McKinsey & Company Greater China SWOT Analysis Contents 1. Introduction2 2. Strengths2 2. 1 Well-deserved reputation2 2. 2 Diverse range of business3 3. Weakness4 3. 1 Weakness in practice area4 3. 2 Lack of enough attention on SMEs4 4. Opportunities5 4. 1 Market potential5 4. 2International cooperation5 5. Threats6 5. 1 Intense competition6 5. 2 Global financial crisis7 6. Conclusion7 Bibliography8 1. Introduction McKinsey & Company (McKinsey) is a well-known international management consulting firm. Its Greater China department has been serving clients in Greater China for over 25 years (Mckinsey & Company Greater China, 2012).
McKinsey’s core objective is “to help our clients achieve substantial and enduring impact by tackling their biggest issues concerning strategy, operations, organization, technology and finance” (Mckinsey & Company Greater China, 2012). Although this company has recruited outstanding staff on a global scale and it has developed its own consulting system (such as McKinsey’s 7s model), McKinsey would face many internal and external factors which might impact the company performance, especially in the greater China market.
Therefore, McKinsey Greater China should have a clear picture of the situation and comprehensively analyse its strengths, weaknesses, opportunities and threats to overcome the future challenges. This project will illustrate an internal analysis of McKinsey Greater China’s strengths and weaknesses, and an external analysis of it opportunities and threats. 2. Strengths 2. 1 Well-deserved reputation McKinsey has a well-deserved reputation among world-famous companies and a long, successful tradition in consulting field. Originally, the company started with solving senior management problems in American companies.
Then, with about eight decades of operation and development, McKinsey has established a complete consultation service system and has accumulated many successful consulting examples which help the firms settle practical issues, such as evaluating OldPharma’s biologicals strategy. These factors help this company win the respect and reputation from competitors and clients. Thus, without brand promotion and advertising, Greater China department which is an important part of McKinsey has attracted much attention from the media and well-known Chinese companies.
It is beneficial to reduce the advertising expenditure and crack the Chinese market. 2. 2 Diverse range of business McKinsey has set up a complete service system, including almost all of industrial departments, to the greatest extent to ensure the various needs of clients. Clients can choose an entire management consultation or the specific professional services in the area of automotive, global energy and materials, financial services and the other five advisory categories (Mckinsey ;amp; Company Greater China, 2012).
In these fields, the service items could be subdivided into business technology, corporate finance, organizational change, strategy planning, and sustainability and resource productivity services (Mckinsey ;amp; Company Greater China, 2012). The diverse range of consulting can cater to clients’ various demands and can attract some big companies which prefer an integrated, one-stop service. Because this service can help them save a great deal of time and money. Therefore, compared with other Chinese local consulting firms, McKinsey Greater China will earn the confidence from the customers by its multitudinous consultation services items. . Weakness 3. 1 Weakness in practice area McKinsey Greater China has been more interested in theoretical knowledge or analysis methods rather than presence in some practice areas (MarketLine, 2011). In other words, Mckinsey is good at finding questions while seeking answers is weak. This problem has impacted the development of McKinsey Greater China. According to analysis statistics, its human resources consulting practices have a wide gap with its competitors on market share (MarketLine, 2011).
Although many companies have reduced consulting input because of being affected by the economic crisis, it cannot be the reason that the company’s market share is narrowing. In many failure cases, McKinsey Greater China just gives the suggestions on macroscopic view, but they cannot address the issues in practice, which has damaged the reputation of company. 3. 2 Lack of enough attention on SMEs The other weakness is that attention has not been paid sufficiently to the SMEs (small and medium-size enterprises) by McKinsey Greater China for a long time. Undeniably, SMEs have become an essential economic force in the greater China.
Take China as an example, the percentage of SMEs has reached 99 %( approximately 10 million) in the total enterprises and the social wealth created by them also reaches nearly 60 per cent of GDP (Liang Jun, 2010). However, McKinsey Greater China seems to pay more attention on multinational corporations and industry leaders. It might lead to missing some potential customers and a new profit-growth spot for the company. Furthermore, the negligence of the SMEs which is an economic barometer probably causes the company making the wrong judgment for this region’s economic conditions. It will weaken McKinsey’s brand influence and its market share. . Opportunities 4. 1 Market potential Most of economists believe that greater China is one of the fastest-growing, most dynamic regions in the world, especially mainland China. After three decades from Deng’s economic reforms beginning, China has been completely changed ranging from economy to society. Chinese aggregate economy is ranking number two in the world, and industrial output increases dramatically. However, with the depth of economic development, many companies encounter in the bottlenecks of management. Some of them are going through the throes of economic transition. Moreover, global economy slowdown is indisputable.
If China’s companies, especially export processing enterprises, want to develop continuously, they need professional consultation ranging from strategy to human resources management. It appears that the consulting market in China has enormous potential. That is a big opportunity for McKinsey greater China. 5. 2 International cooperation In recent years, there is a trend that many greater China’s companies want to seek international cooperation in order to earn greater commercial profit. For example, many companies are interested in mergers and acquisitions of international businesses.
But these actions need professional suggestions and there are many operation problems after mergers and acquisitions. As a global consulting firm, McKinsey Greater China has the ability to help clients realize international cooperation. Because it has maintained close ties with many international enterprises for a long time and built a customer-information network covering the whole world. The network can provide a platform for greater China’s firms to seek international cooperation with suitable foreign companies. It is also an opportunity for Mckinsey Greater China to find a new profit-growth spot. 5. Threats . 1 Intense competition McKinsey is in a highly competitive business environment. The company requires services with practicality and innovation in order to help clients solve management problems. On the one hand, McKinsey Greater China faces some traditional rivals in the consultancy market such as BCG and Bain & Company. Most of top 10 consulting companies want to grab a slice of the greater China market. On the other hand, Chinese local players develop very rapidly in recent years. Under the supporting from the government, local consulting firms have seized a large number of small businesses clients.
These have put pressure on the margins of McKinsey, especially in IT and strategic consulting fields (MarketLine, 2011). Intense competition in the marketplace will reduce McKinsey Greater China’s profitability and erode its market share. 5. 2 Global financial crisis The foreign investment to greater China has slowed down in recent years due to poor economic situation. The worldwide economic recession that was triggered by the US property bubble has affected growth in various companies and countries. Many international groups have adjusted the investment layout.
The main actions are reducing the investment and returning to the domestic market slowly. These movements will affect the mainstream business of McKinsey Great China and the market competition will become fiercer and cruder in short term (MarketLine, 2011). Moreover, because of the rising price pressures, governments have cut the direct investment to domestic infrastructure. As result, McKinsey Great China will lose clients and its profits space will be narrowed in the consulting area of Construction and infrastructure. Continued decline will make the business environment become more challenging and uncertain. . Conclusion McKinsey is one of the leaders in global consulting businesses and its greater China department also plays an important role in Asia-Pacific market. McKinsey’s greater China department has well-deserved reputation and provides a full range of advisory services, while it has weaknesses in various practice areas and it might lack enough attention on SMEs. Considering the massive market of China and the trend of international cooperation, Greater China department will eliminate the danger of global financial crisis and catch the opportunity to improve the market share.
Bibliography Liang, J. , 2010. Official: China’s SMEs in best period. [Online] Available at: <http://english. peopledaily. com. cn/90001/90778/90862/7107295. html > [Accessed:20 August 2012]. MarketLine, 2011. McKinsey & Company SWOT Analysis. London: MarketLine. Mckinsey & Company Greater China, 2012. About Mckinsey Greater China. [Online] Available at: <http://www. mckinseychina. com/en/> [Accessed: 20 August 2012].