core capabilities of research, benchmarking, modelling, analysis and strategy development to help companies determine the best way forward.

13. Oliver Wyman

Website: www.oliverwyman.com

Founded in New York in 1984, Oliver Wyman operates in 60 offices across 23 countries. In Australia, Oliver Wyman operates out of Sydney.

Services offered by Oliver Wyman include business transformation, organisation & leadership, finance & risk, marketing & sales, operations & technology, and strategy.

14. PwC

Website: www.pwc.com

Created in 1998 out of the merger of Price Waterhouse and Coopers & Lybrand, PwC has historical roots going back some 150 years.  PwC  operates in 159 countries worldwide. In Australia, PwC has offices in Adelaide, Brisbane, Canberra, Melbourne, Newcastle, Perth, Sydney and Townsville.

PwC provides assurance, advisory and tax services. PwCs consulting arm indicates that “people engage PricewaterhouseCoopers to help them design, manage and execute lasting change.”

15. Crescendo Partners

Website: www.crescendopartners.com.au

Crescendo Partners is based in Sydney and has extensive experience providing value to clients across the globe.

Crescendo Partners is an elite high value consulting, advisory and private equity firm. Services include strategy consulting, M&A support, capital raising, and private equity investment.

16. Momentum Partners

Website: www.momentumpartners.com.au

Founded in 2003, Momentum Partners has offices in Sydney, Adelaide and Perth.

Services include strategy, operational performance, organisational effectiveness, corporate advisory, business systems and processes. Momentum has consulted to thousands of different organisations across more than 50 countries. Clients include public and governmental organisations, private companies ranging from large global corporations to small, fast growing start-ups.

17. Oyster Consulting

Website: www.oysterconsulting.com

Oyster Consulting is based in Perth.

Oyster Consulting has strong resource industry experience, and offers a range of services including corporate strategy and business planning, business analysis, services optimisation, business improvement, and organisational design services.

18. SMT Consulting

Website: www.smt.com.au

SMT is located in Sydney and Melbourne.

SMT Consulting is a specialist provider of supply chain and logistics services.

List of strategy consulting firms in London 2011

List of strategy consulting firms in London

  1. Accenture
  2. Alpha Financial Markets Consulting
  3. Alvarez & Marsal
  4. Applied Predictive Technologies
  5. Applied Value Group
  6. Arthur D. Little
  7. A.T. Kearney
  8. Bain & Company
  9. BearingPoint
  10. Booz & Company
  11. Boston Consulting Group
  12. BTS
  13. Cambridge Strategic Management Group
  14. Candesic
  15. Capgemini
  16. Cedar Management Consulting
  17. Celerant Consulting
  18. Deloitte Consulting
  19. Frost & Sullivan
  20. Global Intelligence Alliance
  21. The Hackett Group
  22. LEK
  23. McKinsey
  24. Parthenon Group
  25. Roland Berger

1. Accenture

Website: www.accenture.com

Address:

Accenture
1 Plantation Place
30 Fenchurch Street
London EC3M 3BD
United Kingdom

Tel: +44 207 844 4000

Founded in 1950, Accenture has offices in more than 200 cities worldwide.

Accenture is a global management consulting, technology services and outsourcing company. Its management consulting services include CRM, finance and performance management, process and innovation performance, risk management, strategy, supply chain management, and talent and organisation performance services.

2. Alpha Financial Markets Consulting

Websites: www.alphafmc.com

Address:

Alpha
60 Gresham Street
London EC2V 7BB
United Kingdom

Tel: +44 207 796 9300

Founded in 2003, Alpha Financial Markets Consulting is based in the UK and also has offices in Luxembourg, Paris and NY.

Alpha is a leading global provider of consulting, benchmarking and implementation services to financial institutions with a particular focus on the asset and wealth management industries and the companies that service them.

3. Alvarez & Marsal

Website: www.alvarezandmarsal.com

Address:

Alvarez & Marsal
First Floor, One Finsbury Circus
London EC2M 7EB
United Kingdom

Tel: +44 207 715 5200

Founded in 1983, Alvarez & Marsal is headquartered in New York and has 17 offices worldwide.

A&M specialises in turnaround and interim management, performance management and business advisory services. It also delivers specialist operational, consulting and industry expertise to management and investors seeking to accelerate performance and maximise value across corporate and investment lifecycles.

4. Applied Predictive Technologies

Website: www.predictivetechnologies.com

Address:

Applied Predictive Technologies
Berkeley Square House, 2nd Floor
London W1J 6BD
United Kingdom

Tel: +44 207 692 0772

Founded in 1999, APT has offices America, Europe, Asia and Australia.

APT provides software and consulting services for consumer-focused companies.

5. Applied Value Group

Website: www.appliedvaluegroup.com

Address:

Applied Value Group
53 Chandos Place
Covent Garden
London WC2N 4HS
United Kingdom 

Tel: +44 207 812 6635

Founded in 1997, AVG is headquartered in Boston with 7 offices worldwide: Stockholm, Shanghai, New York, London, Hong Kong, Detroit, and Boston.

AVG provides corporate entrepreneurship programs, financing and deal structuring, e-procurement strategy, technology portfolio management, operations strategy, acquisition analysis and valuation, post-merger integration, and corporate strategy.

6. Arthur D. Little

Website: www.adlittle.co.uk

Address:

Arthur D. Little Limited
2nd Floor, Shackleton House
4 Battlebridge Lane
London SE1 2HP
United Kingdom 

Tel: +44 207 766 0200

Founded in 1886, ADL has office in over 20 countries.

ADL is a global management consultancy specialising in strategy and operations management, serving major corporations and organisations worldwide.

7. A.T. Kearney

Website: www.atkearney.com

Address:

A.T. Kearney Limited
Lansdowne House
Berkeley Square
London W1J 6ER
United Kingdom

Tel: +44 207 468 8000

Founded in 1926, A.T. Kearney is headquartered in Chicago and has 55 offices in 38 countries.

A.T. Kearney is a global management consulting firm focusing on strategic and operational issues faced by CEOs. Expertise includes supply chain management, growth strategies, mergers, innovation and complexity, IT strategies, transformation, procurement and sustainability.

8. Bain & Company

Website: www.bain.com

Address:

Bain & Company, Inc. United Kingdom
83 Piccadilly
London W1J 8JA
United Kingdom

Tel: +44 207 969 6000

Founded in 1973 when Bill Bain and others left BCG to form Bain & Company. Bain is headquartered in Boston and operates in 46 offices across 29 countries.

Bain focuses on strategy, marketing, organisation, operations, technology and M&A across all industries and geographies.

9. BearingPoint

Website: www.bearingpointconsulting.com

Address:

BearingPoint Limited
16 Great Queen Street
London WC2B 5DG
United Kingdom

Tel: +44 203 206 9600

Founded in 1997, BearingPoint has offices across 15 countries.

BearingPoint brings together management and technology capabilities to align and optimise processes, IT and operating models with business strategy.

10. Booz & Company

Website: www.booz.com

Address:

Booz & Company
7 Savoy Court
Strand
London WC2R 0JP
United Kingdom

Tel: +44 207 393 3333

Founded in 1914, Booz has 60 offices in 33 countries.

Booz has its main area of expertise in strategy and technology consulting, working in the commercial sector.

11. Boston Consulting Group

Website: www.bcg.com

Address:

Boston Consulting Group
20 Manchester Square
London W1U 3PZ
United Kingdom

Tel: +44 207 753 5353

Founded in 1963, BCG is headquartered in Boston with offices in 42 countries.

BCG delivers customised solutions that resolve clients’ most significant issues and create lasting competitive advantage.

12.  BTS

Website: www.bts.com

Address:

BTS
346 Kensington High Street
London W14 8NS
United Kingdom

Tel: +44 207 348 1800

Founded in 1986, BTS is headquartered in Stockholm and has 25 offices worldwide.

BTS is a global leader in strategy implementation through the use of business simulations and experiential learning programs.

13. Cambridge Strategic Management Group

Website: www.csmg-global.com

Address:

CSMG – London
Descartes House
8 Gate Street
London WC2A 3HP
United Kingdom

Tel: +44 207 643 5550

Founded in 1989, CSMG has offices in Boston and London.

CSMG is a strategy consultancy for the communications, technology and digital media industries.

14. Candesic

Website: www.candesic.com

Address:

Candesic Limited
New Zealand House
80 Haymarket
London SW1Y 4TQ
United Kingdom

Tel: +44 207 096 7680

Founded in 2002, Candesic is headquartered in London and also has offices in Paris and Madrid.

Candesic offers strategic review and performance benchmarking studies, operational risk model diagnosis, and business process redesign.

15. Capgemini

Website: www.capgemini.com

Address:

Capgemini
40 Holborn Viaduct
London EC1N 2PB
United Kingdom

Tel: +44 207 936 3800

Founded in 1967, Capgemini is headquartered in Paris and operates in 40 countries.

Capgemini is a global leader in consulting, technology, outsourcing, and local professional services.

16. Cedar Management Consulting

Website: www.cedar-consulting.com

Address:

Cedar Management Consulting
140 White House
9 Belvedere Road
London SE1 8YP
United Kingdom

Email: [email protected]

Founded in 1985, Cedar has a network of offices in 15 cities worldwide.

Cedar is a global management consulting firm, assisting in the areas of strategy, process, strategic HR and IT.

17. Celerant Consulting

Website: www.celerantconsulting.com

Address:

Celerant Consulting Holdings Limited
Avalon House
72 Lower Mortlake Road
Richmond
Surrey TW9 2JY
United Kingdom

Tel: +44 (0) 208 338 5000

Founded in 1987, Celerant has 38 offices worldwide.

Celerant is a global Operational Strategy and Implementation consultancy specialising in performance improvement.

18. Deloitte Consulting

Website: www.deloitte.com

Address:

Deloitte
2 New Street Square
London EC4A 3BZ
United Kingdom

Tel: +44 20 7936 3000

Founded as an accountancy office in London in 1845, Deloitte has member firms in nearly 140 countries worldwide.

“Deloitte” is the brand under which a collection of independent firms collaborate globally to provide audit, consulting, financial advisory, risk management, and tax services.

19. Frost & Sullivan

Website: www.frost.com

Address:

Frost & Sullivan
4 Grosvenor Gardens
London SW1W 0DH
United Kingdom

Founded in 1961, Frost & Sullivan is headquartered in San Antonio, Texas and has 40 offices worldwide.

Frost & Sullivan’s Growth Consulting services encompass customised research, business strategy, and organisational development initiatives.

20. Global Intelligence Alliance

Website: www.globalintelligence.com

Address:

Global Intelligence Alliance UK
Holborn Gate, 1st floor, 330 High Holborn
London WC1V 7QT
United Kingdom

Tel: +44 207 203 8382

Founded in 1995, GIA is headquartered in Helsinki and has 25 offices worldwide.

GIA is a strategic market intelligence and advisory group which offers industry expertise coupled with research know-how and keen knowledge of local business and markets in more than 100 countries.

21. The Hackett Group

Website: www.thehackettgroup.com

Address:

The Hackett Group
Martin House
5 Martin Lane
London EC4R 0DP
United Kingdom

Tel: +44 20 7398 9100

Founded in 1997, Hackett is headquartered in Miami, Florida and has 13 offices worldwide.

The Hackett Group is a global strategic business advisory, operations consulting and finance strategy firm with expertise in business best practices, business benchmarking, and transformation consulting services including strategy and operations, working capital management, and globalisation advice.

22. L.E.K.

Website: www.lek.com

Address:

L.E.K.
40 Grosvenor Place
London SW1X 7JL
United Kingdom

Tel: +44 207 389 7200

Founded in1983, LEK is headquartered in London and has 20 offices worldwide.

L.E.K. Consulting’s services draw on its core capabilities of research, benchmarking, modelling, analysis and strategy development to help companies determine with precision the best way forward.

23. McKinsey

Website: www.mckinsey.com

Address:

McKinsey & Company
No. 1 Jermyn Street
London SW1Y 4UH
United Kingdom

Tel: +44 207 839 8040

Founded in 1926, McKinsey is headquartered in New York and has 100 offices across 45 countries.

McKinsey provides management consulting services. It also offers business building, performance and structure management, organisational change, operations and customer management, and mergers and acquisitions advisory services.

24. The Parthenon Group

Website: www.parthenon.com

Address:

The Parthenon Group
39 Sloane Street
London SW1X 9LP
United Kingdom

Tel: +44 207 201 0460

Founded in 1991, Parthenon is headquartered in Boston and also has offices in San Francisco, London and Mumbai.

Parthenon offers strategic advisory services.  Parthenon is a strategic advisor to CEOs and business leaders throughout the world.

25. Roland Berger

Website: www.rolandberger.co.uk

Address:

Roland Berger Strategy Consultants Ltd
6th Floor, 55 Baker Street
London W1U 8EW
United Kingdom

Tel: +44 203 075 1100

Founded in 1967, Roland Berger is headquartered in Munich and has 43 offices across 31 countries.

Roland Berger operates a generalist strategy consultancy and provides the world’s leading corporations with a broad range of services including brand management, corporate finance, corporate responsibility, customer relationship management, franchising, information management, manufacturing, marketing, and research & development.

List of strategy consulting firms in Hong Kong 2011

List of strategy consulting firms in Hong Kong

  1. Accenture
  2. Alvarez & Marsal
  3. Applied Value Group
  4. A.T. Kearney
  5. Bain & Company
  6. Booz & Company
  7. Boston Consulting Group
  8. Deloitte Consulting
  9. Forum Corporation
  10. Global Intelligence Alliance
  11. Hay Group
  12. Hill & Knowlton
  13. IMS Health
  14. Kurt Salmon Associates
  15. Lippincott
  16. McKinsey & Company
  17. Monitor Group
  18. Navigant Consulting
  19. OC&C Strategy Consultants
  20. Oliver Wyman
  21. Roland Berger Strategy Consultants
  22. Seabury Group
  23. Value Partners Management Consulting

1. Accenture

Website: www.accenture.com

Address:

Accenture
85/F International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong

Tel: +852 2249 2388

Established in 1989, Accenture operates in more than 120 countries worldwide.

Accenture is a global management consulting, technology services and outsourcing company.

2. Alvarez & Marsal

Website: www.alvarezandmarsal.com

Address:

Alvarez & Marsal
11/F MassMutual Tower
38 Gloucester Road
Wanchai
Hong Kong

Tel: +852 3102 2600

Founded in 1983, A&M operates in 38 cities worldwide.

A&M is an independent global professional services firm which provides leadership, problem-solving and value-creation services to companies across the industry spectrum.

3. Applied Value Group

Website: www.appliedvaluegroup.com

Address:

Applied Value Group
Yuen Kee International Building
3 Queen Victoria Street, 1/F
Central
Hong Kong

Tel: +852 2868 0014

Applied Value has offices in Stockholm, Shanghai, New York, London, Hong Kong, Detroit, and Boston.

Applied Value offers strategy, finance, and operations management services.

4. A.T. Kearney

Website: www.atkearney.com

Address: 

A.T. Kearney (Hong Kong) Ltd.
Room 1301, 13/F MassMutual Tower
38 Gloucester Road
Wanchai
Hong Kong

Tel: +852 2501 1400

Founded in 1926, A.T. Kearney operates across 55 locations world wide.

A.T. Kearney’s mission is to help the world’s leading corporations gain and sustain a competitive advantage, and to achieve profound, tangible results for its clients. Services offered include: complexity management, enterprise transformation, operations, procurement solutions, strategic information technology, strategy and sustainability.

5. Bain & Company

Website: www.bain.com

Address: 

Bain & Company (Hong Kong)
30/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong

Tel: +852 2978 8800

Founded in 1973 when Bill Bain and others left BCG to form Bain & Company. Bain operates in 47 offices across 30 countries.

Bain is well-known for offering services like due diligence, IPO preparation, portfolio profit improvement and revenue enhancement geared toward leveraged buyout and venture capital firms.

6. Booz & Company

Website: www.booz.com

Address: 

Booz & Company
Unit 17, Level 18, Wheelock House
20 Pedder Street
Central
Hong Kong

Tel: +852 3650 6100

Founded in Chicago in 1914 by Edwin G. Booz, Booz & Co broke away from Booz Allen Hamilton in 2008. The company operates in 62 offices across six continents.

Booz & Co has its main area of expertise in strategy and technology consulting, working in the commercial sector.

7. BCG

Website: www.bcg.com

Address:

The Boston Consulting Group
34th Floor, Tower Two
Times Square
Causeway Bay
Hong Kong

Tel: +852 2506 2111

Founded in 1963 by Bruce Henderson, BCG operates in 72 offices worldwide.

BCG specialises in business strategy and draws most of its clients from the 500 largest corporations worldwide, as well as working with smaller companies, non-profit organizations and government agencies.

8. Deloitte Consulting

Website: www.deloitte.com

Address: 35/F, One Pacific Place, 88 Queensway, Hong Kong

Deloitte
35/F, One Pacific Place
88 Queensway
Admiralty
Hong Kong

Tel: +852 2852 1600

Founded as an accountancy office in London in 1845, Deloitte has member firms in nearly 140 countries worldwide.

“Deloitte” is the brand under which a collection of independent firms collaborate globally to provide audit, consulting, financial advisory, risk management, and tax services.

9. Forum Corporation

Website: www.forum.com

Address:

Forum Asia-Pacific – Hong Kong
23/F China Online Centre
333 Lockhart Road
Wanchai
Hong Kong

Tel: +852 3966 7288

Founded in 1971, Forum operates in 10 countries worldwide.

Forum helps senior leaders execute innovative, people-driven solutions that accelerate business growth, corporate change and overall performance.

10. Global Intelligence Alliance

Website: www.globalintelligence.com

Address:

Global Intelligence Alliance Hong Kong
88 Hing Fat Street, Unit 1902
Causeway Bay
Hong Kong

Tel: +852 2107 4299

GIA has 11 offices worldwide.

GIA provides strategic market intelligence and advisory services anywhere around the world.

11. Hay Group

Website: www.haygroup.com

Address:

Hay Group
27/F, 3 Lockhart Road
Wanchai
Hong Kong

Tel: +852 2527 9797

Founded in 1943 by visionary Edward N. Hay, Hay Group operates in 84 offices across 48 countries.

Hay Group is a global management consulting firm that works with leaders to transform strategy into reality.

12. Hill & Knowlton

Website: www.hillandknowlton.com

Address:

Hill & Knowlton Asia Headquarters
36th Floor, PCCW Tower, Taikoo Place
979 Kings Road
Quarry Bay
Hong Kong

Tel: +852 2894 6321

Founded in 1927, Hill & Knowlton is headquartered in New York and has 80 offices in 44 countries worldwide.

Hill & Knowlton is a leading international communications consultancy, providing services to local, multinational and global clients.

13. IMS Health

Website: www.imshealth.com

Address:

IMS Hong Kong, ChinaMetrik Ltd.
16/F, 80 Gloucester Road
Wan Chai
Hong Kong

Tel: +852 2581 1802

Founded in 1954, IMS is headquartered in Connecticut andhas 86 offices worldwide.

IMS is the leading provider of information services for the healthcare industry. Services offered are grouped into 3 categories: healthcare measurement, analytics & services, and consulting.

14. Kurt Salmon Associates

Website: www.kurtsalmon.com

Address:

Kurt Salmon Associates
99 Queen’s Road
66/F, The Center
Central
Hong Kong

Tel: +852 3960 6448

Formed by the merger of Kurt Salmon Associates and Ineum Consulting, Kurt Salmon has offices in 15 countries across five continents.

Kurt Salmon is a global management consultancy.

15. Lippincott

Website: www.lippincott.com

Address:

Lippincott
26th Floor Central Plaza
18 Harbour Road
Wanchai
Hong Kong

Tel: +852 2301 7552

Founded in 1943 as Lippincott & Margulies, Lippincott has offices in Boston, Hong Kong, London, New York and Paris.

Lippincott crafts authentic brand stories and memorable experiences that transform perception, enrich connections and drive change.

16. McKinsey & Company

Website: www.mckinsey.com

Address:

McKinsey & Company
40 Floor, ICBC Tower
3 Garden Road
Hong Kong

Tel: +852 2868 1188

Founded in Chicago in 1926 and operating in Hong Kong since 1985, McKinsey is the world’s most prestigious consulting firm and operates in 101 locations worldwide.

McKinsey is a global management consulting firm, and trusted advisor to the world’s leading businesses, governments, and institutions.

17. Monitor Group

Website: www.monitor.com

Address:

Monitor Group Hong Kong Limited
Suite 219, 2/F, Shui On Centre
6-8 Harbour Road
Wanchai
Hong Kong

Tel: +852 2824 8322

Founded in 1983 by six entrepreneurs, including Harvard’s Michael Porter, Mark Fuller and Joseph Fuller, Monitor operates in 17 countries worldwide.

Monitor works with organizations to help them grow.  For corporations, that often means developing strategies for revenue growth. For governments, it means working on national economic development. For non-profits, it means helping to grow their social impact.  Monitor addresses all the problems that are involved in growth: strategy, marketing, pricing, innovation, product development, organization, leadership, economic competitiveness.

18. Navigant Consulting

Website: www.navigant.com

Address:

Navigant Consulting
108 Gloucester Road, Dah Sing
Financial Centre, Suites 2901-2904, 29th Floor
Wanchai
Hong Kong

Tel: +852 2233 2500

Navigant is headquartered in Chicago, Illinois and has offices throughout the world, including core offices in London, Los Angeles, New York, San Francisco, and Washington, DC.

Navigant has industry expertise in Energy, Healthcare, Construction and Financial Services, and has significant technical expertise in Disputes & Investigations, Economics, Financial Advisory and Management Consulting.

19. OC&C Strategy Consultants

Website: www.occstrategy.com

Address:

OC&C Strategy Consultants
18/F Fu Fai Centre
27 Hillier Street
Hong Kong

Tel: +852 2201 1700

Founded in 1987, OC&C Strategy Consultants has 11 offices worldwide.

OC&C helps clients across a wide range of industries find a creative, practical and actionable solutions to the challenges they face.

20. Oliver Wyman

Website: www.oliverwyman.com

Address:

Oliver Wyman
26th Central Plaza
18 Harbour Road
Wanchai
Hong Kong

Tel: +852 2506 0767

Formed through a long list of mergers since 1970, Oliver Wyman operates in 50+ cities across 25 countries.

Oliver Wyman is a leading global management consulting firm that combines deep industry knowledge with specialized expertise in strategy, operations, risk management, organizational transformation, and leadership development.

21. Roland Berger Strategy Consultants

Website: www.rolandberger.com

Address:

Roland Berger Strategy Consultants
16/F, Nexxus Building
41 Connaught Road
Central
Hong Kong

Tel: +852 3757 9480

Founded in 1967, Roland Berger has offices in 31 countries.

Roland Berger is one of the world’s leading strategy consultancies. Its expertise includes branding, corporate finance, corporate responsibility, financial & risk effectiveness, IT, manufacturing, marketing, organization, real estate management, research and development, restructuring, sales, strategy, and supply chain management.

22. Seabury Group

Website: www.seaburygroup.com

Address:

Seabury Group
9/F, Somptuex Central
52-54 Wellington Street
Hong Kong

Tel: +852 9836 1556

Seabury Group has 10 offices worldwide.

Seabury Group is a global advisory and investment management group providing investment banking, restructuring, management consulting, IT development, and human capital advisory services.

23. Value Partners Management Consulting

Website: www.valuepartners.com

Address:

Spectrum Value Partners
1402 Harcourt House
39 Gloucester Road
Wan Chai
Hong Kong

Tel: +852 2103 1000

Founded in 1993, Value Partners Management Consulting has offices in 9 countries worldwide.

Value Partners has turnaround and change management expertise working with industrial and service multinationals.

Management consulting – where did it begin?

EXECUTIVES often rely on the advice of expert management consultants. Was it always this way? Where did it all begin?

The very first management consulting firm was Arthur D. Little, founded all the way back in 1886 by a professor at MIT whose name was (funnily enough) Arthur D. Little.

Almost 30 years later, Booz Allen Hamilton was founded in 1914. Booz was the first management consultancy to serve both industry and government clients.

Interestingly, McKinsey & Company was the world’s first pure management and strategy consulting company. Founded in 1926, McKinsey is is now the world’s most prestigious consulting firm.  The culture of the firm was heavily influenced by a man named Marvin Bower, who served as managing director from 1950 to 1967. Bower believed that management consultancies should adhere to the same high professional standards as lawyers and doctors. To this day, the core guiding principle at McKinsey is professionalism.

Boston Consulting Group, arguably the world’s second most presigious consulting firm, was founded in 1963 by Bruce Henderson. It all began when Henderson left Arthur D. Little to accept a challenge from the CEO of the Boston Safe Deposit and Trust Company to start a consulting arm for the bank.

Ten years later, in 1973, Bill Bain and others left the Boston Consulting Group to form Bain & Company, which is also one of the world’s leading consulting firms.

List of consulting firms in Australia

AN IMPORTANT step towards obtaining a job in a consulting firm is to create a target list of firms that you would like to work for. This can be a very time consuming process.

With the view to saving you a couple of hours, I have prepared a list of consulting firms operating in Australia. This is not an exhaustive list, so if I have overlooked any good consulting firms (I have), let me know.

To make it easier to find the consulting firm you are looking for, consulting firms have been grouped in one of four categories: Strategy and general business, Human resources, Information technology, and Sustainability. Where a consultancy could have been placed under more than one heading, I have placed under the heading I thought was most relevant.

Although some of the consulting firms listed below operate internationally, I have created this list specifically for Australia, but don’t despair! I intend to create specific lists for other countries, for example, India, the UK, USA, Singapore, and China. I plan to do this over the next few months.

Of all the firms I looked at, I have only included the ones that appeared to be of good quality. If you have used any of these firms, please let everyone know what you thought of them – the good and the bad.

Since there are quite a few firms, I have broken the list down into four categories:

  1. Strategy and general business consulting
  2. HR (human resources) consulting
  3. IT (information technology) consulting
  4. Sustainability consulting

BCG Growth Share Matrix

The BCG growth share matrix is a simple conceptual framework for resource allocation within a firm

BCG Growth Matrix(Source: Flickr)

1. Background to the BCG matrix

IN 1968, BCG developed the growth share matrix, which is a simple conceptual framework for resource allocation within a firm.

2. Purpose of the BCG matrix

The BCG matrix is a simple tool that enables management to:

  1. classify products in a company’s product portfolio into four categories (Stars, Cash Cows, Question Marks, and Dogs);
  2. index a company’s product portfolio according to the cash usage and generation;
  3. determine the priority that should be given to different products in a company’s product portfolio; and
  4. develop strategies to tackle various product lines.

3. BCG matrix explained

The idea behind the growth share matrix is that the amount of cash that a product uses is proportional to the rate of growth of that product in the market, and the generation of cash is a function of market share for that product.

Money generated from high-market-share/low-growth products is used to develop high-market-share/high-growth products, and low-market-share/high-growth products.

Under the BCG matrix, products are classified into four business types:

  1. Stars are leaders in high growth markets. Stars grow rapidly and therefore use large amounts of cash. Stars also have a high market share and therefore generate large amounts of cash. Over time, the growth of a product will slow. So, if a Star maintains a high market share, it eventually becomes a Cash Cow. If not, it becomes a Dog.
  2. Cash Cows are highly profitable, and require low investment because they are market leaders in a low-growth market. Growth is slow and therefore cash use is low, and market share is high and therefore cash generation is high. Money generated from cash cows is used to pay dividends, interest, and overheads, and to develop Stars and Question Marks.
  3. Question Marks are the real cash traps and gambles. Question Marks grow rapidly and therefore use large amounts of cash. However, they do not have a dominant market position and hence do not generate much cash.
  4. Dogs generate very little cash because of their low market share in a low growth market. BCG refers to these products as cash traps. Although they may be sold profitably in the market, Dogs are net cash users and BCG indicates that, in terms contributing to growth, they are essentially worthless.

4. Available strategies

  1. Develop: The product’s market share needs to be increased to strengthen its position. Short-term earnings and profits are forfeited because it is hoped that the long-term gains will outweigh these short term costs. This strategy is suited to Question Marks if they are to become Stars.
  2. Hold: The objective is to maintain the current market share of a product. This strategy is often used for Cash Cows so that they continue to generate large amounts of cash.
  3. Harvest: Under this strategy, management attempts to increase short-term cash flows as far as possible (e.g. by increasing prices, and cutting costs) even at the expense of the products long-term future. It is a strategy suited to weak Cash Cows or Cash Cows that are in a market with a limited future. Harvesting is also used for Dogs, and for Question Marks that have no possibility of becoming Stars.
  4. Divest: The objective of this strategy is to get rid of unprofitable products, or products with a low market share in a low growth market. Money from divestment can then be used to develop and promote more profitable products. This strategy is typically used for Question Marks that will not become Stars and for Dogs.

[For more information on consulting concepts and frameworks, please download “The Little Blue Consulting Handbook“.]

#2 BCG – an overview of the top four consulting firms 2008

 

  1. McKinsey & Company
  2. Boston Consulting Group
  3. Bain & Company
  4. Booz Allen Hamilton

2. Boston Consulting Group

Organisation type

Private Company

Headquarters

Boston, Massachusetts, USA

Key people

Hans-Paul Burkner, President and CEO

Size

3,900 consultants (2007) in 66 offices across 38 countries

Revenue

$1.8 billion (2006, Vault)

Expertise

Business strategy

Mission

BCG is committed to:

· Creating competitive advantage through unique solutions

· Building capabilities and mobilizing organizations

· Driving sustainable impact

· Providing unparalleled opportunities for personal growth

· Succeeding together with passion and trust

Operational structure

BCG divides its services into functions including branding, consumer goods, corporate finance and strategy, e-commerce, globalisation, health care, industrial goods, information technology, innovation, intellectual property, marketing and sales, operations, organisation, post-merger integration and strategy.

BCG has a strong presence in Asia.

Clients

BCG draws most of its clients from the 500 largest corporations worldwide, as well as working with smaller companies, non-profit organisations and government agencies.

Culture

BCG supports openness and diversity of opinion. It has a non-hierarchical structure where junior consultants are given responsibility and have access to partners.

BCG reportedly has a friendly and cooperative culture.

BCG has a reputation as a high travel firm.

BCG reportedly has a good work life balance and is less interested in hours spent in the office than it is on results produced.

It appears that BCG does has an “up or out” policy.

 

Recent publications

2006Treasure Hunt: Inside the Mind of the New Consumer’ by Michael Silverstein

2006 The Boston Consulting Group on Strategy: Classic Concepts and New Perspectives

2005The Forgotten Half of Change: Achieving Greater Creativity through Changes in Perception’ by Luc de Brabandere .

2004 Hardball: Are You Playing to Play or Playing to Win’ by George Stalk

Brief history

1963 founded by Bruce Henderson. Henderson left Arthur D. Little to accept the challenge from the CEO of the Boston Safe Deposit and Trust Company to start a consulting arm for the bank.

1965 Henderson pioneered Business Strategy as a special area of expertise for BCG.

1966 BCG developed their first breakthrough concept, the Experience Curve. The concept stipulates that unit costs characteristically go down over time as experience increases. This concept helped in the understanding of the role that market share plays in establishing competitive advantage.

1966 BCG becomes the first Western strategy consulting firm in Japan.

1968 BCG developed the growth share matrix, which is simple conceptual framework for resource allocation within a firm. .

1975 BCG stock is sold to its employees through an employee stock ownership plan as a means of purchasing the company from The Boston Company. This was one of America’s first ESOPs. The buyout of all shares was completed in 1979.

1988 George Stalk wrote “Time: The Next Source of Competitive Advantage”, from which academic and business communities embraced the concept of time based competition.

1990 BCG opens the Sydney, Melbourne and Auckland offices.

1998 Creation of the Strategy Institute to research and foster discussion on innovation.

Nota bene

Awards:

2008 Ranked 2nd most prestigious consulting firm in the Vault consulting firm rankings.

2008. Ranked 11th overall, and 1st among smaller companies, in Fortune Magazine‘s 2008 “100 Best US Companies to Work For” survey, based on strong employee development, a supportive culture, and progressive benefits.

2007. Named best large consulting firm in Australia in BRW magazine’s annual Client Choice Awards.

Careers information

Consultants can expect to be involved in pro bono work. Recent projects have included, developing a comprehensive environmental plan for eastern Germany and designing a five year strategy for the World Wildlife Fund.

BCG places heavy emphasis on the use of the case interview and looks for a combination of curiosity and competence.

Website

http://www.bcg.com/