What is Management Consulting?
Interested in a consulting career? This article will provide an overview of management consulting including the different types of firms and projects, and the main players.
Posted January 9, 2024
Table of Contents
Management or Strategy Consulting is a cottage industry of companies that bring together analytical minds to help clients solve complex business problems. Management consultants enhance the business performance of their clients in order to ultimately create value for shareholders and owners. The projects–often referred to as cases, studies, or engagements–are broad and varied. They typically involve heavy amounts of research and analysis with the goal of improving the overall health of a company’s finances and operations.
Management consultants are hired in part for their external objectivity. Companies want them to view their business operations from a third-party perspective for an independent view. They also want access to the talent and expertise of outside resources, in the form of consultants.
Many consulting firms become specialized over time or have different sectors with specializations. Some focus on tech or HR companies, while others may work mostly with those in the healthcare industry. These specializations allow consulting firms to grow their client base and become experts in their industry.
Types of Firms
Though there are certainly overlaps across industries, broadly speaking, management consulting firms can fit into one of four different categories.
1. Strategy
Geared toward high-level, corporate decisions, these firms focus on conducting broad industry analyses, merger integrations, new product strategies, and competitor assessments. This category fits most large-scale, high-level firms. Most of these consulting firms hire MBAs as their consultants.
2. Information Technology
Firms specializing in IT services focus on the implementation, design, assessment, and infrastructure of IT development.
3. Human Resources
HR consulting firms work to maximize the value of their clients’ HR departments. They focus on improving health & benefits planning, compensation schemes, and recruitment processes.
4. Niche
Some consulting firms focus on a specific area of technology, research method, industry, or region. For example, healthcare consulting firms work almost exclusively with companies in the healthcare industry because that is where their knowledge is and what the consultants have experience with.
Types of Projects
Consulting is known for its wide range of projects that employees will be asked to work on. Here are some of the eight most common ones.
1. Post-Merger Integration
After a company has acquired another or been acquired, there are many processes that need to be reconfigured. Consultants step in to help with the merging of supply chains, IT systems, and HR departments, among others. Merger integration projects usually involve many different small projects within the larger one so typically the firms that work with this are the strategy and niche ones.
2. Growth Strategy
Growing a company is notoriously difficult and consultants step in to help them scale their products and/or services to a wider audience. An example project might revolve around helping one company enter the market in a different country or increasing their market share. These projects typically last three to six months and involve significant research and analysis tasks, including a SWOT analysis, competitor profiles, and expert interviews.
3. Business Diagnostics
These types of projects are usually undertaken when a new CEO, SVP, or other C-Suite employee comes in and wants a broad snapshot of the overall health of the company or specific unit. It often takes around three months and is heavily analysis-driven.
4. Private Equity Due Diligence
Sometimes private equity firms will hire consultants to help them with performing due diligence on companies they’re interested in. The PE firms will run management interviews and create the deal model but use the consultants to provide inputs to that model. In other words, the consulting firm works as another pair of eyes.
5. M&A Due Diligence
When an investor or company is deciding whether to acquire another company, they will often hire a consulting firm to conduct an analysis of its health and financials. Consultants will work on providing an overall perspective on the acquisition to help the client determine whether it’s a good fit. Due to the nature of these projects, they can take anywhere from three to twelve months.
6. Cost Reduction
When companies are over budget, they may hire a consulting firm to help them find the best areas in which to cut costs. This may include reducing production overheard or procurement spending, switching to better technology or less expensive raw materials, or reducing the company headcount. As these projects can often be sensitive, it is beneficial to bring in an external party with objectivity.
7. Organizational Design
For these projects, consultants will work with clients to redesign their company’s organizational charts. This will involve establishing the company hierarchy and rearranging roles for maximum efficiency.
8. Customer Retention/Churn
Some companies may bring in consultants to help them analyze the state of their customer base. Through focus groups, customer surveys, and other analysis methods, they will outline the profiles of different customer bases and develop strategies to retain customers. This area is crucial to the company’s ongoing viability and is especially useful when a competitor poses a threat to the client’s existing customer base.
Top Management Consulting Firms
There are three main management consulting firms that are often referred to as “The Big Three.” They are McKinsey & Company, Bain & Company, and the Boston Consulting Group (BCG).
McKinsey & Company
McKinsey focuses on helping its clients achieve economic growth, sustainability, and inclusion. Through advanced strategies and new technologies, it aspires to help companies build lasting organizations. It highlights the value of its employees, who are doctors, engineers, designers, data scientists, entrepreneurs, business managers, and more. McKinsey welcomes the complex, important challenges of the modern business age because it has the employees to deliver effective experience and expertise. McKinsey has 149 offices across 69 locations and is headquartered in New York City.
Bain & Company
Bain emphasizes a focus on the future and wants to work with clients who are trying to redefine their industries. They approach problems with an integrated solution designed to drive innovation and long-lasting results. Bain has worked with 63% of the Global 500 top companies and measures their success by the success of their clients. It is headquartered in Boston, MA but has offices in 63 locations across 38 countries.
Read: How to Get an Interview at Bain & Co.
Boston Consulting Group
BCG approaches its strategies through the lens of benefitting all stakeholders of a company. Its goals are to help companies grow, build a strong competitive advantage, and create a positive societal impact. BCG’s purpose is to unlock the potential of those who are trying to advance their business and the world by leading with integrity, simplifying complex problems, and challenging traditional ways of thinking. Based in Boston, it has over 90 offices in 50 different countries.
Read: How to Get a Job at BCG: Interview and Networking Tips
Final Note
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Read next: How to Succeed in a Consulting Career - An Expert Coach's Guide
