Price Waterhouse Coopers Supply Side Report

Order Instructions:

Progress Report/Information Report.

Due: Thursday October 16th

Weighting: 20%

Each member will be allocated a phase of the Marketing Project and will provide a progress report on that particular phase.

The assignment acts as a progress report of the final project to demonstrate understanding of the relevant Phase of the Group Marketing Project and as such detailed feedback will be provided by tutors.

You are required to complete an analysis of the marketing strategy of our Client Partner – Price Waterhouse Coopers, focusing on the particular marketing issue (what does PWC look like in 2-5 years?) related to the organisation. Blue Ocean Strategy (BOS) will be applied to the marketing issue and the framework provided by BOS used to formulate a marketing solution supported by other marketing concepts and analytical tools.

The analysis must demonstrate:
(a) understanding of the predominant marketing systems in the Client Partner industry
(b) the potential to develop ‘blue-ocean’ strategies for the Client Partner
(c) application of the analysis to the Client Partner.

Report Phase 3 – Supply Conditions and Intermediaries, Environment and Observers

Supply Conditions including for example:
• What are the conditions for supplying the product? Number, type, size and location of direct and indirect competitors supplying the product or service (including both domestic based and international import suppliers) i.e. What are the supplier alternatives?
• What is the concentration or lack of concentration of ownership and trends in supply. Use Supplier Power analysis from Porter’s 5 Forces.
• Nature of value creation and delivery system linking producers and consumers for this type of product or service (including channels of distribution, key input suppliers, key complimentors and other relevant intermediaries that impact on the cost of the product)
• Government actors involved and their role
• Environmental Impacts on Supply – contraints and enablers: Including, socio-cultural, economic and material environment, regulations, technology, and relevant infrastructure (transport, communication, finance etc)
• Any marketing models or frameworks applied to the supply conditions you consider appropriate.
• Use appropriate Blue Ocean Strategy theory and models to evaluate the supply conditions. (See Appendix 3 for Model and Chapter Table)

Intermediaries, Environment and Observers
• Nature of Intermediaries (e.g. distributors, transportation, logistics, warehousing, retailers) predominant in the industry and their role.
• Industry Observers Outside the Firm and Service Organisations and their influence/role such as: Industry Studies, Unions, Business Press (BRW), Local Org. Chambers of Commerce, State Governments, Federal Government, Domestic Trade Bodies/Statistics and International Organisations, e.g. OECD; World Bank, etc. Service organisations such as trade associations, investment banks, consultants, advertising agencies, etc

Suppliers and Intermediaries
(Supply Side) Other Marketing Frameworks
– Relevant macro level impacts on industry competition (PESTL)
– Porter’s 5 Forces: Supplier Power
– Porter’s Value Chain

Phase 3 – Nature of Industry Marketing and Competitive Positioning Strategies

Identify the kinds of strategy selection in your industry. (e.g. six basic strategies can be the starting point for your own custom strategy :
– Cost leader with Product Life Cycle Focus
– Differentiation with Product Life Cycle Focus
– Broad Cost Leader
– Broad Differentiator
– Niche Cost Leader
– Niche Differentiator
Models to use: product Life cycle. Four basic stages
Porters Generic Strategies

Phase 3 – Competitors
Review the market positioning and differentiation of competitors.
Consider the kinds of marketing mix strategies:
– branding, before and after sales services
– product/service design, packaging
– prices, margins, finance and contractual arrangements – advertising and promotion marketing channels, logistics, margins, role of e- commerce.

Cooperative Strategies: strategic alliances, supplier, customer, distributor and complementor relations (including technical alliances, government relations, co-marketing arrangements, sponsorship, trade associations, etc.)

Other aspects of trade and marketing practices and issues not elsewhere covered
Environmental factors affecting competitive and cooperative strategies Including, socio-cultural, economic and material environment, government and regulations (taxes, tariffs, trade practices act), technology (standards bodies), professional bodies and relevant infrastructure (media, transport, finance etc.)

Any marketing models or frameworks applied to the supply conditions you consider appropriate.
Use appropriate Blue Ocean Strategy theory and models to evaluate the competitive position.

IT service industry Marketing and Competitive Positioning Strategies

IT service market (demand condition)
• – The market for green IT services is pushed by businesses to save money and improve efficiencies
• – IT services market will grow 60 percent per year into 2013
• – More enterprises are investigating hiring IT services firms to help plan and implement
• – Large number of outsourcing and hosting IT services market (e.g. “cloud computing”)
• IT Service Trend (supply condition)
– Outsourcing (offshore)
• – high-value, innovative and consultative services
• – Seeking cost savings and management centralization

competitor analysis:
• Aim: To identify market and competitive strategies of major competitors
• Implication of competitors:
• – Fast-cycle business
• – Hypercompetitive
• – Most emphasis on differentiation, cost leadership
• – Strength the relationship between company and clients
• – Value maximization
• Strategy selection (sustainable): • Cost leadership
– Lowering price relative to competitors and still create value to customers
• Differentiation with PLC focus: Provide distinguishing services through
-high awareness and easy accessibility product

-Value chain management: Cornerstone of business

Competitive advantage/ Differentiation of competitors.
Marketing Mix Strategy
Branding: Image, message, interaction, prospects
• Product/Service: Differentiation, competitive response, market testing
Packaging: Sustainable view
Before and after sales service: Building relationships with customers, handling feed backs, delivery original promises
Price: • Set up based on different variables
Advertising and promotion
Appropriate,budget,unique, design
Marketing channels and e commerce
Efficiency.
Right place, easy to use, technical control

Cooperative Strategies
– To establish strong position against external threat, minimizing weaknesses and maximizing core competencies through strategy alliance
• Customer
– Contract alliance
– Loyalty and Retention
• Distributor
– Joint Venture/partnership
– “FujiXerox’s Triangle Corporation”
• Complementor relations
– Synergistic
– E.g.HP technical alliance
Service market Matrix.
Environmental Factors
• Economic
– Domestic/Global economic climate
• Market Standards
– ACCC, ITIL, ISO
• Technology
• Corporation infrastructure – Media
– Skilled human resource – Finance
– Security

Conclusion
1. Marketing approaches: strategy selection.
Cost leadership:
Differentiation with PLC
Value chain management
2. Marketing mix strategy
-Setup 4P’s based on specific niche market
3. Cooperative strategy:
– Speeding up the development of services & market entry
– Maintaining market leadership
– Overcoming uncertainty/sharing risk
•4. Environmental factors
– Identifying external threat factors and choosing right strategies

This Assessment Task relates to the following Learning Outcomes:
• Articulate frameworks and approaches to harness the power of marketing-oriented thinking for the creation of long-term advantage of any organisation.
• Be able to conduct an industry and market analysis to assess market opportunities by analysing customers, competitors, collaborators, and other external forces

Enhance awareness of marketing’s contribution to society through discussion of ethical and professional conduct and issues in corporate social responsibility

SAMPLE ANSWER

Report: Price Waterhouse Coopers Supply Side

In this paper, an analysis of the marketing strategy of Price Waterhouse Coopers (PwC) is provided that focuses on the particular marketing issue – that is, what PwC looks like in the next 2 to 5 years – related to the organization. The supply conditions, intermediaries, the environment and observers are analyzed exhaustively. PESTL and Porter’s Supplier Power are described pertaining to PwC’s supply side. The Blue Ocean Strategy (BOS) will be employed to the marketing issue and the framework provided by BOS used in formulating a marketing solution supported by other concepts and analytical tools.

1.0 Supply Conditions and Intermediaries, Environment and Observers

PwC is an international professional services network, and it is currently the second largest professional services network in the world as measured by its revenues of the year 2014. Along with Ernst & Young, KPMG, and Deloitte, PwC is one of the Big 4 auditors worldwide (PwC 2014). With regard to the conditions for supplying the service – auditing, tax, advisory, and consulting services –, the main competitors to PwC include KPMG, Deloitte, and Ernst & Young. Out of four biggest auditors in the world, Deloitte is the largest. In the year 2012, the world revenue of Deloitte was $32.4 billion; PwC had aggregated gross revenues of $32.09 billion; Ernst & Young had combined revenue of $25.83 billion; and in the fourth place was KPMG with worldwide revenue of $23.42 billion (Saito & Takeda 2014, p. 205).

Deloitte, KPMG, and Ernst & Young are each a network of firms, and they are managed and owned independently. They have entered into accords with other member companies in the network to share common quality standards, brand and name. Each of these networks has created an entity for co-coordinating the network’s activities. In most instances, these 3 major competitors to PwC have member firms in countries all over the world. Deloitte, KPMG, and Ernst & Young have separate legal entities in India, Europe, Americas, Africa, the Middle East, as well as the Asia-Pacific region in countries such as Japan (Strahler 2013, p. 19). As such, Deloitte, KPMG, and Ernst & Young are the main direct competitors to PwC not only nationally in Australia, but also internationally. Besides these three main competitors, PwC also faces direct competition from many small auditing firms nationally and this impacts on PwC’s financial bottom-line.

The main environmental impacts on supply consist of regulations, economic, socio-cultural environments. Accounting firms and auditors face market discipline that works towards a decreased likelihood of future accounting scandals. The Auditing and Assurance Standards Board develops guidance and standards for auditors and accountants. The regulations set by the Australian Securities and Investments Commission must be observed, which are intended to ensure that Australia’s fiscal markets are transparent and fair, supported by informed and confident consumers and investors (Francis, Michas & Yu 2013, p. 1629).

Blue Ocean Strategy (BOS) theory

This theory postulates that there are unexploited markets as well as the opportunity for higher growth without having to eat away at the competitors’ profits. Competition is not relevant according to the Blue Ocean Strategy, since the rules of the game are yet to be laid down. With supply being more than the demand in many industries, to compete for contracting markets would not be adequate in sustaining high performance (Kim & Mauborgne, 2005). With the use of BOS, PwC can be able to succeed not by fighting with the competitors in the marketplace, but through the creation of blue oceans of uncontested market space. Such strategic moves would lead to a leap in value for Price waterhouseCoopers, its staffs, and clients, whilst unlocking new demand and rendering the competitors irrelevant.

2.0 Intermediaries, Environment and Observers

Industry Observers Outside the firm

There are several organizations that have a considerable influence to the auditing industry in Australia. The Australian Securities & Investments Commission (ASIC) administers the requirements of the Corporations Act as it pertains to auditor independence as well as audit quality. ASIC’s audit oversight activities assist with maintaining and raising the standard of conduct in the profession of auditing. It is of note that whilst these activities have both a compliance and educational focus, enforcement action could be taken when considerable non-compliance is identified (Australian Securities & Investments Commission 2014).

The other industry observers are the Australian and Assurance Standards Board and Australian Auditing Standards, which set the requirements and offer application on other explanatory material regarding: (i) the form as well as content of the auditor’s report. (ii) The responsibilities and duties of an auditor when engaged to carry out an audit of a fiscal report, or complete set of fiscal statements, or any other historical fiscal information (Auditing and Assurance Standards Board 2014). Another industry observer is the Australian Accounting Standards Board (AASB), a statutory, independent agency with the responsibility of creating standards and guidance for auditors as well as providers of other assurance services. The Australian Financial Security Authority (AFSA) administers and regulates the proceeds of crime, personal insolvency system, and trustee services. The Financial Reporting Council (FRC) provides board oversight of the process for establishing standards of accounting in Australia (Australian Government 2014).

PESTL

A scan of an organization’s external macro-environment may be described in terms of Legal, Political, Economic, Technological, Environmental, and Social factors (Porter 1998). Political: at present, there is political stability in Australia and in a lot of other countries in which PwC operates in, and this is favorable to PwC and other auditors. Economic factors: the economic growth in Australia was 2.8% in 2013 and the rate of inflation is 3% (World Bank 2014). This is favorable to PwC and other auditors since it illustrates that there is a growing market and opportunity of the services offered by PwC.

Social factors: in terms of demographics, Australia. has a population of about 23.13 million, with 89 percent living in suburbs, cities and other urban areas as of the year 2014. The rate of population growth is currently 1.4 percent, and the education level in the Australia is very high (World Bank 2014). Technological factors: technology has a substantial influence and impact on auditing. The incessant evolution of software and hardware provides auditors with the capacity to do more complex calculations with greater accuracy, speed, ease and mobility. Now, auditors can speedily collect data, produce reports, and explicitly communicate the results (Montgomery 2010, p. 50). Some of the new technology available to auditors include IDEA from CaseWare IDEA Inc., and ACL from ACL Services Ltd which are software programs for data mining and data extraction.

Legal factors: these include consumer protection, rules on monopolies and mergers, international trade regulations and restriction, as well as national employment laws in Australia and in other nations around the world wherein PwC operates in. In the Australia, PwC must pay its workers no less than the stipulated minimum wage of $16.87 per hour or $640.90 per week as mandated by the Fair Work Commission (Montgomery 2010, p. 42). Auditors must also comply with the regulations established by the government and government bodies such as the Australian Securities and Investments Commission, and the Australian Accounting Standards on auditing quality, standards, and integrity.

Porter’s 5 Forces: Supplier Power – Low

In Porter’s 5 Forces, the supplier power is understood as the pressure that suppliers can exert on business organizations by raising the prices (Gurau 2007, p. 380). At present, the bargaining power of suppliers is not a significant force in such a fragmented industry. Essentially, universities are suppliers considering that nearly all employees in this market come out of business schools. The auditing firms can obtain workers from the many universities and business schools across Australia, and therefore this makes the supplier power to remain low.

3.0 Nature of Industry Marketing and Competitive Positioning Strategies

Kinds of strategy selection

Cost leader with Product Life Cycle Focus: in essence, this would entail seeking to reduce the costs through expertise and efficiency (Montgomery 2010, p. 58). The services offered by PwC would be allowed to age and alter in appeal from High End, to Traditional, and ultimately Low End clients. The firm will focus on profits, return on investment, and ROS, and the company will spend moderately on promotion and sales. Moreover, the firm will spend low on research and development, and invest in technology early enough in the life-cycle of the product (Porter 1998). Differentiation with Product Life Cycle Focus: with this strategy, the company will be seeking to be recognized everywhere as the auditing firm that provides best quality auditing and consulting services in terms of objectivity, integrity, and competence. The firm will offer several product lines in targeted segments – Low End, Traditional, and High End. There will also be high investments in promotion and sales with the aim of creating maximum awareness as well as accessibility. The focus will be on Asset Turnover and ROA (Montgomery 2010, p. 61).

Broad Cost Leader: the firm will strive to be the low-cost producer in all segments of the market. The company would enjoy good profit margins on all sales whilst keeping prices low for clients who are price-sensitive (Murray 2008, p. 390). The firm will be more probable to reposition its services than introduce new services to the marketplace, and it will tend to spend less on sales and promotion. The focus will be on profits and market share, and capacity improvements are not likely to be undertaken. In addition, the firm would finance investments using stock issues and/or debt (Porter 1998). Broad Differentiator: the firm aims at creating maximum awareness as well as brand equity, and wants to be known as an auditing firm which provides high-quality and very sought-after auditing and consulting services. The firm focuses on profits and market share, maintains a presence in every market segment, and it spends greatly on sales and advertising with the purpose of creating maximum awareness and accessibility. The firm will tend to charge higher prices for its services (Montgomery 2010, p. 62).

Niche Cost Leader: the firm will be seeking to dominate each of the price sensitive market segment, and it will aim at setting prices below that of all the competitors in the marketplace, and still remain profitable. The company focuses on profits, returns on investment and ROS, and invests in several service lines within the low-tech segments – traditional and Low End segments. The firm will also spend moderately on advertising to clients who are cost sensitive (Porter 1998). Niche Differentiator: the firm will be seeking to be recognized as the best provider of high quality consulting and auditing services in all the targeted segments. It will offer several product/service lines in segments that are high-tech, and there is little focus in the other segments (Montgomery 2010, p. 61). The business also focuses on ROI, asset turnover, as well as ROE.

Product Life cycle: this is essentially a concept of how a particular product moves through 4 basic stages which are (i) introduction; (ii) growth; (iii) maturity; and (iv) decline. Introduction: this is when the service is introduced into a marketplace. Growth stage: the marketplace has accepted the new service and demand of the auditing and consulting services provided by the company start to increase along with sales. Maturity: sales attain their peak. Decline: sales start to reduce as the product/service gets to its saturation point (Murray 2008, p. 392).

4.0 Competitors: KPMG, Deloitte, and Ernst & Young

Market Positioning and differentiation of competitors

As noted earlier, the main competitors to PwC are KPMG, Deloitte, and Ernst & Young. The 4Ps of marketing strategy include product, price, place/distribution, and promotion. Product: product is the auditing and accounting services offered by PwC’s competitors. Ernst & Young, KPMG, and Deloitte all provide high quality accounting and auditing services and consulting practice, which has contributed to their wide popularity not only in Australia, but internationally. Deloitte focuses on providing uniquely high-quality and innovative auditing and consulting services, and this has enabled it to hit global revenues record of $34 billion (Saito & Takeda 2014, p. 205). KPMG provides exceptional professional services and provides 3 basic service lines including advisory, audit and tax. Ernst & Young also offers high-quality audit services to clients in more than 150 countries worldwide (Francis, Michas & Yu 2013, p. 1644). The auditing and consulting services provided by each of these firms is virtually the same, and there is little differentiation.

Price: the pricing of the services offered by the competitors is dependent on various variables and thus it is always updated. The main consideration is costing of the service, the expenses incurred in marketing and advertising, as well as price fluctuations in the marketplace. Since the three main competitors are all prestigious and highly-respected firms, they tend to price their services highly. Smaller competitors, however, tend to charge less expensively for auditing and consulting services (Saito & Takeda 2014, p. 205). Place/distribution: this pertains to how companies get their products/services to the clients and customers. KPMG, Deloitte, and Ernst & Young have member firms throughout Australia and in countries all over the world. They have separate legal entities in India, Europe, Americas, Africa, the Middle East, as well as the Asia-Pacific region, and they use these member firms to get their services to clients worldwide. Promotion: this is when a company communicates the value and benefits of its services/products to the consumers. KPMG, Deloitte, Ernst & Young and other competitors of PwC often make use of personal selling to promote themselves (Robson & Roseman 2009, p. 76).

Cooperative strategies

The three top competitors of PwC have established cooperation with customers and suppliers in Australia and in many other nations the world over. Ernst & Young works with various universities and business schools which supply the firm with employees. Some of these universities and business schools include Warwick Business School; Nottingham University; Leeds University Business School; Bangor University’s Bangor Business School; Pace University’s Lubin School of Business; and School of Business, University at Albany. Ernst & Young cooperates with various customers including Lehman Brothers and PNC Financial Services Group. KPMG cooperates with the University of Exeter Business School, Birmingham Business School, and also works together with Durham University Business School which are some of its suppliers. KPMG also works with the Institute of Chartered Accountants of England and Wales (ICAEW). Deloitte cooperates with many customers and a lot of these clients are among the FTSE 250 corporations. It has also partnered with various suppliers such as Columbia University’s Columbia Business School; and School of Business, University at Albany in New York (Francis, Michas & Yu 2013, p. 16).

Environmental factors affecting competitive and cooperative strategies

The key environmental factors that affect competitive as well as cooperative strategies include state and national governments and regulations considering that policies established by the government can enhance or impede competition strategies and cooperation strategies. All the competitors in this industry must observe the ASIC, and AASB standards, rules and regulations. The companies in this industry take into account the Blue Ocean Strategy and understand that there are unexploited markets as well as the opportunity for higher growth without having to eat into the profits of other players in the industry. KPMG, Deloitte, Ernst & Young have been able to succeed not by fighting with each other and other auditors in the marketplace, but through the creation of blue oceans of uncontested market space (Kim & Mauborgne 2005).

5.0 Conclusion

In conclusion, regarding the conditions for supplying the service – auditing, tax, advisory, and consulting services –, the main competitors to PwC include KPMG, Deloitte, and Ernst & Young. Each of these networks has created an entity for co-coordinating the network’s activities both in the Australia and in more than 150 nations globally hence they are PwC’s competitors both nationally and globally. The main industry observers are Australian Accounting Standards Board, Australian Prudential Regulation Authority, and Australian Securities and Investments Commission. The competitors have partnered with suppliers and clients including universities and business schools across Australia. By using Blue Ocean Strategy, PwC can be able to succeed not by fighting with the competitors in the marketplace, but through the creation of blue oceans of uncontested market space.

References

Auditing and Assurance Standards Board 2014, Australian Auditing Standards. Available at http://www.auasb.gov.au/Pronouncements/Australian-Auditing-Standards.aspx (Accessed October 14, 2014).

Australian Government 2014, Financial Regulation. Available at http://australia.gov.au/topics/economy-money-and-tax/financial-regulation (Accessed October 14, 2014)

Australian Securities & Investments Commission 2014. Financial Reports & Audit: For Auditors. Available at http://asic.gov.au/auditors (Accessed October 14, 2014).

Francis, J, Michas, P, & Yu, M 2013, ‘Office Size of Big 4 Auditors and Client Restatements’, Contemporary Accounting Research, 30, 4, pp. 1626-1661, Business Source Complete, EBSCOhost, viewed 12 October 2014.

Gurǎu, C 2007, ‘Porter’s generic strategies: a re-interpretation from a relationship marketing perspective’, Marketing Review, 7, 4, pp. 369-383, Business Source Complete, EBSCOhost, viewed 12 October 2014.

Kim, W, & Mauborgne, R 2005, Blue Ocean Strategy : How To Create Uncontested Market Space And Make The Competition Irrelevant, Boston, Mass: Harvard Business School Press, Discovery eBooks, EBSCOhost, viewed 12 October 2014.

Montgomery, A 2010, ‘Price Waterhouse Coopers shrinks to PwC’, Design Week Online, 2010, Business Insights: Essentials, EBSCOhost, viewed 12 October 2014.

Murray, AI 2008, ‘A Contingency View of Porter’s “Generic Strategies”‘, Academy Of Management Review, 13, 3, pp. 390-400, Business Source Complete, EBSCOhost, viewed 12 October 2014.

Porter, M 1998, Competitive Strategy. New York: Free Press.

PWC 2014, About Us. Available at http://www.pwc.com/gx/en/about-pwc/index.jhtml (Accessed October 12, 2014).

Robson, GS., & Roseman, GH 2009, Is Government Regulation of Auditors Redundant? Boca Raton, FL: Penguin Publishers.

Saito, Y, & Takeda, F 2014, ‘Global Audit Firm Networks and Their Reputation Risk’, Journal Of Accounting, Auditing & Finance, 29, 3, pp. 203-237, Business Source Complete, EBSCOhost, viewed 12 October 2014.

Strahler, SR 2013, The Big Four’s New Math, Crain’s Chicago Business, 36, 40, p. 0019, Regional Business News, EBSCOhost, viewed 12 October 2014.

World Bank 2014, Country Profile: Australia. The World Bank.

We can write this or a similar paper for you! Simply fill the order form!

Type of paper	Academic level	Subject area

Number of pages	Paper urgency	Cost per page:
		Total: