Kpmg Analysis

An over emplacement of what the community does its history and its product/service grade KPMG is a multinational leading professional services family, which deals with twain studyed account and measure with over 10,000 partners and staff. They bear achieved a vast amount of awards for twain employment and health and safety, and this in turn reflects their dedication to excellence in their services. In 2008, KPMG merged with other squ ars in Europe, which formed KPMG Europe LLP. This and so makes the compevery the largest integrated accountancy trusty in Europe, with the headquarters establish in Frankfurt.KMPG has a wide unravel of human resources, and these ensues in a diverse and highly skilled custody. Further more(prenominal), it drive out be seen that KPMG treat their workforce as an nonphysical resource, and this contri stilles to the satisfyings competitive grade. KPMG deal with common chord keystone atomic number 18as audit, tax revenue and pensions an d advisory. Their audit department deals with decision making inwardly capital markets (KPMG, 2011 p. 1). Therefore, they proffer a service to stakeholders, by ensuring that they are satisfactory to independently audit arrangings.Their tax and pensions function helps individual organizations to reduce their tax burden and to ensure they meet the highest levels of compliance. Therefore, this involves key areas such(prenominal) as merged spirit, pensions, and effective tax rates. Fin altogether in ally, they offer advisory support, which supports businesses through their business smell cycle. This therefore helps and encourages familys to develop within regulatory surroundingss. An abridgment of the bulletproofs macro-environment T able-bodied 1 PEST analysis Political Increased political regulation. Increased taxes reducing consumer spending and corporate spending.Focus on environmental governance for pattern environmental auditing. Economic Difficult and restrictive frugal times. Businesses closing down on the UK high street. Unstable economic times, which has dis answer agented in an change magnitude focal point on the financial sector. fond Consumer demand for CSR. Social concerns over the st cleverness of the economy this result, in firms such as KPMG flood tide under increasing scrutiny. Technological Integration of economies the motive for global expansion. eternal economy technology has facilitated 24-hour communication across borders.Advances in technology, which washbowl be subroutined to aid the detailed nature of KPMGs services. The PEST analysis highlights a dynamic environment, which is ever changing. In particular(a), it mountain be seen that the friendship must utilize strategic in like mannerls to under plinth and deal with many of the issues presented in the PEST analysis. At present, the main difficulties facing the firm are in the economic and political environment. The economic recession has resulted in a sc rutiny of the financial sector, and this in turn demands a need to offer an more and more integral service.Furthermore, the secondary result of which has been increased regulation, which, not only affects KPMG itself but the many services it offers to its clients. An analysis of the companys microenvironment Figure 1 Porters Five Forces Porters five Forces seat is an excellent to a faultl for understanding how powerful is a company in its particular business environment. It is really useful, because it dirty dog recognize the businesss strength in the competitive market and the possible afterlife role go out occur if the company thinks to change its plans.As a result the firm buns take benefit in a ascertain that has power also it can avoid any wrong go in the coming(prenominal). On the other hand it can improve a situation that seems to has weaknesses. Competitive rivalry As KPMG belongs to a market that can be defined as oligopoly the level of competition is not too hi gh. This kind of market is controlled by the mountainous Four because they share a huge proportion of the market. Because of this the firms have the power to have high fees. force out of Suppliers The main purpose of KPMG is the provision of services.As a result of this, the major asset of the business is its own individuals employees and members. For that reason the firm should seek to keep and disoblige its talents and trying to hire more fitted accountants. Power of buyers Customers are powerful in that kind of market. They can easy switch to another competitive firm because the costs of doing this arent too high. In addition the services provided by the Big Four are similar and with the same standard and this makes even easier the decision of a guest to move to a similar firm. Threads of substitutesThe thread of possible substitutes in the accounting services is very small because there are not obvious substitutes of those services in the market. Threats of new entrants T he market is conquered by the Big Four so the barricades of new entries in the market are very high. However, it is more common that small firms do not choose one(a) of the big firms. As a result of this there is some situation left for new small companies to enter the market. Table 2 overdress Strengths 1)Asset leverage 2)High research and teaching focus. 3)Areas of online growth. 4)Strong management team, substantial focus on HR. )Strong brand equity 6)Strong financial military strength, which allows the firm to internationalize. 7)Strong European presence. 8)Competitive pricing of services. Weaknesses 1)Weak focus on real estate. 2)Vulner dexterity to litigations over gross negligence in audit practice. 3)Over-reliance on European market need to understand more developing markets such as China and India (Wilson and Purushothaman, 2003 p. 19). Opportunities 1)Product and service expansion 2)Entry into emerging markets. 3)Future acquisitions. 4)Increased disbursement on inf rastructure could increase demand for advisory services.Threats 1)Dynamic and competitive environment. 2)Increased regulation, resulting in a need for a throughout service. 3)Exchange rate fluctuations 4)Changes in the economic environment. 5)Global economic slowdown. The SWOT analysis indicates that the firm has strengths, which aid their position in a competitive market. Furthermore, it can be notable that the firm use such strengths to position themselves in the marketplace in turn this promotes the resource-based view of strategy which focuses around the notion of core competencies (Barney, 1991 p. 99).The threats outlined can be responded to by reviewing the macro environment, and the implementation of strategic tools, which may help to outstrip any weaknesses. Finally, the opportunities outlined suggest that the firm should internationalize outside of Europe, this would extend the firms client base, and would allow them to tap in to developing markets such as China and India . This is in line with the BRICS study (Wilson and Purushothaman, 2003 p. 19) which, indicates that by 2050 China will be the worlds largest economy. Thus, an appreciation of the Eastern world is essential by KPMG to ensure success in the future.Evidence of an audit of key competences within the company The first key competency KPMG have is reputation this is an intangible asset and one, which sees KPMG respected for a high caliber of services. This is the result of professional, and skilled staff, and a vast extent of knowledge, which can be apply to a vast array of business situations. Reputation is needed when whirl such services which, require throughout and exact processing, for congresswoman firms consecrate KPMG to handle aspects such as Tax and financial advisory, and thusly much reputation is a key driver of success in this market.This is linked to the competency of professionalism, in which, tight ethical values of integrity and silver dollar provide the foundatio n for the firms work. Moreover, a key competency of the firm is their ability to develop a strong and skilled workforce. A focus on staff as an intangible resource is something which aids the firms competitive advantage. For example as Barney (1991 p. 99) notes it is eventful that a firm have competencies which are otiose to be imitated by their competitors, this in turn allows the firm to gain a strong position in the market and reduce competition.Therefore, it can be seen that the firm have a key competency of transforming the HR administration to one which supports overall organisational learning, this is seen as something which supports competitive positioning (Pucik, 1988 p. 1). office is a competency, which drives KPMGs success. First and foremost, the company is operating in a dynamic, which demands transparency. Thus, the firm can be seen to take accountability for their actions, and this is something, which is supported by the firms organizational culture. Organizationa l culture is defined by Schein (2010 p. ) as the shared norms and values, which are deeply rooted within an organization. KPMG have a positive culture, which is upheld by values of node service, customer satisfaction and the building of strong and meaningful relationships. Organizational culture can be seen as a competency, as it values can be translated into tangible resources such as increased clients, and stronger out-of-door relationships. This is linked to KPMGs focus on making an bear upon, their clients expect the firm to make an impact and in turn build strong business relationships. Therefore, a strong organizational culture, which upports such values, supports the overall strategic direction of the firm. Needed in a dynamic environment, is the ability to be flexible and problem solving in an open, and innovative manner. These are two competencies which KPMG can be seen to have, in particular these are competencies which highlight how the firm has a key remove to be abl e to analyze complex data and reach an remove solution, in a manner which is simple for their clients to understand. Thus, in summary, it can be seen that the firm have an ability to translate their key, core competencies to contribute to the strategic success of the firm.The most important competencies to the firm are those, which are intangible in nature, as these are aspects, which cannot be imitated easily by their competition. In turn, such intangible resources often result in tangible results, as we can often see a link between the two. For example higher levels of customer service are likely to result in a larger client database. A forecast of likely future prospects for the companys market and recommendations as to how it should react to potential changesThe ability of a firm to respond effectively to change is vital to the novel day organization operating in a dynamic environment. KPMG have a strong focus on their human resources, and this has resulted in the development of a workforce, which are committed to the strategic goals of the firm. Thus, as Hayes (2010 p. 12) notes a flexible workforce is needed to remain competitive, and therefore the firms reaction to any potential changes in the market is likely to be aided by their investment in their staff. KPMGs future market is threatened by increased regulation.For example in 2007 the company was found guilty of brutal wrong doing with regards to tax fraud (Department of Justice, 2007 p. 1). Such ethical wrongdoings damage company reputation, and this in turn is something, which is likely to affect the future of the firm. A firm such as KPMG gains a vast amount of business from reputation, and thus any damage to such may have a banish effect on their future clients. Therefore, in order to respond to increased regulation, the firm must ensure the highest ethical choose at all times, and high levels of transparency.In addition, KPMGs clients are faced with increased legislation regarding business reports, and thus, this promotes a need for a thorough service from the firm. ever-changing legislation will have a result on the firm itself, and increased expenditure is likely to be needed to ensure that all workers have the skills necessary to carry out an effective service. With regards to the external environment, developments in trends are resulting in future changes for the company.Firstly, the company is offering in a dynamic environment, and therefore is take to thrive and not just exclusively stand. In order to respond to competition it is important that the firm looks onwards to the future, and implements a system of strategic planning. In turn, the firm should seek to provide accurate and insightful information to all of their clients, which will result in the firm adapting the finance function to enable their clients to survive during turbulent, economic times.Moreover, due(p) to the economic humour, the needs of their consumers are changing. In order to respond to such a trend, KPMG must simplify complex business issues in a manner, which promotes a greater alignment of business processes. Many firms in a difficult, economic environment often have a short-term focus, and this is something which KPMG themselves need to steer away from, and something which they have to dis-persuade their firms from doing so. Instead, a focus on sustainable business is needed which, in turn will enable more than just reduced short-term costs.Thus, in summary the economic climate has created a difficult environment for both KPMG and their clients, and in order to survive such times and prosper in the future, the firm must position the company in a manner, which promotes success. The final trend portrayed in this section is an increased focus on corporate social duty. This is something which is required both from the company itself and it can be seen that KPMGs CSR actions may play the decisions of their clients.At present, KPMG have a strong belief that soci al responsibility and business success go hand in hand, and thus promote charitable donations, volunteering from their workforce and a key emphasis on the environment. In the future, a greater emphasis will be put on corporate social responsibility, and KPMG must respond to such changes by conducting environmental audits, promoting stakeholder theory, and an overall dedication to the cause. Strategy can be used to conduct external analysis, and such analysis will enable a firm such as KPMG to respond to future changes in the market.For many firms, their germane(predicate) success or failure is dependent on the ability to strategically align themselves to the external environment (Henry, 2007), and as many markets, in particular the financial market are as dynamic as ever, it is important that the firm are able to discern any trends which may ulterior alter the firms strategy. As shown in this paper, the environment consists of both the macro and microenvironment, and this in turn is something, which promotes the complexity of the market.In turn, it is often cerebration that the competitive environment is the one, which has the most direct impact on the firm however, it is the more external macro environment, which creates the most problematic situations for the firm, in particular, if a firm is unprepared for change. Dill (1962 p. 12) states that at the one level the environment is not a very mysterious excogitation, it means the surroundings of the organization, and the concept becomes challenging when we try to move from its simple description to an analysis of its properties.Thus, it is recommended that KPMG impact in environmental analysis in order to provide the companies with the prospect to discern trends, and then from these trends create strategies, which enable the firm to best position itself. By using internal strategic capabilities such as reputation, the firm may be able to diversify into other markets, which are noted as being both less ch allenging and competitive. The prediction of the future is difficult, and is always uncertain due to discontinuities.However, by scanning the environment, the firm can be able to detect any weak signals, weak signals are those trends which may be largely insignificant due to the fact that there impact is yet to be felt, however, the careful monitoring of such can result in the firm being better strategically practised for such uncertainties (Henry, 2007 p. 8 Van der Heijden, 1996). Van der Heijden (1996) notes how there are three different types of uncertainties, which all play a part in the external environment. These being structural uncertainties, risk, and unknowable.Of these both structural uncertainties and unknowables are the two most difficult to comprehend, due to the fact that these are events which each cannot be imagined or do not offer any examine of such a probability. Thus, noted in the literature, is the tool scenario planning (Schoemaker, 1995) which, can be used to deal with even the most unimaginable of events (Porter, 1998). If KPMG were able to adopt the concept of scenario planning, they would be more likely to gain a strong competitive position.Scenario planning is a tool, which can be seen to stand out due to its ability to capture a whole range of possibilities in great detail (Schomaker, 1995). Thus, it can be seen that scenario planning aims to pass over the under and over prediction of change, it does so by adopting a spunk ground, in which, it considers both unknowable and uncertain events. Word count2546 References Barney, JB (1991) degenerate resources and sustained competitive advantage. Journal of management, 17 (1) pp. 99-120.Department of referee (2007) KPMG to pay $456 million for criminal violations in relation to largest ever tax shelter fraud case online. unattached from http//www. justice. gov/opa/pr/2005/August/05_ag_433. hypertext mark-up language Accessed 18. 03. 11. Dill, W. The impact of environment on org anizational development In Mailick, S. and E. Van ness (eds) Concepts and Issues in Administrative Behavior. Prentice-Hall, Englewood Cliffs, NJ, 1962. Henry, AE (2007) Understanding strategic management. Oxford University Press Oxford.KPMG (2011) What we do online. Available from http//www. kpmg. com/UK/en/WhatWeDo/Pages/default. aspx Accessed 19. 03. 11. Porters fives forces model Industry analysis model online. Available from http//www. learnmarketing. net/porters. htm Accessed 21. 03. 11 Porter, ME (1998) On competition. 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