Accenture is a company for management consulting internationally established in 1989. It provides specialized services that includes strategy, accessing, digital technology and operation services. It produced revenues of $32.9 billion while employing 394,000 employees that served clients in round about 200 countries in 2016. Moreover in 2015, the company consisted of 130,000 employees in India and about 48,000 in US and approximately 50,000 in Philippines. The current clients of the company are 94 out of 100 fortune global (Singh, 2008).
The yearly technology vision of Accenture organization yields a vision on the technology future while considering the current state of situation about cloud, mobility and big data. The vision mostly consists of the trends that are currently adopted by the organization in technology sector to increase their growth rate and productivity rather than simply focusing on the ways and methods that could be used for cost-cutting and efficiency improvement.
Porter Five Forces Model of Accenture
Porter five forces is the analysis that is used to understand the business strategy of any organization. It was developed by Michael E. Porter in 1979. It explains the five forces that are essential to stand out in the world of industry. Theses includes
1. Power of Existing Rivalry
2. Bargaining power of Suppliers
3. Bargaining power of Customers
4. Threat of Substitutes
5. Threat of new arrivals
The organization that fails to uses the forces effectively in their strategy is driven out from the competition. The competition between external sources and the organization will fall under three of the Porter’s forces. Whereas the remaining forces explains the external threats. Porter explained these powers in terms of micro environment, in contrast with the more general term of macro environment (Gelles, 2011). It comprises of forces which possesses the ability to capture its customer and in return generate profit. The attractiveness of the industry does not mean that it will always come up with the same percentage of profit as before. In order to gain the profit above the average value, usually the organizations employ their essential capabilities, commercial model or network mode.
The Porter forces were develop in comparison with the SWOT analysis which according to Porter was not rigorous or ad hoc. It is developed on the basis of Structure Conduct Performance paradigm in industrial economics of organizations. It is applicable to variety of problems, and help them to grow more effectively and generate more profit by stabilizing the business. The three forces fall in the category of horizontal competition (FMV, 2013). These forces are threat of substitute products, threat of rivals and threat of new entrants. Whereas the remaining two forces fall under the category of vertical competition that includes the bargaining power of customers and buyers. The analysis of Accenture on the basis of Porter five forces is given below.
Powers of Rivals
The power of rivals can be described in five terms that are listed below.
a. Long Description Accenture has a great impact in Australia market which can be expressed in terms of long description.
b. Large industry size: This factor support the existence of numerous firms and are able to produce more profit without taking the market share of other industries. This is the factor that represents the positive aspect for the Accenture.
c. Exit barriers are low: The low exit barriers means that the strong firms and organizations will have more profit in the market as by this factor the weak companies will leave the market as soon as possible. Accenture is a pronoun organization and it has gained its named in the market due to which the exit barriers are low for it (Khan, 2013).
d. Relatively less competitors: It means that the amount of the competitors for the Accenture are low as there are less amount of companies that are working for the same product as the Accenture do.
e. Low storage cost: The low storage cost also proves to be helpful for any organization while competing in the market. This means that there exist less probability for the Accenture to empty their inventory all of the sudden. As Australia usually has low storage cost so again it proves out to be beneficial for Accenture.
Power of Suppliers
Power of suppliers has a significant impact on the strategy of any organization. So the analysts of the firm must give more attention to this force as in long run it can have a positive impact as well as the negative impact. Powers of buyers for the organization of the Accenture are low.
Power of Customers
The power of customers for the Accenture can be explained in the following points.
a. Buyers need special customization: Those clients who need special customization turn their faces towards the producers very often as there exist a difficulty among the customer and producers in answering the customer needs, demands and expectations (FMV, 2013). So such sort of customization among the customers leaves a positive impact on the Accenture.
b. Limited information availability of Customer: When the clients have less information about their own needs, it leads to fewer negotiation among them and the producers. The information provision is made inadequate by Accenture so that the customers can meet them personally to have a detailed information.
c. Low distributors dependency: This factor leads to the less negotiating power of distributors. So Accenture has low dependency of suppliers.
Threats of Substitutes
These are the risks that comes from the competitors. The probability of occurrence is high in case of Accenture. The main variables in this includes
a. Switching cost
b. Tradeoff among price performance
Risks of new Entrances
It can be explain in terms of cost competition, geographical factors that influence, and high switching cost of customers.
a. Cost Competition: High sunk in the cost creates difficulty for the contenders in order to enter in the market. For Accenture organization, this is qualitative factor as the competitors will seek difficulty while incapacitating Accenture.
b. Geographical Factors: Accenture comprises of good location in Australia, India, Middle East, China and US.
c. High Switching Cost: The strategy that is adopted by Accenture is that they switch among the cost every year in order to meet the changing demands of the market.
So this is the analysis of the Accenture on the basis of Porter’s five forces.
References
FMV, T. (2013). Porter’s Five Forces Strategy Skills. Management-ebooks.
Gelles, J. (2011, Feburary 11). Retrieved from www.effgelles.blogspot.com: http://jeffgelles.blogspot.com/2011/02/porters-five-forces.html
Khan, A. (2013, March 15). Retrieved from www.academia.edu: http://www.academia.edu/4919799/Final_Presentation
Singh, A. (2008, March 19). Retrieved from www.slideshare.net: https://www.slideshare.net/atulssingh/accenture-consultingstrategy