CHAPTER 8: STAGES OF MANAGEMENT o Pattern Recognition & Matching

CONSULTING ENGAGEMENT – PART II Approach

- emphasizes experience especially
those having similar characteristics
Management Consulting Engagement Stages: to the prob. situation
o Brainstorming Approach
 Negotiating the Engagement o SCAMPER APPROACH
 Engagement Planning - Substitute, Combine, Adjust,
 Conducting Consulting Assignment Magnify, Put to other use,
A. Prob. Identification & Solution Eliminate, Reverse
B. Identification of Suitable & Accurate o Delphi Approach
Sources of Info. - Employs idea generation
C. Data Analysis & diagnosis concept similar to brainstorming
D. Solution Development
E. Preparation & Presentation of the (2) Evaluation of Sol. Alt.
Report & Recommended Solution NOTE: evaluation should be based upon a
F. Implementation situational feasibility analysis
G. Follow Up Evaluation
 Evaluating the Engagement & Post Areas of Consideration:
Engagement Follow Up o Economic Feasibility
D. Solution Development (SD) (3rd Phase of Problem (Cost/Benefit Analysis)
Solving Process): - Break-even analysis, NPV,
payback, IRR, make or buy
4 Steps Involved in SD (GenEvaChoDet): o Operational Feasibility
1. Generation of Sol. Alt. - Usability of each sol. alt. in the
2. Evaluation of Sol. Alt. environment & persons for
3. Choice of Preferred Sol. Alt. whom it is intended
4. Detailed development of Selected Solution o Technical Feasibility
- Adequacy of existing state of
NOTE: SD links previous phases through Deliverables technology to meet the
requirements
Range of Recommendation Consultants Expected to
o Scheduling Feasibility
Produce:
- Determination it can be
o Solution to specific problem rendered operational by
o Educational Course specified time/date
o Designated System Component o Legal Feasibility
o Implemented System Development Life Cycle - Ability to meet the legal
o Advice requirements imposed by
o Expert Opinion outside authorities
o Other Evaluation Factors
- Simplicity, flexibility,
(1.) Generation of Sol. Alt. adaptability, sensitivity,
- 1st Step in SD phase – to generate & reliability
thoroughly search for sol. alt. (3) Choice of Most Preferred Solution
APPROACHES:  Certainty Environment (CE)
 - There is only one event NOTE: the growing, stable, declining is called “state of
therefore only a single outcome nature/outcome”
for each action
NOTE: the numbers in the table, is called as “payoffs”
- 100& occurrence of event
– w/c can be in terms of profits, costs, returns, etc.,
2 Approaches if CE:
ANSWER:
o Optimizing Approach – employs
one of the mathematical techniques Maximin: Invest in A
o Satisficing Approach – search
among alternative solution that Investment Growing Stable Declining Worst
satisfies performance criteria A 40 45 5 5
B 70 30 3 3
C 53 45 4 4
 Uncertainty Environment (UE):
- does not provide sufficient info to assign Minimax: Invest in B
probabilities to the future states of
nature. (OL = Best Payoff – Payoff Received)
- Reflects person’s willingness to accept
Investment Growing Stable Declining
the risk
A 40 45 5
4 Approaches if UE: B 70 30 3
C 53 45 4
o Maximin Approach (Pessimistic
Approach) – “best of the worst
outcome”; maximizing the minimum Max.
gain Investment Growing Stable Declining
Regeret
o Minimax Approach – computing
A 30 0 0 30
the maximum opportunity loss
B 0 15 2 15
(regret); reflects an attitude of regret
C 17 0 1 17
avoidance
o Maximas Approach – (Optimistic
Approach) – “best of the best Maximax:
outcome”; maximizing the maximum
gain Investment Growing Stable Declining Best
o Rationality Approach – assumes A 40 45 5 45
that in the absence of avail. info B 70 30 3 70
each state of nature has an equal C 53 45 4 53
probability of occurrence
Computation Sample:  Risk Environment (RE):
Problem: - Data obtained is from historical reports,
mktg studies, fact finding investi.
Investment Growing Stable Declining
A 40 45 5 4 Approaches in RE:
B 70 30 3 o Expected Value Calculation
C 53 45 4
o Decision Tree Approach –
probabilistic results; series of
 sequential decisions must be
made
o Monte Carlo Simulation –
simulating in the form of
computer program over one or
more time periods
o Other RE Approach – Queuing
Theory & Game Theory
(4) Detailed Development of Selected
Solution
Involves designing of:
o Outputs
o Inputs
o Conversion Processes
o Resource & Data Bases
o Organization
NOTE: in this phase, selected solution will
undergo detailed design & refinement
E. Preparation & Presentation of the Report &
Recommended Solution
NOTE: must be presented in a “persuasive manner”
G. Follow Up Evaluation of Implemented Solution
NOTE: Post implementation evaluation should be
conducted after sol. has been fully implemented
NOTE: it is not a one-time process
3 Specific Ares in Each Review & Evaluation:
o Economics – comparison about act. Benefits
& costs of new system and expected benefits
& costs that were developed
o Operations – actual use of the implemented
system by the intended users
o Future Performance Review – identifies
potential improvements to the implemented
system & estimates the effort required to
implement these improvements
IV. Evaluating the Engagement & Post Engagement
Follow Up
Evaluation Covers:
o Proposal
o Engagement Program
o Work Program & Schedule
o Source data & documentation
o Reports
o Results

F. Implementation
Reasons why there are difficulty after Implementation:
NOTE: the CPA should, under implementation:
o Change in operating conditions
o Evaluate client’s capacity to develop & carry
o Design may prove to be faulty
out plans for recommended program
o May recommend that client hire addtn’l NOTE: follow ups are usually agreed upon with
qualified personnel to perform some tasks client/ by their original agreement
Activities in implementation Phase:
o Development of Work Plan
o Establishment of Controls over
Implementation Activities
o Selection & training of needed personnel
o Installation of needed physical facilities
o Development of standard & docu
o Testing of the solution implemented
o Follow up & evaluation of implemented sol.