Professional Documents
Culture Documents
(10)Darshan Patel
(22) Lokesh Kumar
(25) Mayank Sah
(30) Nisarg Chokshi
(34) Prakriti Jain
Table of Contents
1. COMPANY OVERVIEW..............................................................................1
Accenture............................................................................................1
PwC.....................................................................................................3
Accentures industries.........................................................................5
PWCS Industries.................................................................................7
2. Accentures SWOT analysis..................................................................10
3. PWCS SWOT Analysis..........................................................................11
4. VRIN Analysis.......................................................................................12
5. PESTEL Analysis...................................................................................14
a)
Political Factors..........................................................................14
b)
Economic Factors.......................................................................14
c)
Social Factors.............................................................................15
d)
Technological Factors.................................................................15
e)
Environmental Factors...............................................................16
f)
Legal Factors.............................................................................17
8. Ansoff Matrix........................................................................................23
9. BCG Matrix (Boston Consultancy Group)..............................................28
10. Level of Control....................................................................................30
11. GLOBAL STRATEGY...............................................................................32
Multi-Domestic Strategy:...................................................................41
Global strategy:.................................................................................41
Transnational strategy:......................................................................41
14. R&D Investments:................................................................................43
15. GAP Analysis.........................................................................................46
Drivers of Internationalisation:..........................................................47
16. CONCLUSION........................................................................................49
17. RECOMMENDATION..............................................................................50
18. Exhibit 1...............................................................................................51
List of Figures
COMPANY OVERVIEW
Accenture:
Accenture Limited is one of the largest global providers of consulting, technology, and
outsourcing services. It is registered in Hamilton, Bermuda but it was announced on the May 26,
2009 that the Board of Accenture approved moving their incorporation to Ireland. It is said to be
the largest consulting firm in the world. Accenture is a Fortune Global 500 company with more
than 186,000 people in 52 countries across the Americas, Asia Pacific, and Europe Middle East
Africa (EMEA) regions. The company is headquartered at Hamilton (Bermuda), the US. The
company reported net revenues of about $23 billion in fiscal-year 2008, which grew by 19%
compared with the previous year. Accenture goes to market through five distinct operating
groups covering 17 industry verticals.
The digital revolution is compelling our clients to change the way they do business. They
come to us for our end-to-end solutions, our deep industry knowledge and wide-ranging global
expertise. The very same things that can make a difference to your career. We do more than
advise we work at the heart of our clients organizations and help address their most complex
issues. To do that across more than 40 industries and every kind of project imaginable requires a
host of talented people each with their own unique skillset, background and industry
knowledge. The key is allowing these individuals to make the most of the expertise of some
368,000 colleagues while supporting them to enhance their industry and technical knowledge, as
well as experience across our client base. Whether youre already a consultant or not, our breadth
of work, projects and opportunities mean that, if youre ambitious, Accenture Consultancy is the
place for you to increase your knowledge, talent and career. Read on or click on the icons below
to find out where your skills could play a part.
Mission: Helping our clients create their future.
Vision: To become one of the world's leading companies, bringing innovations to improve the
way the world works and lives.
Goal - to help clients to become high performance businesses and governments & to become
one of the world's leading companies, bringing innovations to improve the way the world works
and lives.
Tagline: High Performance. Delivered.
Values: The six core values form the backbone of how Accenture go to market are:
Client Value Creation: Understand/ meet client expectations 100% of the time.
One Global Network: Act to enhance the collective values of the global organization.
Stewardship: Think future oriented; act /invest to build a stronger firm for tomorrow.
Best People: Are highly competent and make a commitment to excellence, teamwork,
and the success of our clients.
Respect for the Individual: Treat each person as we would like to be treated.
PwC:
PricewaterhouseCoopers (PwC) is one of the leading providers of advisory, tax and
human resources related services around the world. PwC is one among the accounting's Big
Four, the other three firms being Ernst & Young, Deloitte Touche Tohmatsu and KPMG. The
company classified its business into six segments, namely, Audit and Assurance, Consulting,
Deals, Human Resource, Legal Services and Tax. It has presence in 151 countries across the US,
Europe, Asia Pacific, and the Middle East regions. The company is headquartered in New York,
the US. PwC is the brand under which the individual member firms of Pricewaterhouse Coopers
International Limited (PwCIL) operates and provides professional services, drawing on common
resources and methodologies. PwCIL acts as a coordinating entity that focuses on key areas, such
as strategy, brand, and risk and quality. The PwC network is not one international partnership and
the PwC member firms are not otherwise legal partners with each other formed in 1998 from a
merger between Price Waterhouse and Coopers & Lybrand, PwC has a history in client services
that dates back to the nineteenth century. Both accounting firms originated in London during the
mid-1800s.
Today, PwC serves 26 industries. Our industry-focused services in the fields of assurance,
tax, human resources, transactions, performance improvement and crisis management have
helped resolve complex client and stakeholder issues worldwide. We also apply our expertise and
talents to help educational institutions, the federal government, non-profits and international
relief agencies address their unique business issues.
Mission: PwC mission is to deliver a fair and clarified auditing service, in order to improve
presentation of financial information. And therefore, helping the company gain trust from
investors.
Main Principles
Company's Values
Integrity
Intelligen
ce
Innovatio
n
Teamwo
rk
Excellen
ce
Leaders
hip
Vision:
Through their strong work ethic they hope to gain recognition throughout the world.
They are looking for people who are professional and able to adapt to the market in
different situations, as well as following the company's work ethic, to have a leading
expertise.
They apply their best practice in all areas of governance and always maintain
transparency.
Our goal is to be a leading participant in the process of establishing Spanish and
international accounting and auditing standards, as well as playing a major role in
them.
We will be a firm in which all partners and employees feel motivated in their work
Accentures industries
Automotive and Industrial - Accenture helps automotive and industrial companies create a
new level of innovation and efficiency across the extended value chain. In 2020 they
estimate that a Connected Industrial Workforce could be helping them to unlock as much as
500 million in profitability for an automotive manufacturer with annual revenues of 50
billion. Their efforts promise to sustain their first-mover advantage as the Connected
and IT transformations and help wealth managers drive sales, reduce costs and manage risks.
Chemicals- Helping chemical companies apply innovation, transformational strategies and
digital enablement for growth, differentiation and superior operations. Accenture Enterprise
Services for Chemical helps in accelerating enterprise-wide business value with innovative,
industry with a new productivity transformation, where digital technologies help companies
less.
Insurance - Helping P&C and Life insurers transform through innovative business and
operating models for customer retention, growth and profit. We help insurers cut costs,
manage risk and drive growth through digital innovation, platform modernization, and
deliver better results for individuals, families and societies in a digital era.
Retail - Accenture helps retailers transform to increase profits, engage customers and
PWCS Industries
Aerospace and Defence - The company exploit market understanding to drive efficient
innovation in the aerospace, defense and security industry. Aerospace, defense & security
companies expect to have achieved an advanced level of digitization and integration in five
years time.
Automotive - PwCs global automotive practice leverages its extensive experience in the
industry to help companies solve complex business challenges with efficiency and quality.
One of their practice's key competitive advantages is Autofacts, a team of automotive
and finance skills, to serve the full asset lifecycle of capital projects and infrastructure.
Chemicals - PwC's Chemicals practices offers guidance in such areas as M&A
developments, talent retention, sustainability, regulation and the global chemicals industry.
Education - They have access to industry specialists in over 140 countries. Their core crossfunctional team comprises professionals from various fields including tax, regulatory,
corporate finance and strategy who analyze client problems in a more holistic and detailed
manner.
Entertainment and Media - The Companys Global Entertainment and Media practice
work with businesses to address both the challenges and opportunities presented by digital
transformation, assisting them shift from traditional business models to businesses, brands
and revenue streams that leverage digital content and platforms. They work with clients
across a wide range of key industry sectors including: television, film, music, Internet, video
games, advertising and publishing, radio, out of home advertising, sports, business
Government and Public Sector - . The company assists governments and public sector
organizations to enable efficient governance practices infused with ingenuity and aided by
technology.
Healthcare The Company provide health organizations with professional guidance not
just on healthcare issues in their local markets but also about operating in global markets
including a broad mix of service lines that may include manufactured goods, retail, mobile
communication devices, and information systems. PwC brings a world of multiple-industry
communication and knowledge sharing of key issues critical to your fund, deals, and
portfolio companies.
Technology - PwC is best equipped to understand and help to grow in an environment of
increasing enterprise risk due to global economic turbulence, unsteady demand,
unpredictable currencies and new challenges in the predictability of tax regimes. PwC
works across segments such as IT/ITeS, eCommerce, electronics manufacturing and
semiconductors.
Telecom PWCS telecom industry practice focuses on bringing together global network
resources around their clients needs, creating teams to help them and responding to
challenges around almost every dimension of the business.
They have a large client base many of which are repeat clients.
Many business units apart from financial services like, Consumer & Industrial
Weakness:
Opportunities:
Threats:
Expansion of competitors.
10
They have a large client base many of which are repeat clients
Many business units apart from financial services like, Consumer & Industrial Product
accountancy firms
Has nearly 20,1090 employees globally
Intellectual Property (IP) - Established and maintained IP and global thought leadership
Weakness:
Stiff competition from other leading industry players means restricted market share.
Brand visibility and advertising lesser than some industry major.
Opportunities:
Threats:
Expansion of competitors.
Fluctuating global economy affects operations.
11
VRIN Analysis
The resource-based view (RBV) is a way of viewing the firm and in turn of approaching
strategy. Fundamentally, this theory formulates the firm to be a bundle of resources. It is these
resources and the way that they are combined, which make firms different from one another. It is
considered as taking an inside-out approach while analyzing the firm. This means that the
starting point of the analysis is the internal environment of the organization.
The important features for a resource to be strategically important are as below:
Valuable - When resources are able to bring value to the firm they can be a source of
competitive advantage.
The criteria of the VRIN Framework clearly rules out best practices as a source of competitive
advantage. If other firms can easily understand and copy a capability, it is not a source of
advantage.
12
13
PESTEL Analysis
a) Political Factors
Politics plays an important role in business. This is because there is a balance between systems of
control and free markets. As global economics supersedes domestic economies, companies must
consider numerous opportunities and threats before expanding into new regions. It also applies to
firms identifying optimal areas for production or sales. Political factors may even help determine
the location of corporate headquarters.
Some of the political factors one needs to watch are:
Tax policies
Stability of government
b) Economic Factors
Economic factors are metrics that measure the health of any economic region. The economic
state will change a lot of times during the firms lifetime. You have to compare the current levels
of inflation, unemployment, economic growth, and international trade. This way, you can carry
out your strategic plan better.
Some examples of economic factors you can judge are:
Credit accessibility
Unemployment rates
Interest rates
Inflation
c) Social Factors
Social factors assess the mentality of the individuals or consumers in a given market. These are
also known as demographic factors. Social indicators like exchange rates, GDP and inflation are
critical to management. They can tell when it is a good time to borrow. These factors help find
out how an economy might react to certain changes.
The following are some social factors to focus on:
Distribution of Wealth
Educational levels
d) Technological Factors
15
This step entails recognizing the potential technologies that are available. Technological
advancements can optimize internal efficiency and help a product or service from becoming
technologically obsolete. Role of technology in business is increasing each year. This trend will
continue because R&D drives new innovations.
Recognizing evolving technologies to optimize internal efficiency is a great asset in
management. But, there are few threats. Disruptive innovations such as Netflix affect business
for CD-players. The best strategy is to adapt according to the changes. Your strategies should
sidestep threats and embrace opportunities.
This is a large challenge for management. Below is a list of common technological factors:
Both consumers and governments penalize firms for having adverse effect on the environment.
Governments levy huge fines upon companies for polluting. Companies are also rewarded for
having positive impact on the environment. The consumers are willing to switch brands if they
find a business is ignoring its environmental duties.
Impact on the environment is a rising concern. Note that the environment benefits the company
too. Running water for a hydro-power plant is an example.
Few common environmental factors are:
f) Legal Factors
This step involves learning about the laws and regulations in your region. It is critical for
avoiding unnecessary legal costs.
This is the last factor in PESTEL. These factors overview the legal elements. Often, start-ups
link these elements to the political framework. Many legal issues can affect a company that does
not act responsibly. This step helps to avoid legal pitfalls. You should always remain within the
confines of established regulations.
Common legal factors that companies focus on include:
Employment regulations
Competitive regulations
Product regulations
Antitrust laws
Patent infringements
17
18
19
20
21
22
Years of experience
Brand loyalty
The industry is already dominated by strong firms with these qualities doing well both
locally and internationally; new entrants are not a threat.
Bargaining power of suppliers: is high. They are big, rich and their alumni are
everywhere, throughout institutes, regulatory bodies, government, their clients' boards and
even within almost every other accountancy firm (Prizeman, 2011).
Bargaining power of buyers: is low. To obtain the best in professional services, there are
very few options to choose from.
Rivalry: PwC is highly competitive especially among the 'Big Four' accountancy firms.
Whereas, for Accenture, the industry isnt that competitive.
23
Both the consultancy firms follow both the Cost leadership and Differentiation strategies i.e.
integrated cost and differentiation strategy.
24
Fi
g 6. Business Level strategy
Ansoff Matrix
The Ansoff Growth matrix is strategy planning tool that helps a business determine its
product and market growth strategy. Ansoffs product/market growth matrix suggests that a
business attempts to grow depend on whether it markets new or existing products in new or
existing markets. The output from the Ansoff matrix is suggested growth strategies which set the
direction for the business strategy.
25
A. Market penetration:
Market penetration is the name given to a growth strategy where the business focuses on selling
existing products into existing markets.
Market penetration seeks to achieve objectives like:
Help company to maintain or increase the market share of current services or products as
well as secure dominance of growth markets
To increase the market penetration or market share it is likely to have good information
on competitors and on clients needs. It is unlikely that this strategy will require much
investment in new market research for market penetration.
26
PwC
As per report of 2015 PwC has 10.2 market shares which is highest among all other consultancy
services provider. For market penetration PwC launches different campaign which helps them to
attract new clients at some level as well as the existing clients stick with their services.
One of the campaigns of PwC is The World is in Beta which help them to creating brand
advantage in rapidly changing world. The campaign is all about the companys digital leadership
as well as suggests the vision of company. To reach the people they follow the strategy of
editorial website, vibrant lead driving blog and a social content strategy that leveraged the vast
PwC staff network. With help of this strategy they were able to reach over 30 million on Twitter
and increase LinkedIn followership by 130%.
As per report of 2015 Accenture has 3.3 % market share & revenue of $4.4 billion. Same as
PwC Accenture also launches new advertise campaign for market penetration.
One of the campaign is High performance Delivered. positioning to the next level by
demonstrating the full depth and breadth of the companys capabilities and focusing on the value
Accenture creates for its clients. The campaign will come to life across every brand touch-point
with external and internal audiences including print, airport, outdoor and broadcast
advertising; a wide array of digital extensions, such as online advertising, search, mobility
platforms, social media and interactive billboards; recruitment marketing materials; client
presentations; the companys newly refreshed website; employee communications; and branding
at Accenture locations in more than 200 cities across six continents.
B. Product development:
Product development is the name given to a growth strategy where a business aims to introduce
new services into existing markets. This strategy may require the development of new
competencies and requires the business to develop modified services which can appeal to
existing markets.
A strategy of product development is particularly suitable for a business where the service needs
to be differ in order to remain competitive. To develop new services company have to focus on
following:
PwC & Accenture both lie in product development and market development quadrant. As we talk
about the product development they adopt or develop their skills in mainly on technology side &
come with new service lines to convince their clients for providing the services.
28
PwC
PwC is second highest market share holder in consultancy service provider. To become highest
market share holder PwC have to focus on the how the economy change year by year and try to
develop new service line in that way which help client as well as company in manner of profit
generating service line.
As example PwC acquiring Outbox, a Poland based company that specializes in customer, digital
and cloud-based solutions and transformational services.
Accenture
Accenture have low market share compare to Big 4 consultancy. As Accenture provide same
service as other consultancy provides but some services are there which Accenture add their
portfolio of services in recent years which help Accenture in future market penetration like they
added new service line of global risk management service for help clients to better identify,
manage & mitigate risk.
As example Accenture acquires Schlumberger business consultancy to enhance Accenture
capabilities in upstream oil & gas business.
C. Market development:
As name suggest in this strategy where the business seeks to sell its existing services into new
markets.
There are many possible ways of approaching this strategy, including:
Company can develop its market by targeting new geographical regions where market
growth for company service is high.
Different pricing policies to attract different clients or create new market segments
Market development is a more risky strategy than market penetration because of the targeting of
new markets.
29
PwC serves 26 industries with offices in more than 150 countries on the other side Accenture
serves more than 120 countries. Both the companies are highly geographically diversified.
For new market development both companies have to focus on the niche market segment or
small scale business.
D. Diversification
Diversification is a strategy in which company develop new services in new markets.
This is an inherently more risk strategy because the business is moving into markets in which it
has little or no experience. For a business to adopt a diversification strategy, therefore, it must
have a clear idea about what it expects to gain from the strategy and an honest assessment of the
risks. However, for the right balance between risk and reward, a marketing strategy of
diversification can be highly rewarding.
PwC & Accenture
As per our study of both consultancy reports there is no need of the diversification for both
companies because they are already developed their services for long period as per economys
growing demand & there is lot of opportunity on the product development side.
In future there may be possibility that different country & their economy changes as time passes
and demand of different services generate then consultancy have to develop their services in
different areas as per demand which were related or unrelated to their current services.
30
1) Stars:
Stars represent business units having large market share in a fast growing industry. They
may generate cash but because of fast growing market, stars require huge investments to
maintain their lead. SBUs located in this cell are attractive as they are located in a robust
industry and these business units are highly competitive in the industry. If successful, a star will
become a cash cow when the industry matures.
2) Question Marks:
31
Question marks represent business units having low relative market share and located in a
high growth industry. They require huge amount of cash to maintain or gain market share. They
require attention to determine if the venture can be viable. Question marks are generally new
goods and services which have a good commercial prospective. There is no specific strategy
which can be adopted. Most businesses start as question marks as the company tries to enter a
high growth market in which there is already a market-share. If ignored, then question marks
may become dogs, while if huge investment is made, and then they have potential of becoming
stars.
3) Cash CowsCash Cows represent business units having a large market share in a mature, slow growing
industry. Cash cows require little investment and generate cash that can be utilized for
investment in other business units. These SBUs are the corporations key source of cash, and are
specifically the core business. They are the base on different to different organization.
4) DogsDogs represent businesses having weak market shares in low-growth markets. They
neither generate cash nor require huge amount of cash. Due to low market share, these business
units face cost disadvantages. These business firms have weak market share because of high
costs, poor quality, ineffective marketing, etc. Unless a dog has some other strategic aim, it
should be liquidated if there is fewer prospects for it to gain market share. Number of dogs
should be avoided and minimized in an organization.
Due emerging economy as well as industrialization & urbanization of the countries the demand
of the different services always be there. As different companies of different countries have a
different demand of services. All the services of the consultancy are lies in to the stars.
As we go further in detailing in country wise & their economy demands then some services are
lies into the star or cash cows or dogs or Question mark.
Example- India is a developing country. Among all services of Accenture communication &
Media service lies into the star quadrant due to country look forward to digitalization of its
different business simultaneously Prime Minister campaign of Digital India on the other side
the resource service lies into the Dog quadrant.
32
Among all services PwC Assurance service is lies into the star quadrant where the Tax service
lies into the cash cows quadrant in North American market.
Level of Control
Entity-level controls are internal controls that help ensure that management directives pertaining
to the entire entity are carried out.
There are total two types of level of control:-
In this any one unit reports to one supervisory unit only so it would be easier to communicate
between two units.
In this units report to several supervisory units at the same time so it help in way that for one
issue there may be a number of different views can occur and it help to take decision with
consideration of different view of different supervisory units (Exhibit 1).
Both the companies follow the singular line of command in which any one unit report to
the one supervisory of unit only.
33
Singular line control is beneficial for the consultancy because consultancy provide different kind
of services. For each service there is one head of respected service who give the command to the
lower employees.
If they follow multi line control then it may chance that different services had provide different
views in one client requirement & this may very completed situation for company as well as the
client in which path they move further.
34
GLOBAL STRATEGY
What is global strategy? And why is it important?
Global Strategy is a shortened term that covers three areas: global, multinational and
international strategies. Essentially, these three areas refer to those strategies designed to enable
an organization to achieve its objective of international expansion.
In developing global strategy, it is useful to distinguish between three forms of
international expansion that arise from a companys resources, capabilities and current
international position. If the company is still mainly focused on its home markets, then its
strategies outside its home markets can be seen as international.
One of the basic decisions in global strategy begins by considering just how much local
variation, if any, there might be for a brand. Another more basic decision might be whether to
undertake any branding at all. Branding is expensive. It might be better to manufacture products
for other companies that then undertake the expensive branding.
As international activities have expanded at a company, it may have entered a number of
different markets, each of which needs a strategy adapted to each market. Together, these
strategies form a multinational strategy. For some companies, their international activities have
developed to such an extent that they essentially treat the world as one market with very limited
variations for each country or world region. This is called a global strategy.
Importantly, global strategy on this website is a shorthand for all three strategies above.
Implications of the three definitions within global strategy:
Global strategy: the organization treats the world as largely one market and one source
of supply with little local variation. Importantly, competitive advantage is developed largely on a
global basis.
From a company perspective: international expansion provides the opportunity for new sales
and profits. In some cases, it may even be the situation that profitability is so poor in the home
market that international expansion may be the only opportunity for profits.
In addition to new sales opportunities, there may be other reasons for expansion beyond the
home market. For example, oil companies expand in order to secure resources called resource
seeking. Clothing companies expand in order to take advantage of low labour costs in some
countries called efficiency seeking. Some companies acquire foreign companies to enhance
their market position versus competitors called strategic asset seeking. These issues are
identified in the film that you will shortly be able to see on the page How do you build a global
strategy?
From a customer perspective: International trade should in theory at least lead to lower
prices for goods and services because of the economies of scale and scope that will derive from a
larger global base. For example, Nike sources its sports shoes from low labour cost countries like
the Philippines and Vietnam. In addition, some customers like to purchase products and services
that have a global image. For example, Disney cartoon characters or Manchester United
branded soccer shirts.
36
From the perspective of international governmental organizations like the World Bank :
The recent dominant thinking has been to bring down barriers to world trade while giving some
degree of protection to some countries and industries. Thus global strategy is an important aspect
of such international negotiations.
What are the benefits of a global strategy? And what are the costs?
The business case for achieving a global strategy is based on one or more of the factors set out
below
a)
A group when it shares activities or transfers capabilities and competencies from one part
of the group to another for example, a biotechnology sales team sells more than one product
from the total range.
b)
Economies of scale: the extra cost savings that occur when higher volume production
allows unit costs to be reduced .Global brand recognition: the benefit that derives from having
a brand that is recognized throughout the world.
c)
Global customer satisfaction: multinational customers who demand the same product,
service and quality at various locations around the world for example, customers of the
Sheraton Hotel chain expect and receive the same level of service at all its hotels around the
world.
37
d)
Lowest labour and other input costs: these arise by choosing and switching manufacturers
with lower labour costs for example, computer assembly from imported parts in Thailand
and Malaysia where labour wages are lower than in countries making some sophisticated
computer parts (such as high-end computer chips) in countries like the USA
e)
Recovery of research and development (R&D) costs and other development costs across
the maximum number of countries new models, new drugs and other forms of research
often amounting to billions of US dollars. The more countries of the world where the goods
can be sold mean the greater number of countries that can contribute to such costs. For
example, the Airbus Jumbo A380 launched in 2008 where development costs has exceeded
US$ 10 billion.
f)
Emergence of new markets: means greater sales from essentially the same products.
Set against these benefits, there are at least six economic costs of international and global
strategies:
1.
Lack of sensitivity to local demand: Leavitt argued that people would be prepared to
compromise on their individual tastes if the product was cheap enough deriving from
economies of scale and scope. Is this really correct? Other writers argued that there could be
costs in adapting products to match local tastes, local conditions like the climate and other
local factors like special laws on environmental issues.
2.
Transport and logistics costs: if manufacturing takes place in one country, then it will be
necessary to transport the finished products to other countries. The costs for some heavy
products, like steel bars, may be greater than the economies of scale from centralized
production in one country.
3.
Economies of scale benefits may be difficult to obtain in practice: plant takes time to
commission, local competitors still using old plant and cheap labour may still be competitive.
4.
and control the result. All this is time consuming, expensive and at the mercy of local
managers who may have their own agendas and interests.
5.
6.
Barriers to trade: taxes and other restrictions on goods and services set by national
governments as the goods cross their national borders.
7.
Other costs imposed by national governments to protect their home industries like
special taxes or restrictions on share holdings.
39
CAGE FRAMEWORK
The CAGE Distance Framework identifies Cultural, Administrative, Geographic and
Economic differences or distances between countries that companies should address when
crafting international strategies. It may also be used to understand patterns of trade, capital,
information, and people flows. The framework was developed by Pankaj Ghemawat, a professor
at the University of Navarra - IESE Business School in Barcelona, Spain.
Components
The table shown below provides more detail on each of the CAGE categories, and how
they can manifest themselves depending on whether one is comparing a pair of countries or
looking at one in isolation. One of the distinctions between the CAGE Framework and other
country analysis frameworks is its inclusion of bilateral as well as unilateral factors.
40
Ghemawat offers some advice on how the CAGE Framework can help managers
considering international strategies:
It helps to pinpoint the differences across countries that might handicap multinational
companies relative to local competitors
It can shed light on the relative position of multinationals from different countries. For
example, it can help explain the strength of Spanish firms in many industries across Latin
America
41
It can be used to compare markets from the perspective of a particular company. One
method to conduct quantitative analysis of this type is to discount (specifically, divide) raw
measures of market size or potential with measures of distance, broadly defined
CAGE Framework for PWC & ACCENTURE:
After study of this framework we have found that the CAGE framework analysis for the
PWC and ACCENTURE is same. As both the companies are business consulting firms and as we
have discussed in the earlier part of the report that both the companies having similar type of
services provided to similar type of industries.
C: Cultural Distance
Demographic and technological changes are causing massive economic shifts, both
between and within countries and thus equally momentous swings in consumption.
The world is getting wealthier: the number of middle-class consumers is projected to rise
dramatically over the next 15 years, especially in Asia. Thats creating all sorts of new
opportunities, particularly for companies in the sectors on which richer consumers
typically spend their money.
But the customer base is fragmenting. The gap between the rich and poor is widening;
urbanisation is exacerbating the rural-urban divide;
42
A: Admistrative Distance
Its not just investors they have to satisfy. They also have to answer to regulators and the
general public. And, as many organisations move into new markets, theyre engaging
with a more diverse mix of stakeholders, each wanting different kinds of information
Any organisation that wants to survive, let alone succeed, will have to embrace new
regulations and technologies, manage new risks and prepare for the future with robust
succession planning. That means many private companies and public institutions will
need new governance models
Top management will also have to assume more supervisory responsibilities, and simple
compliance with the rules wont be enough. The management team will have to
communicate its governance policies, processes and organisational culture to all its
stakeholders. It will also have to go beyond traditional reporting and address issues such
as sustainability and tax contributions
G: Geographical Distance
43
E: Economical Distance
The differing rates of economic growth, or indeed, contraction that we see around the
world together with greater volatility, has made it more difficult for companies to create
and execute new growth strategies. Other changes have compounded the challenges.
These include the impact of new digital technologies, shifting demographics, changing
customer behaviour and mounting pressure on the worlds most critical natural
resources. The links between business and governments around the world have also
become clearer and more important.
The global economy is projected to double in size by 2032 and nearly double again by
2050. China will outstrip the US by 2017 (measured in terms of purchasing power
parity). And India is likely to become the third global economic giant, a long way
ahead of Brazil, which we expect to move up to fourth place, ahead of Japan. As the
emerging economies become bigger and wealthier, demand for services is rising. This
phenomenon is already shaping global markets: in 2010, emerging economies spent
more than the G7 on imported services for the first time since reliable records began.
These long-term growth trends present many opportunities and challenges. China, India,
Brazil and other emerging economies will become large consumer markets, not just lowcost production centers. And, with annual growth projected to be only 2% in the
advanced economies, companies will need to look increasingly to other markets.
44
International Strategy
International firms need to formulate company policies that take account of the fact that
they manufacture service, employ and market to or in countries with different laws, different
beliefs and different levels of socio-economic development compared to a firm's country of
origin. This course examines the contextual, organizational and managerial issues associated
with the operation of multinational firms. Interactions between contextual elements and
management of an international enterprise will be studied from both theoretical and practical
perspectives. The major topics that will be studied include international strategic planning and
implementation in MNCs, strategies for international competition international production and
outsourcing, international joint ventures and strategic alliances, organizational structure of
MNCs, control in outsourcing, control in international operations, intra and inter-firm technology
and knowledge management, cross-cultural negotiation and decision making, motivation and
leadership in international management, international human resource management and
international social and ethical responsibly of firms.
International strategy is now further divided into two categories:
45
So For these two firms International Corporate level strategy is applicable. Now lets
discuss about International corporate level strategy.
46
Multi-Domestic Strategy:
A multi-domestic strategy is a strategy by which companies try to achieve maximum
local responsiveness by customizing both their product offering and marketing strategy to match
different national conditions. Production, marketing and R&D activities tend to be established in
each major national market where business is done.
An alternate use of the term describes the organization of multi-national firms. International or
multinational companies gain economies of scale through shared overhead and market similar
products in multiple countries. Multi-domestic companies have separate headquarters in different
countries, thereby attaining more localized management but at the higher cost of forgoing the
economies of scale from cost sharing and centralization.
Strategic and operating decisions are decentralized SBUs in every geography are allowed to
customize their product and services as per local needs. Competition differs as per marketApproach should be peculiar to the specific market. Because of decentralization and local
responsiveness, information exchange amongst the SBUs is limited.
Global strategy:
Global strategy as defined in business terms is an organization's strategic guide
to globalization. A sound global strategy should address these questions: what must be (versus
what is) the extent of market presence in the world's major markets? How to build the necessary
global presence? What must be AND (versus what is) the optimal locations around the world for
the various value chain activities? How to run global presence into global competitive
advantage?
Transnational strategy:
good degree of differentiation. It basically ensures two things together Flexibility and
coordination.
So after the study of International strategy theory we have come to the conclusion for the
consultancy firms specially ACCENTURE and PWC that they have adopted Multi-Domestic
strategy because as they have to customize their services as per customer needs, as they are
providing different services to different types of industries.
48
R&D Investments:
PWC
The geographic footprint of innovation is changing dramatically as research and
development programs become more global. An overwhelming 94 percent of the worlds largest
innovators now conduct elements of their R&D programs abroad, according to the 2015 Global
Innovation 1000 study, our annual analysis of corporate R&D spending. These companies are
shifting their innovation investment to countries in which their sales and manufacturing are
growing fastest, and where they can access the right technical talent. Not surprisingly, innovation
spending has boomed in China and India since our 2008 study, when we first charted the global
flows of corporate R&D spending. Collectively, in fact, more R&D is now conducted in Asia
than in North America or Europe.
Perhaps more unexpectedly, innovation spending in the U.S. has held relatively steady as
a share of global innovation spending, despite increases in the amount of R&D that U.S. firms
conduct in Asia. This is due in part to companies from other countries increasing their R&D
activity in the United States; Silicon Valley, in particular, has been a powerful draw. Innovation
spending in Europe, in contrast, grew more modestly and unevenly, with some countries, such as
France and the U.K., showing net decreases in domestic R&D spending from 2007 to 2015.
More European companies are choosing to expand their R&D operations elsewhere, in both lowcost countries in Asia (defined as countries where the average annual engineering salary is less
than US$35,000) and high-cost countries such as the United States.
For leading companies, implementing a global innovation strategy is paying off. We
found that firms that favor a more global R&D footprint outperform their less globalized
competitors on a variety of financial measures. This is important, because, as in previous years,
we found no statistically significant evidence that higher levels of spending guarantee better
results. Our refrain has long been that its not how much you spend on research and
49
development, but how you spend it. But its also where you spend that determines your success
and our 2015 study shows that decisions about R&D location look very different today than
they did less than a decade ago
Worldwide, R&D spending by the Global Innovation 1000 companies the 1,000 public
corporations worldwide that spent the most on researching and developing products and services
for their markets rose 5.1 percent to $680 billion in 2015, the strongest increase in the last
three years. Companies headquartered in the U.S., Europe, and Japan continued to account for a
large majority of innovation spending: 86 percent in 2015
ACCENTURE
Accenture, which provides management consulting, technology and outsourcing services,
is structured around five operating groups communications, media & technology, financial
services, health & public service, and products and resources which together make up 13
industry groups serving clients globally. On a broader level, over 50% of its revenues come from
consulting for its 13 industry groups, while the rest comes from outsourcing services.
However, in light of the advent of artificial intelligence system, which is expected to disrupt
businesses and industries on a global scale, Accenture has announced that it is accelerating its
research and development efforts in artificial intelligence. In this note, we will explore the
broader trends in the AI industry and how Accenture plans to capitalize on it.
Create more intelligent tools by teaming with Accenture Digital to advance capabilities in
cognitive computing, machine and deep learning, natural language processing, data
augmentation and predictive analytics to help clients become an insight-driven enterprise
Integrate and apply artificial intelligence into Accenture Operations solutions that
improve both front- and back-office operations, including customer support,
procurement, supply chain and warrantee services
Design and scale artificial intelligence capabilities for Accenture Consulting around the
world across multiple industries, including healthcare, public safety and financial
services.
51
GAP Analysis
This analytical tool is used to access the future direction of companies
Domestic and or international. GAP analysis is used to measure the gap
between the projected performance and present performance. If the Gap is
more then it is major concern for the companies the of course it is not
desirable position to be.
Graph below show the GAP analysis:
For consultancy firms like PWC and the ACCEENTURE the performance is always
minimum as it has already been discussed in the Multi-domestic strategy that both the companies
are providing customized services to their clients so Time and Performance desired from the
52
client side is fixed and accordingly PWC and ACCENTURE charged to their customers so
accordingly the performance gap is very minimum.
Drivers of Internationalisation:
There are four major drivers for internationalization:
Market Driver
Cost Driver
Competitive Driver
Government Driver
Market Driver
o
The driver is a result of some standardization of the markets. Customer has similar needs and
tastes. Companies are interested in tapping different geographic markets.
Cost Driver
o
IPLC (International Product Life Cycle) signifies that the game behind the global strategy can
be an outcome of rising costs in the home country.
Competitive Driver
o
Gains of one geographical location can be used to compensate the losses arising from another
geographical location.
53
Government Driver
This can facilitate and inhabit a companys aim to internationalize. Policies pertaining to trade
barriers play a crucial role.
After the study of this theory we have come in the conclusion that both the companies
and all the management consultancies have almost same drivers because of the kind of services
they are providing for the same kind of industries.
As now days because of the industrialization and urbanization economic world all the
companies want to grow their own business strategically because of large competition.
As both the companies are service providers to different companies as mentioned earlier
and make strategies or different companies to survive in this competitive market so all these four
drivers are helping both the companies to grow their market share globally.
54
CONCLUSION
The overall strategy adopted by either consultancy firms is more or less the same. They
both follow cost leadership or differentiation to cut the market, according to the services they are
providing in different countries, all over the world.
PwC, being one of the big four and having a leading base in more than 150 countries,
engages a lot with the government deals. It firmly believes to comply with all the legal
formalities so that it does not violate any ethical issues. Both the companies follow single line of
command that gives them clarity for an individuals roles and responsibilities.
Accenture has just recently entered this market and it penetrated with product
development strategy then. Being a service provider it is very difficult to compete on the basis of
differentiation. It involves huge investments and high risks to get a lead in the market then. Still,
overcoming all the shortcomings, Accenture, according to Fortune 2015 edition, is on number six
among the leading consultancy companies.
55
RECOMMENDATION
For either of the companies to lead in the competitive market, they need to follow certain
strategies to attain more market share and gain profits. Few can be:
They need to be more global. Increase number of offices at different geographic location
others not just on cost basis but on the basis of the services they provide.
With changing economy globally and accordingly in individual country, the companies
56
Exhibit 1
PwC
Accenture
57
58