Principles of Strategic Management
Question:
Discuss about the Last Decade of the Balanced Scorecard.
Strategic Management refers to managing the organization’s resources for accomplishing its goals and objectives. It directs the company to achieve its goals and objectives. It helps the managers to develop policies and procedures to accomplish these goals by allocating the resources needed to implement these plans. It consists of formulating goals, assessing the competitive environment, developing strategies and ensuring that these strategies are implemented throughout the organization (Sen, Bingol and Vayvay, 2017).
There are various factors which decide how the organization will accomplish its objectives and survive internationally and domestically. The business culture, skills and expertise of the employees and the organizational structure are some of them.
The principles of strategic management shall be applied on Accenture in this report. Also, a strategic analysis would be developed on the competitive strategies of the company. Accenture is the provider of management consultancy and professional services globally. It delivers services related to the strategy, consultation, digital technology and operations. It is a Fortune Global 500 company which was incorporated in Dublin, Ireland on 1st September, 2009 (Accenture, 2018).
Accenture has employed more than 425000 employees worldwide. The core values of the company consists of establishing long term relationships with the client companies and building a global network to deliver best quality services to the clients.
Accenture’s strongest rivals include IBM Global Business Services, Capgemini Consulting SA and Deloitte Consulting LLP. International Business Machines (IBM) which is America’s multinational technology company manufactures and trades in computer hardware and software. It provides hosting and consultancy services in computers and nanotechnology. It is ranked second after Accenture for IT operations and strategic consultancy.
Capgemini Consulting is an international management consultancy firm which is based in Paris. It provides IT services and is amongst the biggest outsourcing, consulting and professional services companies internationally.
Deloitte Consulting LLP is third largest company after Accenture and IBM. It deals in services related to strategy, technology and human capital (Gibbons, Scott and Fhionnlaoich, 2015).
The weak contenders of Accenture are TCS, Infosys and Wipro (Livemint, 2017). Tata Consultancy Services (TCS), Infosys and Wipro are Indian multinational service providers dealing in IT services, consultancy and business solutions.
Accenture’s biggest contender IBM believes in innovation and up gradation of its most advanced information technologies comprising of various software, mechanisms and services. It operates in one of the leading industries in the current scenario.
According to Capgemini Consulting (2018) the strategic development team of the company delivers sustainable competitive advantage to the company through adopting immediate actionable tactics. Through its corporate portfolio strategy and strategic planning process, it has become one of the most competitive and winning companies of the world.
As per Deloitte (2014) the strategies followed by the company to outwit its competitors include corporate strategy, market analysis and strategy and go-to-market and post go-to-market.
In order to succeed in the business, Accenture adopts key planning factors for competitive success which include market share, focus and customer service.
Competitive Strategies of Accenture
Market share pertains to occupying the market. If Accenture wants to outperform its competitors then it should determine those strategies which help it to separate itself from the competition. It must innovate and implement new and creative ideas in service support, up gradation of features of the software which are relevant to the industry.
Accenture should focus on the key areas of business. Through an efficient business plan, it needs to dig down the core of business functions and should create plans which are based on busies specific issues.
Customer Service is one of the important planning factors which are essential for customer retention and maintain a decent customer appreciation rating. Developing a customer survey will allow the company to review its performance in terms of customer satisfaction (Aguilar, Hidalgo and Cagliano, 2015).
Accenture has developed the market share as its key factor underpinning competitive success. It follows the principle of look forward and not backward as its core policy of strategic management.
Also, it has implemented the strategy of focusing on the key performance drivers. Customer servicing and incorporating post deal improvements are also the part of its policies and objectives.
According to Cizelj (2014) over the last 30-40 due to the process of globalization and information revolution have developed the economic trends by making the economic activities subject to global competition.
According to the World Bank, there are four major aspects of the knowledge economy. First is establishment of economic and institutional regime for the development of the knowledge industry and entrepreneurship. Second is educated and skilled population to create, share and use the knowledge. Third is emergence of dynamic information mechanisms to communicate, distribute and process the information.
Fourth and the last are effective innovation systems of firms, research centers and consultants to tap into the stock of global knowledge (Hretcanu, 2015).
Accenture operates in the knowledge industry. It is one of the most dynamic and emerging industries. Accenture is amongst the leading firms in IT services. It faces the competition due to the following factors:
- Threat of new entrants: The emerging entrants into the IT industry bring creativity, innovative ways to perform the tasks thereby putting pressure on the company through cost reduction and providing new value propositions to the consumers.
- Bargaining power of suppliers: Due to the bargaining power of the suppliers, the company is facing the threat of paying higher prices of the raw materials to the suppliers.
- Bargaining power of buyers: The customers aspire to avail the services of the company at minimum prices as possible. It impacts the profitability of the company in the long run.
- Threats of Substitute products or services: The Company is facing the threats of substitute products or services as the new entrants are offering value propositions which vary from the present offerings in the industry.
- Rivalry amongst the existing competitors: Due to the rivalry amongst the existing companies is powerful, it will lower down the prices which in turn would have an impact on the profitability of Accenture (Durmaz and Dü?ün , 2016).
The analysis of the five competitive forces of Accenture using Porter’s Model is as follows:
- Threat of new entrants: The threat of new arrivals can cause cost competition and high switching cost so that it can meet the changing needs of the customers.
- Bargaining power of suppliers: If the suppliers are in the prominent positions, they can impact the margins. The suppliers in the Technology sector can use their bargaining power and compel the firms to pay higher prices for their services. It can decrease the overall profitability of the Information Technology services.
- Bargaining power of buyers: The buyers need special customization at nominal prices. It has an impact on the profitability of the company in the long run.
- Threats of Substitute products or services: Customers are driven towards those companies which fulfill their needs economically and that too in an innovative way. So, due to emergence of the substitute products and services, the profitability of Accenture is suffered.
- Rivalry amongst the existing customers: Due to intense rivalry amongst the existing competitors of Accenture, the prices are decreased thereby impacting the profitability of the company (Accenture, 2017).
The changes are introduced in the business environment for various reasons such as contributing to better business performance, to increase the efficiency in the performance of employees and for positioning the organization in a better way in the industry.
Some of the changes in the business environment of Accenture are introduced because of the various reasons. These transformations include changing contracts of employment, increase in the working hours, reduction in the staff, restructuring of teams and departments.
The reasons behind the introduction of these changes include increasing pressures from the industry, budgetary constraints, change in the government legislations and regulations (Wirtz and Daiser , 2017).
The industry providing the services of management consultancy, technology and outsourcing is influenced by clients. The industry has to adapt itself quickly to the changing needs of the consumers. The companies operating in this sector have to transform themselves in terms of structure, services and operations. During the past few years, there have been remarkable transitions in terms of legislations and technology.
The firms operating in this sector have to respond quickly to the needs of the customers along with maintaining a competitive edge and focusing on their long term growth. However, the industry faces a lot of challenges such as transitions in the technology occur faster than the firms are able to cope up with and failures in implementing the innovations etc. (Pearlson, Saunders and Galletta, 2016).
Rivals of Accenture
According to Accenture (2018) the company is consistently innovating and implementing new technology to improve its productivity. It is using the concept of Artificial Intelligence (AI) to create entirely new services, markets and products.
Through the use of AI, the revenue can be boosted up to 38% in the next five years. This may lead to higher levels of profitability and employment in the company. It has adopted the strategy of reevaluating the roles and responsibilities of the work force and shifting it to new business models. It also involves training and upgrading the skills of the work force to assimilate new technological processes in its processes (Negroponte, 2015).
Accenture follows the strategy of Just-In-Time marketing and it believes that it can eliminate much of the wastage of resources by creating links with consumers who are ready and able to buy the products and services
By adopting the concept of lean thinking, the company delivers only those services and products which engage its customers. While the companies adopt those processes which results in wastage of resources, Accenture adopts the policy of lean management principles which helps in sale effectiveness (Ahmed et al., 2016).
Creating a HR strategy which integrates the business strategy and human capital strategy results in delivering high value talent to the clients.
According to Accenture (2017) the company performed efficiently during the financial year 2016-2017. The net revenues amounted to US$34.9 Million, a 6 % increase as compared to the revenues of last year which amounted to US$ 32.9 Million.
During the last three financial years, a compound annual revenue growth of 9 % in the local currency was reported and the same was reported in terms of adjusted earnings per share.
Also, Accenture has delivered yearly return (including dividends) of 20% which is twice the return of S&P 500 Index. Also the company is investing in the acquisitions to drive its growth. They amounted to $1.7 Billion in 2017 which was twice the investment in the financial year 2016.
Conclusion
Thus to conclude, it can be said that Accenture has focused on its performance and turnover as its brand line is “High Performance Delivered”. It is following the trend of establishing itself internationally. It aims at focusing on increasing its volume and efficiency.
Accenture adopts the strategy of looking forward and not backward. It relies on the future forecasts and plans and strategizes its policies accordingly to cope up with the threats of the probable risks arising in the future. It believes that the capability to deliver future values depend on the performance drivers.
Delivering high quality products and services to the customers and due diligence are the key drivers to accomplish the goals of the organization. Also, it employs experts with updated technical skills to deliver technical and operational expertise.
It has adopted certain strategies to beat the competition and to be cost effective. It follows the concept of operational excellence which means that the company outperforms its competitors with superior operations by using human resources, assets and technologies. Also, Accenture expands itself in the growing nations to increase its sales and performance.
References
Accenture (2017) Leading in the New [online]. Available from: https://investor.accenture.com/~/media/Files/A/Accenture-IR/home/accenture-annual-report-2017.pdf [Accessed 24th March, 2018].
Accenture (2018) About Accenture [online]. Available from: https://www.accenture.com/ph-en/company [Accessed 23rd March, 2018].
Accenture (2017) M& A in communications: keeping competitive [online]. Available from: https://www.accenture.com/t20170315T054810Z__w__/us-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Local/en-gb/PDF_3/Accenture-MA-Keeping-Communications-POV.pdf [Accessed 24th March, 2018].
Accenture (2018) Reworking the Revolution [online]. Available from: https://www.accenture.com/t20180226T082732Z__w__/in-en/_acnmedia/PDF-69/Accenture-Reworking-the-Revolution-Jan-2018.pdf#zoom=50 [Accessed 24th March, 2018].
Aguilar, I.L., Hidalgo , A. and Cagliano, R.(2015) Innovation in consulting firms: what are the foundations? International Association for Management of Technology [online]. Available from: https://www.iamot2015.com/2015proceedings/documents/P118.pdf [Accessed 24th March, 2018].
Ahmed, J.U., Ameen, M.M.N., Uddin, M.J. and Khan. T.N. (2016) Strategic Issues for Accenture Bangladesh: A Developing Country Perspective. Vision. 20(1), pp. 66–72.
Capgemini Consulting (2018) Strategy [online]. Available from: https://www.capgemini.com/consulting/service/digital-strategy-transformation/strategy/# [Accessed 23rd March, 2018].
Cizelj, B. (2014) Global Trends in Knowledge Economy [online]. Available from: https://www.sbra.be/sites/default/files/global_trends_in_knowledge_economy_boris_cizelj.pdf [Accessed 24th March, 2018].
Deloitte (2014) Customer & Market Strategy Practice: Driving your business forward [online]. Available from: https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/strategy/lu-en-customermarketstrategy-18022013.pdf [Accessed 23rd March, 2018].
Durmaz , Y. and Dü?ün , Z.D.(2016) Importance of Strategic Management in Business. Expert Journal of Business and Management. 4(1), pp.38-45.
Gibbons,P., Scott, P.S. and Fhionnlaoich, C.M.(2015) Strategic management: A perspective on the development of the field of strategic management and the contribution of the Irish Journal of Management. Irish Journal of Management. 34(1),pp. 22-41.
Hretcanu, C.I. (2015) Current Trends in the Knowledge Economy. Ecoforum. 4(2), pp. 170-175.
Livemint (2017) How Accenture is stealing a march over TCS, Infosys, Wipro [online]. Available from: https://www.livemint.com/Industry/VhVYymGPAGJzFl4NZGLUVP/How-Accenture-is-stealing-a-march-over-TCS-Infosys-Wipro.html [Accessed 23rd March, 2018].
Negroponte, N.(2015) Being Digital. Knopf Doubleday Publishing Group.
Pearlson, K.E., Saunders, C.S. and Galletta, D.F. (2016) Managing and Using Information Systems, Binder Ready Version: A Strategic Approach. John Wiley & Sons.
Sen, D., Bingol, S. and Vayvay, O. (2017) Strategic Enterprise Management for Innovative Companies: the Last Decade of the Balanced Scorecard. International Journal of Asian Social Science. 7(1), pp. 97-109.
Wirtz , B.W. and Daiser , P.(2017) Business Model Innovation: An Integrative Conceptual Framework. Journal of Business Models .5(1), pp. 14-34.
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