Deloitte SWOT

Deloitte Competitive Analysis Report Deloitte is a global provider of audit, tax and advisory services and the world largest provider of business and IT consulting services worldwide. We have analyzed Deloitte’s business consulting operations worldwide, identifying its strengths, weaknesses, opportunities and threats so that a proper competitive analysis could be done for the company. ANALYSIS The report contains a Strength, Weakness, Opportunity and Threat (SWOT) analysis for Deloitte and the business consulting services it delivers to the global market. We list here only those characteristics that have the greatest potential impact on Deloitte’s market position and strategy. Each characteristic is examined in terms of its potential impact on the firm’s market position and is rated high, medium or low, according to its impact. Deloitte competes in the business consulting services market, which is estimated to be worth $34.2 billion USD in 2014 out of a total $120.3 billion. It is a highly competitive and fragmented market in which Deloitte must differentiate itself from a variety of types of competitors including: established management consulting brands, such as McKinsey & co, BCG, large IT service providers such as Infosys Consulting and Tata Consulting Services. Deloitte must also differentiate itself from immediate peers Ernst & Young, KPMG and PricewaterhouseCoopers, the other members of so called “Big-Four” that have an accounting heritage. Firms in this market face price pressure on consulting day rates and frequent changes to technology that affect clients’ business processes. They also need to deal with the threat and opportunity offered by new technology-based delivery models, such as online advisory services. The foundational capabilities typically do not change dramatically, but the business and technological environment in which the clients operate is changing rapidly indeed. Under current economic conditions, pressures on provider revenue remain high. Consultants must update their knowledge base frequently to keep pace with evolving business and technology needs.

THE BIG FOUR Mergers over the past couple of decades have created the big four accounting, auditing and consulting firms: Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers. The relative lack of disruption has been a competitive advantage of Deloitte in the consulting business, it used the uninterrupted time to establish its intellectual capital and take a different route from that taken by its competitor. SWOT ANALYSIS Deloitte, Business Consulting Services, Worldwide.

STRENGTHS       

Value-driven approach Business-led, IT-enabled approach to engagements Depth in vertical industries and business processes Ability to invest in growth Stability and capability from audit business Trusted brand Breadth of service and skills OPPORTUNITIES

WEAKNESSES     

Brand awareness limited to only some executives in the client enterprise Global association structure Relative immaturity of global delivery capability Under penetration into Asia Limitation of market opportunity due to audit

THREATS   

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Change in economic and business environment Green agenda National infrastructure investments and reaction to the global financial crisis Pattern-Based strategy Midmarket penetration Other high-growth sectors

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More-focused competitors from IT heritage IT providers with business capacity Software brands

This SWOT analysis draws on research and analysis of Deloitte in the business consulting services market. It is a weighted summary of its Strength, Weaknesses, Opportunities and Threats. The strength and weaknesses are internal whereas opportunities and threats are from external sources. For each category, we define a number of characteristics based on parameters such as company or market, business consulting services, finance, and operations and assign to each a weighting. Each characteristic is examined in terms of the potential impact on the provider’s position in the market. Our analysis identified dozens of factors, each of which could be important in particular circumstances. Here we have mentioned just the important characteristics; we are prepared to discuss on this in detail if any query comes up. The main SERVICE LINES of Deloitte and its competitors are: Consulting 1. Strategy and Operations: Strategy; finance; integration; divestiture and restructuring; operations; supply chain; outsourcing advisory 2. Human capital: Talent / people strategy; strategic change and organization transformation; talent,productivity and rewards; technology adoption; HR transformation; mergers and acquisitions; actuarial, risk and analytics service 3. Enterprise applications: Customer relationship management; emerging solution; financial services solution; Oracle; SAP; supply chain management 4. Technology integration: Business integration and optimization; information management; performance management; platform architecture and infrastructure; system development; technology strategy 5. Outsourcing: Application management services; business process services Audit and enterprise risk services 1. Audit: Auditing services; global IFRS and IFRS implementation services; cross-border services; reporting advisory services 2. Enterprise risk services / Business risk: Contract risk and compliance; corporate responsibility and sustainability; governance; regulatory and risk strategies; internal audit 3. Enterprise risk services / Information and technology risk: Data risk services; information and controls assurance; risk management technologies; security, privacy and resiliency; technology risk and governance Financial Advisory Service: forensic and dispute services; electronic discovery services; reorganization services; valuation services; corporate financial advisory; transaction services Tax services: Business tax consulting; compliance and reporting services; tax management consulting; private company services; legal services; research and development and government incentives; indirect tax; customs and global trade; global employer services; high-net worth individual and employed wealth; international tax and transfer pricing; mergers and acquisition; Here we mainly focus on the Threats to Deloitte More-Focused Competitors from IT Heritage Deloitte is to some extent vulnerable to more-focused IT services providers because it is not easy, even at the scale of Deloitte, to cover all aspects of IT that are needed to implement its consulting advice. For some enterprises, working with consulting providers that also provide their own technology is a pragmatic advantage. This puts a limit on Deloitte’s ability to effectively control the outcome of all its business consulting projects. IT Providers With Business Capability The competing brands that have successfully combined a business focus with a strong IT backgroundpredominantly IBM Global Business Services and Accenture, but also Capgemini and some others-pose a threat to Deloitte’s business. In an era when no business decision can be effected without IT, competitors with an IT heritage are not disadvantaged as they once would have been. Software Brands Software brands, especially SAP and Oracle at present, have a high degree of recognition and intent to use on buyers of consulting services.

PERFORMANCE ANALYSIS 2014

Deloitte became the largest accounting firm on the planet, beating PwC on revenue terms in 2014. Deloitte had gained this spot for the first time ever in 2010, but lost out to PwC in 2011 and 2012. In 2013, Deloitte’s revenues grew 3.5% from 2012 while PwC’s revenue grew only 1.8%, thus Deloitte’s revenues exceeded PwC’s by $311 million in 2013 compared to a deficit of $200 million in 2012. In 2014, Deloitte’s revenues grew 5.7% from 2013 while PwC’s revenue grew slightly faster at 5.8%, but Deloitte’s revenues still exceeded PwC’s by $248 million in 2014 compared to a lead of $311 million in 2013. 2014 saw good acquisition activity by the Big Four firms in the Advisory space. Notably, Deloitte made 20 acquisitions, Including Platon Group, Urgentis Digital Crisis Solutions, McColl Partners, Banyan Branch, NXG Business Solutions, The Brief Group, MN Security and Vigilant. PwC finally bought and consolidated Booz. KPMG bought SAFIRA, Cynergy, Quebera and Rothstein Kass, while EY bought Parthenon and Thomson Reuters’ Tax Preparation and Court Accounting Outsourcing business. GROWTH STARS We have highlighted the firms who have achieved the highest growth rate in revenues from 2013 to 2014 in local currency terms as the growth stars in 2014. Audit EY Audit – 4.5% Tax PwC Tax – 8.0%

Advisory EY Advisory – 12.3% Americas KPMG Americas – 10.1%

Global: EY – 6.8% KEY HIGHLIGHTS PwC Largest Audit, Tax, Europe and Asia practices Fastest growth in Tax and Asia Deloitte Overall revenue leader Fifth consecutive year of positive revenue growth Largest Americas and Advisory practices Fastest growth in Europe EY Fastest growth in Audit, Advisory and total firm Fastest overall growth in 2014 KPMG

Europe Deloitte Europe – 5.8% Asia Pacific PwC Asia – 7.7%

Fastest growth in Americas Highest acceleration in growth from 2013 to 2014

CONCLUSION The 2007 to 2009 recession has been the world’s worst financial crisis for over 70 yrs., and despite such turbulence, the Big Four firms turned in quite a creditable Performance, this makes the completion for Deloitte much more tuff as it is expected to sustain its growth along with the other big 4’s. Since March 2009, global financial markets had a marked improvement in equity values, and general business conditions are in much better shape in December 2014. Implication of Deloitte Deloitte is in a strong position in the business consulting market. But, nothing stands still. We recognize Deloitte is firm whose leadership is constantly challenging its own assumption and its business model. It should actively continue the following: Invest, experiment and innovate the areas of automation, online services, emerging business models and offshore labor.  Apply thought leadership marketing, and manage it more rigorously.  Deliberately extend the capability and the brand into new areas of client need, such as sustainability consulting, while avoiding overextension. It should take these steps to secure future:1. Work on appropriate level of global integration of the consulting business that is compatible with current global structure. 2. Carefully extend the relevance and awareness of the brand among more non finance executives. 3. Closely monitor the internet based providers of business services (and consumer services and digital content): They may act as substitutes or competitors for some services, but they are also potentially among the largest prospective clients. 4. Develop local services and solutions for the high-growth markets of Asia.

What to Look for in 2015 and Beyond Beyond 2015, we do see several years of anticipated solid growth with general global improvement and large scope and size for Deloitte as well as its competitors. 2015 will be an interesting year to watch for any changes in Big Four rankings: whether Deloitte will be able to maintain its lead over PwC, whether EY can continue its strong growth streak and increase its gap against KPMG; and whether Americas can maintain their top position among the regions. Further, we analyze the impact of the recently appreciating US dollar on growth rates. More so, the impact of the recent slowdown in Eurozone on Europe growth will be monitored.

References The 2014 Big Four Firm Performance Analysis

www.Big4.com SWOT: Deloitte, Business Consulting Services, Worldwide

Gartner for Business Leaders Research Note G00175106, Rolf Jester, Jacqueline Heng, Michael von Uechtritz, 14 May 2010, V2 RA4 05202011