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Management Consultancy

Essay by   •  September 28, 2011  •  Essay  •  1,494 Words (6 Pages)  •  1,502 Views

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Over the past two decades, the management advice industry has been thriving. The global market for the advice industry was $64 billion in 2001. The article "Who Put the Con in Consultancy? Fads, Recipes and 'Vodka Margarine" highlights that as the expenditure on the external management consultants has been rising, the journalists, academics and parliament has started to view their performance critically. Critics say that there is too much expenditure being done to obtain external advice. Also that the management experts are gaining on the expense of the business community. They have started to look at the darker side of management consultancy, the cons of external management consultancy (Collins 2004). Nevertheless, when managing a major change in the organization, the use of external management consultancy has both pros and cons.

When managing a major change in the line of products produced by the company, hiring an external management consultant brings great benefit to the company. This is because these consultants have far greater knowledge of consumer tastes and market trends. They also have critical information about the kind of competition in the new market. They also know what kinds of products are demanded by the consumers in a particular market and they create better quality standards due to their know-how of the consumer tastes and preferences.

When changing the information management system of the company, hiring an external management consultant becomes extremely important. Implementation of systems like ERP and SAP require the advice of external management consultant, who has much experience in determining what kind of system will suite the structure and type of the business. These consultants know organizational change management. With deciding on which system has to be implemented, the consultants train the workers in how to use the system and how to resolve issues regarding the new system. These consultants help in optimizing the benefits of the ERP technology to the business availing their services.

An external management consultant has much experience to look into the process of the business and advice what kind of change is possible. Moreover, after the required change has been decided upon, the consultant can train the managers how to manage the change, how to allocate time between the major and the minor issues to be addressed. Usually when any kind of major change takes place in an organization, the workers take quite some time to accept that change. The management consultants train the managers how to deal with their workforce in such situations. Moreover, they also help the workers to work with the changed structure, system or processes comfortably.

Another advantage of external management consultancy is that the external consultants create a favorable environment for change in the organization (Fincham and Evans 1999). They employ the most suitable of variant of business processes reengineering techniques, and make their strategies flexible enough the fit in the culture of the organization (Collins 2004).

While there are many advantages of hiring external management consultants, there are many problems in this path too. Firstly, the management consultants are really expensive. All the time they give to manage the organizational change, has immense cost for the organization itself. The management consultants have to be paid huge sums of money in return for their expert advice. Moreover, when company is going through a major change, it has huge costs involved. The cost of restructuring the system, the management or the system costs a lot of money. The cost of management consultancy adds to cost burden the business has.

The advice of the management consultants is based on their past experiences and market trends. However, what happens if the methodology followed by the consultant does not bring about a favorable result, all the money paid to the management consultant goes in vain. In the case of a major organizational change, the consultant should focus on bringing improvements, and should show the ability to bring the desired result (Fincham and Evans, 1999). If consultant is not able to bring about the desired result, the money paid to the consultant will not bring about much benefit to the firm.

Time is also a major concern. The time needed to put the organizational change in practice, training of workers, solving post-restructuring problems is of great concern to the businesses. What happens if the time taken by the management consultant is more than that affordable by the firm? The firm loses both time and money.

Also, the workers and managers of a firm may find it extremely uncomfortable to work with an external management consultant. They might not agree or be

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