Consulting

An American management consulting company is planning to extend its business broad and target a new international market. The consulting services help companies to develop their business plan, marketing plan, financial plan, logistic plan, information technology, and training. Today, this kind of services has become very common and widely spread across all business activities around the world. Also, it has become integrated Part of the huge numbers of companies. In 2007, the total revenue of its market amounted $201 billion.

The management consulting market is almost shared between USA and Western European consulting companies. Many companies provide different consulting services and on the other hands many of them specialize in a certain filed such as information technology and accounting and auditing services. The management consulting market is very fragmented and low barriers to enter or go out (Encyclopedia of Global Industries 2012). The objectives of extend the business broad are; first, benefiting from the international growth demand on the consulting services. Second, finding new market with lower competition especially the US market is becoming stiff competition because of the growth of demand that attract new comers to compete. Third, enhance company acknowledge by working in verities countries and cultures that reinforces ability to attract new clients.

Forth, meet the international growth demand for consulting services (Encyclopedia of Global Industries 2012). The target market is Saudi Arabia, it is one of the emerging economies (Alder Audit Bureau 2010). There are several motives to target this market. First, the strength of economy, it is the largest economy in the Middle East and North Africa, and the 19th largest economy around the world. It enjoys high GDP growth that exceeded the world growth, it amounted 5.8% in 2012. Also, the other economic indicators; economic stability, government expenditure and the the average person annual income ($25,000) show that the Saudi’s economy is an attractive market for foreign investors (Saudi Arabian General Investment Authority 2013).

Second, potential opportunities either in government and private sectors, Saudi government has lunched several programs economic and regulatory reforms as a respond on Saudis’ claims and anticipation the Arab Spring extension. Also, the private sector is seeking to be ready for competition with foreign companies because Saudi Arabia has become a member of WTO. As well as the government strives to increase the non-oil exports to minimize the dependence on the oil income, so it provides large support for non-oil sector (“Saudi Arabia Promotes Non-Oil Trade” may 16, 2013). Third, many of family companies are planning to convert to public companies to tap into government aids and stock market opportunities. Also, the educated next generations of companies owners look forward to run business in modern concepts.

Forth, the foreign consulting companies are very favored than the domestic companies because the high level management in both government and private sector think that the foreign companies are more skilled and better than domestic companies. Thus, the competition with domestic is an easy game. Those factors together create an attractive market for foreign consulting companies. However, this attractiveness of Saudi market involves significant challenges. First, the lack of fairness in competition, Saudi Arabia is ranked the 66 in the transparency index of the Transparency Organization that implies there are serious corrupted practices in both the government and private sector activates (Transparency Organization 2012). The obtain problems here is that there are certain companies assigned because of their relationship with high level management in those organization not because of their qualification that make getting an opportunity hard for new comers or which do not have relationship.

Thus, the new comer has to build a strong relationship with key people in potential clients. Second, the regulatory issue, if the company chooses the franchise strategy to enter the Saudi market, it has to find a Saudi partner because the regulation requires the franchiser a Saudi citizen. As well as, the Saudi’s law requires a certain portion of workers Saudi citizens to reduce the unemployment rate. The company would need a partner how is familiar with American business style and has ability to address the opportunities and runs the business in Saudi market. Third, the hardness of convincing potential client of they need consulting services. There are unique characteristics of business such as the government does not impose tax on income, and the majority of business are started by owners own money or free interest loan provided by government, and the competition is not fireclay.

Therefore, the business owners think that they conduct business in the best way as long they earn profit. Forth, the domestic consultanting companies claim to have the lion portion of consulting contactors and their voice has become noticeable. However, the last two issues will not last for a long time because of expected changes in the market due to Saudi Arabia has become one of the WTO members and the existing constrains will collapse after tolerance durations are over.

Market- Entry Strategy:

The proposal entry strategy is the franchise strategy because of its advantages for the company. First, the company will not incur cost to enter the new market the Saudi partner will incur it. Second, it will benefit from the Saudi partner knowledge of Saudi market as well as its communications and relationships in target market. However, the company should keep in mind that according to the Saudi regulation the partner must be Saudi citizen and meet the required portion of national workers.

The marketing plan:

The targeted market is both government and private sectors. The target clients are segmented in tow segments; the government departments and large companies ($100 million market value and more), and the second segment is the medium companies. The preferred segment is the government and large companies because they tend to assign consultants for a long term contract and with large amount. For example; Saudi Telecom Company assigned with Booz & co a long term contract with bundle services and Booz Allen Hamilton got several contractors with different departments in Saudi government.

Marketing Mix

I. The Product: The sole of the management consulting services is giving clients advices and assistance in certain areas; developing strategic plan, marketing plan, financial plan, logistic plan, human resource, and training in order to solve problems or achieve goals. The services could be offered as a bundle of services long-term contract or a single service short-term contract. However, each client’s needs vary from other clients’ needs, thus the company should tailor its products according to each client’s needs.

II. The Price:

Pricing a product or service is the most difficult part of the marketing mix for all business and it is more difficult in consulting service pricing process because of lack of public information and in Saudi Arabia market particularly (Greg Gentschev May 31, 2010). There are different methods to set prices for consulting services such as; based on hourly/ daily rate, based on the value of project , based on performance (“Consulting fee rates | Consultant fees” 2012). However, it is very common in Saudi market well-known consultant charges higher in all consulting sectors. Thus, the company has to rise its fee with rise of its reputation in the market. It may start with low fee to get a place in the market then higher fee for next projects. Also, it may charge heavily for the adding on the contract to offset the low fee. And it may set the rate based on the client, it charges government departments and large companies higher than medium companies.

III. Promotion:

The consulting services targets limit number of clients, so the company has to find the effective ways and cost less to reach and attract the potential clients. There re several ways to promote the company’s services; personal communication, the company staff visit and communicate (face – to- face) with business executives and government departments managers to introduce the company abilities to help their entities (Robert 2013). Advertisement, the company needs to choose the press and media and press which focus on business such as CNBC Arabic TV, Alarabiya TV, Aleqtsadiah newspaper, Alrajl, Forbes Arab, Gulf news magazine. Public relationship, the company should sponsor participate in some events in Saudi Arabia such as Jeddah economic forum, and global competitive forum in Riyadh. Finally, offering the first conaoulatnting free to attract clients.

IV. Place:

In Saudi Arabia all governments departments’ headquarter are in Riyadh, the capital city, whereas the companies’ headquarters are in Riyadh, Jeddah, and the Eastern Region. That means the majority of potential clients concentrate in those three cities. On the other hand, many of clients allocate offices in their locations for the consulting staffs, and the transportation cost is cheap comparing to the USA. Thus, the company needs just one location in Riyadh. In future, it could open up another location, if it finds itself needs to do that. However, the cost of renting per meter square is in range between $200 to $ 346.

By

<Enter your Name here>

Executive Summary
1.0 Executive Summary

Home Needs Consulting (HNC) will offer a unique service of enhancing skills of Manpower (Drivers & Servants) hired by local residents in Saudi Arabia. HNC will provide training on Vehicle Driving, Spoken Languages (such as English and Arabic) and other essential skills for people.

Our main aim is to provide end-to-end Manpower consulting for House owners. House owners can hire a Licensed Driver from us OR send their Driver for enhancing his Driving Skills and to get local Driving License. Servant maids will also be available for hire from us or the House owners can send their Servant maids for training on several useful skills such as language training, cleaning, cooking and doing other house hold activities. This is a very essential service required by most House owners in Saudi Arabia. Since this is a niche Business area in the market we expect to be a profitable business and grow rapidly in next few years. 

1.1 Objectives

HNC has a clear set of objectives. It wants to achieve the following in its first year:

·         Provide one stop solution for all Home Manpower Needs such as Driving, Spoken language and other grooming skills.

·         Once training is completed, we arrange for drivers to take the test and get them International driver’s license if required.

Achieve sales revenues of approximately X Dinar by end of first year.
Expand by starting up one or more facilities within the city.
Become the low cost provider of comprehensive Manpower Services in Driving education and Servant Maid grooming.

1.2 Mission

·         The mission of Home Needs Consulting (HNC) is to provide high quality, convenient and comprehensive driver education courses at the lowest cost. The most important aspect of driver education is SAFETY. It is the goal of our School to have our Drivers with the safest driving records than any other competitor, there by create and maintain a reputation and increase market share.

·         HNC’s Servant Maid Training will provide good education in all fields so that they can do their day to day activities to the full satisfaction of their owners.

1.3 Keys to Success

Home Needs Consulting has done thorough market research on the Business potential and key success factors for this unique Business. It understands that Quality, Cost and Excellent Customer Service are the key to grow and gain customer’s loyalty. It will also be important to be available in different locations in the city, so we plan to reach out to our customers with additional facilities in the city in future.

For many years now, the founder of Home Needs Consulting has noticed the great untapped opportunity in providing such Business. No company is currently targeting this exact nature of Business with end to end customer service. Home Needs Consulting believes it can deliver what the customers truly demanded, high quality driver education at the lowest possible cost as well as best grooming for servant maids. This is our driving strategy and our winning business model. We expect a steady growth in the market over time a period of time.

Our Key success factors will be:

Low cost – High Quality Driver Education
Assistance in getting International Drivers License for the Driver
Lower cost of operations  by Hiring Professionals as per the demand
Have an experienced Manager to take care of day to day management tasks. This person must be able to report to the upper management everyday.
Setup additional facilities in the city after making sure we are in reasonable profit.
Hire best instructors for Driving education who are certified and have good experience.
Aggressively market our brand in all effective and high impact channels and steadily grow customer base.
Company Summary
2.0 Company Summary

Home Needs Consulting (HNC) will be a registered company offering Manpower Consulting services. The focus is currently on providing Driving & Grooming services. In future it can expand to suit the Business Demands. We aim to achieve maximum customer satisfaction by providing high quality low cost services.

2.1 Company Ownership

The company will include the Founder and other Financial Investors. The founder will work for the company at Managerial level to ensure smooth implementation and execution of Business plans. It is also expected that Investors of this Company will also participate in Marketing and other activities to get good business to the Company. During the first year, by mutual agreement, it would also be required to invite additional investors into the company for financial support.

2.3 Company Locations and Facilities

Home Needs Consulting will setup and Front end office for Sales and customer service activities while the Backend Office will be for training purposes.

·         We plan to setup the front end office at:
<Enter location or mention as “To be discussed with Investor”>

·           Training House will be located at:
<Enter location or mention as “To be discussed with Investor”>

In the due course we plan to setup additional facilities at:

·         Front end Offices at:
<Enter list of locations or mention as “To be discussed with Investor”>

·         Back end – Training Houses at:
<Enter list of locations or mention as “To be discussed with Investor”>

Our primary Front end office will include following facilities:

–       1000 Square feet office space

–       1 sales executive (Telephone and On Field)

–       1 Customer Service cum Receptionist

–       1 Manager to supervise of all activities

Our Training House will include following facilities:

–       2000 Square feet office space & ample parking area

–       1 Office room & 1 Training Hall

–       3 experienced Drivers per shift

–       1 Teachers for Servant grooming

Services
3.0 Services

Home Needs Consulting will offer a wide range of services as outlined in the detailed sections below. It is ultimately the goal of the company to offer a one-stop facility for all driver needs, including registration, licensing, etc. In this way the company could offer great value for the customer.

Our Services will have highly competitive prices since the only way to have an advantage in this industry is a low-cost leadership principal applied to all aspects of the business. We will hire trained and certified instructors who provide all the teaching services. In addition, the company will have a fleet of many cars (both manual and automatic transmission) used to train the drivers. Each of these equipments will be maintained regularly.

3.1 Service Description

Home Needs Consulting (HNC) will provide a wide range of certified courses and services. These include:

Evening and noon classes for the busy working individuals.
Courses on Street safety and other essential skills.
Brush up courses for those who are good but do not have proper certification.
The course material for the course will be provided by the Company. It will contain a brief training on the subject whether it is driving or cooking, cleaning or talking skills. The course duration can be from 2 weeks to four weeks depending on student skills. Instructors will do their best to help the students clear all their doubts and train them nicely.

3.2 Competitive Comparison

The driver education industry is highly competitive. Each company within this field has high capital costs, low margins, and a high intensity of competition. Usually suppliers have a great deal of power in setting and negotiating the prices of their products and services to driving schools. Since HNC will avoid the suppliers and directly get its customers we expect to have a greater profit margin. We will constantly keep in touch with our satisfied customers and try to get new Business, thereby avoid commission for getting new customers.

Additionally if required, we plan to hire the manpower required by the company instead of keeping them on Pay roll. This will help us lower the costs of our services and increase our profit margin. We can add more manpower as the demand increases. By this we expect to provide a cost effective service.

3.3 Fulfillment

Home Needs Consulting (HNC) will hire trained and certified instructors who provide all the teaching services. Our Managers will include people will lots of managerial experience. With good facilities, manpower and excellent customer service we are confident of full filling the stake holder’s business expectations.

3.4 Technology

HNC will use multiple computers networked together, to keep a track of its day-to-day Business Activities. This will include attendance of employees, Customer Database, Registrations, Billing and Weekly Reports. We also plan to use computers to enhance the teaching experience for drivers. Also Servant maids will be shown videos of cooking and other interesting groom skills. Using computers useful weekly and monthly reports will be generated to see our progress in the Business.

3.5 Future Services

Given the market potential and available competition, we estimate within first 1 year we will need to setup additional facilities to cater to our growing customers. Our portfolio of services must also be broadened. We must look at providing many value added services to our customers, such as:

·         Setup company website will details of all our services on the Internet

·         Offer Candidate registration and payment via our own Company website

·         Offer Computer training to Drivers and Servant Maids

·         and more..

Market Analysis Summary
4.0 Market Analysis Summary

In Saudi Arabia, most of the residents have one or more drivers and servant maids in their House. It is very important for the Drivers and Servant maids to be good. In many cases the Drivers and Servant maids are not certified. Home Needs Consulting will provide will unique service of certifying Drivers and Servant maids after teaching them the necessary skills.

4.1 Market Segmentation

The market potential for this Service is very large it is a very commonly required service.  The market can be segmented as follows:

House Owners wish to send their Drivers for training and certification
House Owners want to hire a certified Driver from our Company
House Owners want to train their Servant maid in certain skills like cooking etc.
House Owners want to hire a certified Servant maid to work in their house.
Commercial drivers want to get certification.
Servant maids who wish to educate themselves better and get certification
Market Growth Analysis for last few years

YEAR
2002
2003
2004
2005
2006
Driver Certification

GROWTH
–
10%
20%
30%
40%
Commercial Driver License

30,000
50,000
85,000
2,40,000
4,50,000
Servant maid Grooming

30,000
50,000
85,000
2,40,000
4,50,000
Computer Training

–
50,000
85,000
2,40,000
4,50,000
Other Services

30,000
50,000
85,000
2,40,000
4,50,000

Total

90,000
2,00,000
3,40,000
9,60,000
18,00,000

4.2.3 Main Competitors

As mentioned earlier, the Driving school Industry is competitive. There are a couple of competitors who provide similar services and are now taken the major market share. Here is a partial list of our important competitors.

<Enter a list of competitors here, or mention as “Will be disclosed after Investor Discussion”>

Strategy and Implementation Summary
5.0 Strategy and Implementation Summary

The following subsections outline the marketing, pricing and promotion strategies, and competitive edges for Markam Driving School.

5.1 Competitive Edge

HNC’s competitive edge that can rival our competitors include:

·         One stop solution for all Home Manpower Needs such as Driving, Spoken language and other grooming skills.

·         Once training is completed, we arrange for drivers to take the test and get them International driver’s license if required.

Low cost provider of comprehensive Manpower Services in Driving education and Servant Maid grooming.

5.2 Marketing Strategy

The company plans to create a strong marketing presence to make it visible to its customers. The various channels through which advertising will be done are news papers, local radio and posters at prominent location. We will also print brochures and distribute them to departmental stores and entertainment malls. It is important to note that we must reach the House Owners who have the ability to maintain one or more servants (Drivers and maids) in the house. We can get access to such people via the directory of other commercial services such as travels, auto dealers etc.

Good students (drivers) who are happy with our training also become our marketing friends. They help us get a better image and create awareness.  We plan to have one Marketing and Sales Executive to plan and execute campaigns to get more business to the company. He will be given weekly and monthly targets and he must work hard to get new business each month.

5.2.1 Pricing Strategy

Our main aim is to provide High quality and low cost service. But this does not mean we will make loss. We will ensure we will cover our expenses and good amount of profit margin. As mentioned earlier, we will try to reduce our operating cost so that we can provide a great price reduction as compared to our competitors.

5.2.2 Promotion Strategy

We understand the importance of marketing our brand. Hence, our promotion will include advertisements in Yellow Pages, local magazines, local radio, posters and hand outs. We also plan to setup road shows to educate customers. Every six months we will revive our Promotional Strategy and realign it as per our Business Requirements.

Sales
6.0 Sales

The following table and chart illustrate the projected sales forecast for Home Needs Consulting.

Sales Forecast

YEAR
2007
2008
2009
2010
2011
Driver Certification

GROWTH
–
10%
20%
30%
40%
Commercial Driver License

30,000
50,000
85,000
2,40,000
4,50,000
Servant maid Grooming

30,000
50,000
85,000
2,40,000
4,50,000
Computer Training

–
50,000
85,000
2,40,000
4,50,000
Other Services

30,000
50,000
85,000
2,40,000
4,50,000

Total

90,000
2,00,000
3,40,000
9,60,000
18,00,000

Management Summary
7.0 Management Summary

Home Needs Consulting has a great management staff that can provide comprehensive direction for the company’s day-to-day operations and for its future planning. This includes:

Mr. ;Enter your Name;
;Enter brief profile information – your experience, education, skills etc.;

;You can enter another person’s name here;
;Enter brief profile information – experience, education, skills etc.;

;You can enter another person’s name here;
;Enter brief profile information – experience, education, skills etc.;

7.1 Personnel Plan

The company will be run by the Manager and its staff who will take monthly salaries. The details of the staff and manager salaries are listed below. As per the requirement, in future we may add additional staff.

Personnel

Personnel Plan

2007
2008
2009
Founder ; General Manager
10,000
15,000
20,000
Sales Executive
3,000
4,000
5,000
Customer Support + Receptionist
3,000
4,000
5,000
Driving Instructor 1
3,000
4,000
5,000
Driving Instructor 2
3,000
4,000
5,000
Driving Instructor 3
3,000
4,000
5,000
Teacher 1
3,000
4,000
5,000

Total People
7
7
7

Total Payroll
28,000
39,000
50,000

Financial Plan
8.0 Financial Plan

The following subsections outline the financial plan for Home Needs Consulting.

8.1 Break-even Analysis

The company’s Break-even Analysis is based on the company’s running costs, including payroll, and its present fixed costs, not including the expenses associated with the firm’s planned expansion.

Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even
75,000

Assumptions:

Average Percent Variable Cost
40%
Estimated Monthly Fixed Cost
30,000

Contact information
<Don’t forget to enter your Contact information here!>

San Francisco Bay Consulting (SF Bay Consulting), as described in the Harvard Business School case by Baker and Monsler (1995), is a leading business consultancy and litigation support group following the goal of providing “practical application of economic theory to business problems” (p. 1). In order to manipulate and analyze data, high-end software and computers are used to serve clients’ needs.

The company faces serious internal problems regarding the relationship between their consultants and the computer services (CS) staff because of disagreements concerning the transfer pricing system, which is applied to alleviate the procurement and payment of computer resources. The major challenges for this system are the heavy price drops for computer hardware and the broadness of the researchers demands.

The management of SF Bay Consulting forbids their employees to purchase their own computer hardware and software which leads to frustration among the consultants, especially in the case when the CS department refuses to buy and supply certain hardware and software requested by the consultants. The worst scenario occurred when transfer prices produced charges to clients’ bills that exceeded the current market price for the computer as it has happened with the SUN workstation.

Donald Learner, Chief Financial Officer of SF Bay Consulting, now sees himself in charge to find a solution to the current problems that is able to satisfy both, the consultants as well as the CS employees. For this purpose, he has identified three options: a) Stick to the current system, b) make CS a profit center, or c) run CS as an expense center. Due to the fact that the current situation at SF Bay Consulting is going to escalade if it is further made use of, option a) is not recommendable and a different solution has to be found.

Otherwise the working environment will be seriously affected in the long run and thus efficiency of the company might decrease to an undesirable level. Option b), to make CS a profit center, would lead to the situation that consultants themselves are allowed to purchase any hardware or software they like and thus focus on problems, others as they are supposed to do. However, this option would lead to the freedom for researchers to purchase the equipment they would like to work with and might free them of their frustrations.

Since IT specialists are running the CS department their core competency is not to focus on earning a profit within a competitive environment. While focusing on equipment procurement would distract researchers, the argument of distraction also holds true for the computer experts, which have to refocus and be in charge not only for maintenance but also running a business in a competitive manner. On the other hand this could lead to a more competitive price management that could cause lower costs for the two internal groups.

Notwithstanding, Learner and Alex Whalen (founder, president, & CEO of SF Bay Consulting) both agree that computer purchasing decisions should stay within CS to secure a certain level of compatibility among hardware and software and to avoid maintenance problems. Lastly, option three, to run CS as an expense center, would eliminate internal billing and lead to group profit generated from client charges greater than the CS overhead costs.

Even though, there is a possibility of researchers ignoring the costs they provoke with a great deal of requests for CS, this problem might be minor due to the fact that they are not as frustrated as before and thereby reaching a higher level of overall satisfaction. In order to make all employees more sensitive for working efficiently an elaborated group-profit-related bonus system could be introduced at SF Bay Consulting.

However, the impact of the bonus system for CS employees has to secure a balance between profit orientation and reasonable investments into hardware and software. Moreover, if all employees generate one overall profit together, there will not be any internal competition but a jointed overall goal. In conclusion, choosing option c), to run CS as an expense center is the right recommendation for SF Bay Consulting in order to solve its internal problems.

The problem in this case is the identification of the role of Computer Service and its relationship between it and other departments. The three solutions all have advantages and disadvantages. I think if we still keep the current system, the role of CS department remains unclear. If the staff are not clear about their role, they would behave nor too conservative nor too risky. So whey still lack can-do attitude on occasions, because they have no criteria in their mind to judge their action.

However, if we make CS a profit center, and free the researcher from their ties to CS, new problems arise. As CS could set any prices it liked and change them as often as it liked, and researcher also are allowed to go outside and purchase the software and hardware they want, hopefully it can work like total competition market. But the CS firm has no difference between other hardware store provider outside. That is to say there is no need to build such an independent department inside the company.

It is not performing its function and create value for the company. Besides it is a waste of time which actually decrease the efficiency of the whole company. For the third solution, running CS as an expense center says the total cost would be allocated to programs or groups in proportion to hours billed. I think this the cause for the potential of encouraging researcher to ignore the costs. Instead I think it is better for every individual of group assume the risk for purchasing new hardware and software.

So in my opinion, I think every solution have its advantages and disadvantages. And it actually also depends on the environment and style of strategy. If the company is in a world developing fast, and the company is trying to expanding itself, it is better to make CS expense department, it can encourage the researcher to apply the newest technology and get advantage of it. However, if the economy is not good and demand is not strong, the company is trying deducting cost, I think it is better to stick to current system.

To summarize, there is no perfect system here. It depends on the economic environment and the company’s strategy. Or I may come up with another solution, but I am not sure. How about just treat the CS department neutral. It is actually just the service department and provides computer service to the company. The risk or gain or loss totally belongs to every consultant in the group. The staffs in CS only get fixed salary and return of company stocks.