Define McKinsey & Company's present "core competence" in terms used by Hamel & Prahalad and state how it fits with McKinsey's longer term vision.
Answer) McKinsey and Co.'s core competence as per Hamel and Prahalad are as follows:
1. Clear distinctive brand proposition that focuses on customized solutions of closely-defined customer group: McKinsey and Co. has achieved a clear distinct Brand of Top notch Strategy Consulting by gaining expertise and reputation through a number of successful consulting engagements over the years. Their solutions are highly customized for their clients and they cater to a closely-defined group of large corporations. Their main revenues are through the model of repeated consulting engagements to large corporate.
2. A strong research division: McKinsey and Co. has a strong back-end research division, namely, McKinsey Knowledge Center, which publishes its research and reports, makes IP models and frameworks like McKinsey Matrix etc., thereby, helping the delivery consultants of McKinsey in their client engagements and improvising the brand image of McKinsey.
b) State how this core competence may need to change in light of the changing environment of the consulting industry over the coming decade.
Answer) The changes required in these core competencies in the light of changing environment are as follows:
1. Make more standardized solutions for their clients: McKinsey needs to create more standardized solutions which could be implemented for multiple clients in the same industry. It would enable McKinsey to reduce its operational costs and hence, increase its profits in future. Post recession, Profits have become an integral part of corporate in the industry, hence McKinsey would benefit a lot by adopting this as their core competency in future.
2. More investment in research: McKinsey and Co. needs to increase its investments in research. They need to create more IP models which can be implemented for multiple clients, rather than customizing their research for specific clients. It would enable reduce their costs, thereby increasing profits and improve their Brand Value in future.
3. a) What are McKinsey's organizational strengths and weaknesses?
Answer) McKinsey is one of the leading management consulting firms in the world. Major strengths of the company include its extensive global operations and wide range of services. However intense competition and economic slowdown could limit its growth opportunities.
Global operations: McKinsey & Company has wide global presence with approximately 94 offices in more than 52 countries, covering North America, South America, Europe, Middle East, Africa and Asia Pacific. This enables the company to reach out its clients at their locations, globally. This extensive global presence enables its clients to receive consistent level of services, besides providing them with the access to McKinsey's experts.
Multilingual: McKinsey provides information and consulting in different local languages including Chinese, Mandarin, German, Russian, Spanish and Dutch. This enables McKinsey to reach out to its clients more effectively and efficiently.
Wide Range of services: McKinsey offers a wide range of consulting service to its clients, which are grouped into seven main areas, namely, business technology office, corporate finance, marketing and sales, operations, organization, risk and strategy. Its client services are classified into two areas, namely, industry practices and functional practices. As part of its industry practices offerings, it offers consulting services to its clients in various industries including automotive, public sector, banking, chemicals, media & entertainment, manufacturing, consumer packaged goods, metals & mining, retail, social sector, trading, financial services, pharmaceuticals & medical products, telecommunications, shipping, travel infrastructure and logistics. McKinsey's consultants keep track of developments in different industries, which enable them to provide consulting on competitive dynamics, regulatory changes, and technology advancements, among others, for each industry. Moreover, the company is also engaged in providing consulting services in functional areas such as operations, corporate finance, risk, strategy, and marketing and sales, among others. The two practices covering major global industries and critical functional areas enable its clients to improve performance, develop skills, and to adopt changes. These wide industry and functional practices provide McKinsey a competitive advantage in the consulting industry.
Diversified Client Base: McKinsey's consulting services focus on different industries, from automotive and banking to pharmaceuticals and telecommunications. The company advises corporate enterprises, as well as government agencies, institutions, and foundations on a number of business practices. McKinsey has advised many of the fortune 500 companies in USA and top corporation in other countries. Some of its clients include General Motors, Pepsi, Ford Motor and American Express. With such a diversified client base the company has scope of generating more revenues.