A Study On Taiwan’s Management Consulting Industry ~ An Application Of The Structure-Conduct-Performance Analysis Student: Hui-Wen Chang Advisor: Dr. Yung-Chien Lou ABSTRACT Among the service industries, management consultancy is the most prominent due to its importance for the prosperity and competitiveness of enterprises. Therefore, the motivation of carrying out this study is to explore ways to facilitate the successful development of management consulting industry and ultimately revive Taiwan’s economy. The focus of this study is concentrated on the characteristics of Taiwan’s management consulting industry by understanding its evolvement path, current condition, composition of five competitive forces, and its organization economic model to discover the industry’s structure, behavior pattern of participants and overall performance. This study also aims at identifying fundamental causes of the industry’s long-lasting problems and factors that hinder the implementation of the most frequently proposed recommendations in the past two decades. Through the application of S-C-P paradigm and the feedback from industry experts, this study concludes that the most frequently raised pressing issues of Taiwan’s management consulting industry are actually symptoms of the industry’s unique structure with 88% of industry participants employed fewer than 10 people (i.e. the cause), which reflects the influence of the industry’s low entry barrier, as well as the nature of management consultation knowledge, mindset of consultants and clients’ behavior. And pertaining to factors hindering the implementations of most frequently proposed recommendations in the past 20 years, this study comes to the conclusion that lacking of legislation, characteristics of management consultation services, mindset of industry participants, and clients’ true needs are major issues adding difficulties to the execution of various recommendations proposed. Last but not least, this study also proposes several criteria to enhance the effectiveness of recommendations proposed by previous studies.

A number of studies have explored the drivers behind value creation, often referred to as value drivers. These studies point out that the generalizability of research on value creation to other contexts is difficult. One such context in which the value drivers remain unidentified is the context of industrial consultancy services. In the age of digitalization, where industries are becoming more complex and knowledge intensive, consultancy services have grown increasingly important for industrial customers. At the same time, globalization intensifies the competition on consultancy markets creating a high pressure on consultancy firms’ ability to continuously enhance value creation for their customers. Based on these challenges, the purpose of this thesis is to explore how value creation can be enhanced through the identification and utilization of value drivers in industrial consultancy services. Two research questions were formulated based on this purpose and addressed by means of a qualitative study conducted in the paper and pulp industry in Sweden. Semi-structured interviews were conducted with six managers and decision makers from five multinational companies that use consultancy services. The thematic analysis of the interviews led to the identification of 13 value drivers that play key roles in value creation in industrial consultancy services: Individual competence, Organizational resources, Availability, Personal relationship, Communication, Personal attributes, Timeliness, Usage of time, Performance, Cost, Customer-organizational involvement, Documentation and Progress by feedback. Ten among these drivers were considered benefits, while three were considered sacrifices. Consultancy firms should strive towards minimizing the negative effects on value creation caused by sacrificial value drivers and maximize the positive effects on value creation caused by beneficial value drivers. In addition, the thesis contributes a model in which the 13 value drivers can be used by both industrial customers of consultancy services and consultancy firms for the purpose of evaluating and enhancing value creation. Specifically, the model offers a tool that (I) compares different consultancy firms or projects in terms of value creation, (II) evaluates and analyzes projects and collaborations with respect to value creation and (III) enhances value propositions and value creating processes.

Begreppet managementkonsult har visat sig vara diffust och vad professionen innebär är svårt att definiera. Det faktum att managementkonsulter i princip säljer ett löfte om vad de ska leverera gör att förmågan att inge förtroende är en viktig egenskap hos en konsult. I denna studie undersöker vi hur den svenska managementkonsultbranschen ser ut och vilken betydelse förmågan att skapa förtroende har. Genom en fallstudie på företaget Reforce har vi kunnat analysera vilken position ett litet managementkonsultföretag, utan ett känt och väletablerat varumärke, kan ha på marknaden samt vilka aspekter som påverkar deras förmåga att inge förtroende. I kartläggningen av den svenska managementkonsultmarknaden framkommer att de företag som agerar på marknaden idag kan delas in i tre huvudsakliga kategorier; amerikanska, semiamerikanska och svenska företag. Det har visat sig att de olika kategorierna skiljer sig åt bland annat i avseende på vilka primära tjänster de erbjuder och på vilket sätt de arbetar. Managementkonsultbranschen är kunskapsintensiv och något som därför har uppmärksammats i denna studie är att företagen inte endast konkurrerar om kunder utan också om bra personal. Fallföretaget Reforce kallar sig själva för affärsstrateger och säger sig vara en blandning av managementkonsulter, säljkonsulter och investerare. De arbetar efter en specifik metod och hjälper sina klienter genom att ta fram strategier som de sedan operativt är med och förverkligar. Resultatet av fallstudien visar att det inte går att placera in Reforce i någon av de huvudsakliga aktörskategorierna på den svenska managementkonsultmarknaden. Detta tyder på att företaget har en unik position på marknaden i förhållande till övriga aktörer. Studien tyder även på att de utmaningar som ett mindre managementkonsultföretag står inför, både ur ett positionerings- och ett förtroendeperspektiv, beror av företagets specifika egenskaper och förutsättningar. Resultatet visar att det i dagsläget tycks finnas utrymme på marknaden för en aktör som inte går i fotspåren av de dominerande globala aktörerna. Vilket pris ett managementkonsultföretag tar för sina tjänster har visat sig vara av mindre betydelse i den förtroendegivande processen, medan konsulternas förmåga att utstråla engagemang, trygghet och erfarenhet är av stor vikt. En av de största utmaningarna för en aktör som tänker annorlunda, tycks vara att överbrygga och förändra gamla värderingar. I arbetet har Reforce endast studerats ur ett internt perspektiv och en intressant framtida utveckling av studien skulle därför kunna vara att utreda hur företagets kunder ser på Reforce och deras förmåga att inge förtroende. / There is no general definition of management consulting or what such consultants do. It is hard to measure the results that they deliver and one may say that they sell promises about future results. To be trustworthy is therefore one of the most important qualities for a management consultant to possess. The purpose of this study is to take a deeper look into the Swedish management consulting industry and to investigate the importance of trust. To be able to further discuss how small companies, without a well-established brand, can be positioned at the market and how they work with the creation of trust; a case study is performed at the Swedish company Reforce. The investigation of the Swedish management consulting industry shows that companies that are operating on this market, can be divided into three main categories; American, Semi-American and Swedish companies. These different categories differ in respect to, inter alia, what they offer and their method of work. Management consulting is a knowledge intensive industry, which makes the companies that operate on the market compete with each other, not only to win clients, but also to get the most talented consultants. Reforce uses the term business strategists to describe themselves. They say that they are a mix of management consultants, sales consultants and investors and have developed a specific methodology, which they use in all of their projects. They assist their clients to reposition themselves on their markets and are also operatively involved in the implementation process. Through interviews and observations it can be concluded that it is not possible to place Reforce in any of the main categories on the Swedish management consulting market. This suggests that Reforce might have a unique position relative to the other companies on the market. The challenges for small management consulting companies depend on its characteristics and the environment in which they operate. This study shows that there is room for new companies on the market, even though they do not think and act like the dominating, global companies. It has been shown that the price of the service is of minor importance when building trust. The consultant’s ability to show devotion, be confident and experienced is, on the other hand, of great importance. The main challenge for a company that differs from their competitors seems to be to overcome their clients’ conservative thoughts. This study investigates Reforce from an internal perspective and an interesting development would be to interview the company’s clients to find out how they experience Reforce ability to inspire confidence.

Enabled by new technologies, firms are starting to shift from selling products to selling outcome-based services. In an outcome-based business model, providers deliver outcomes and work in close cooperation with end-customers to create superior value, more efficient and more sustainable solutions. Research has explored the boundaries to the adoption of outcome-based business models, but does not provide an approach to overcome these boundaries. To address this research gap, this degree project examines how the consulting industry can boost outcome-based business models by facilitating their adoption. To explore how consultancies can profit from projects related to outcome-based business models by generating valuable services to clients, a representative case study at Capgemini Invent, a large strategy and technology consultancy, was conducted. Semi-structured interviews with twelve experienced consultants from different backgrounds lead to the finding, that the shift of industrial firms towards selling outcome- based services, provides large potential for consultancies as they can sell a full range of services related to generating an understanding for the value created by outcome-based business models, supporting the value definition and value proposition within such a business model, and delivering alternative services in the post-implementation-phase of an outcome-based business model. I also find that consultancies have the capabilities and, due to the existent potential, motivation to offer services to facilitate the adoption of outcome-based business models but are nevertheless focused on generating short-term profits rather than actively trying to promote solutions because they provide social value. This project contributes to literature, by providing a perspective on how the development of outcome-based business models can be facilitated, which in turn is likely to lead to increased sustainability and social value. It also points out that consultancies – as knowledgeable leaders - have a major responsibility to take a lead on developing sustainable business practices to help solve some of our generations most difficult challenges. Let us hope they take on this responsibility.