Chapter 1

I. Questions

1. What are some of the factors that contributed to the emergence and growth of
management consultancy?

Various factors account for the emergence and growth of management consultancy which
may vary according to region, sector, management function and project such as: client
size, wealth, complexity and structure; cultural values on advice; labor consultant supply;
investor/shareholder power; competing network-based ways of generating innovations;
and government policies and legislation.

A need for lean internal teams and increased organizational complexity are also among
the factors to the growth of consultancy.

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2. Why do small companies need the services of management consultants?

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These small companies are basically not in the place yet to hire managers or employees

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usually due to the lack of enough capital for wages and also the fact that small companies
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are mostly starting businesses. They need the expertise of management consultants to be
able to assist them in coping up with everyday operation.
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3. What are the objectives of management of a business organization?

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The objectives of management include maximizing the stakeholders’ wealth and

discharging corporate social responsibility.
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4. Distinguish between consultation and management.

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A consultation normally consists of providing advice and information during a short

period of time frame while engagement consists of that form of management advisory or
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consulting service in which an analytical approach and process is applies in a study or

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project.

5. What advantages do CPAs have over other professionals in so far as providing business
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advisory services to their clients are concerned?

Business firms generally prefer CPAs to act as their management consultant because of
the persuasive nature of accounting the academic training and examination requirement

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 Chapter 1
for the CPA certificate, a CPA has a broad base on which to build a management services
practice.

6. What role should CPA who is also the external auditor of a client, assume when he
provides advisory services to the same firm?

CPAs should strive at all times to limit themselves to providing advice and technical
assistance to clients and avoid making management decisions or taking positions that
might impair its objectivity both as consultant and as external auditor.

7. What impact on management consulting practice would technological developments and

globalization have on management consultancy profession.

Technological developments have been affecting areas of information sciences and

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decision sciences. Computer hardware and software, together with data communication

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and robotics represent powerful tools for business management. Globalization takes helps

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in terms of telecommunication which substitutes physical travel. The Internet has now
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provided consultants easier access to a lot of information right on the edge of their
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fingertips for analysis and recommendations.
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8. Describe briefly the main types of consultant firms.

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a. IT Firms are companies increasing looking towards consulting as a means of

increasing revenue.

b. Accounting Firms Offering Consultancy focuses around financial and transactions,

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such as mergers and acquisitions, services.

c. Major Consulting Only Firms are equipped with global reach. They offer a wide
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range of services but their core business is consulting.

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d. Independents run their own consulting services as sole traders, as small limited
companies and partnerships. They offer a range of services, often quite specialized.
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9. Describe briefly the nature of responsibilities of the following personnel in a consulting

firm:

a. Analysts – responsible for gathering information and processing it for the consulting
team.

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 Chapter 1
b. Consultants – undertake the evaluation of the clients business and make
recommendations on its behalf.

c. Managers – responsible of running small consulting projects and more involve in

dealing with members of the client team.

d. Business Development Managers – responsible for developing the firm’s products

and building its relationship with clients.

e. Partners of Directors – responsible for the development of the organization as a whole

and who lead its strategic development.

10. Give and explain briefly at least four reasons for using management consultants

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a. Independent Viewpoint – consultants are considered independent, objective and

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detached to the problems faces by the organization and these enable him to see the

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true nature of the problems and decide which solutions are feasible.

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b. Professional Advisor and Counselor – possesses special knowledge, skill, and a
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variety of professional attributes that make consultant the most desirable candidate to
undertake an engagement involving his area of expertise.
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c. Temporary Professional Service – use of consultants is less expensive to the company

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than hiring new managers or employees to provide professional advisory services.

d. Agent of Change – in providing solutions to the clients’ problems, changes may have
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to be made to the organizational structures, procedures and job responsibilities which

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will assist managers in the administration of organizations.

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II. Multiple Choice Questions

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1. d

2. c
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3. c

4. d

5. b

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 Chapter 1

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