Definition of Management Consultancy

In simple terms this can be defined in a single sentence.

Management Consultancy is the use of an external consultant to help organizations to improve their performance.

They are used to provide external and objective advice and analysis of an organisations processes, a few areas where companies may employ a management consultant are listed below.

  • Gaining access to the consultant’s expertise
  • Process analysis
  • Technology implementation
  • Identify and implement where efficiencies can be applied

Of course, this list doesn’t even scratch the surface of the possible functions they perform.

Definition of Strategy Consulting

A simple sentence to define this could be: –

Strategy Consulting is a type of Management Consulting, normally advising organisations on high-level decisions.

  • Bring an unbiased perspective to bear when considering High Level Decisions
  • Analyse business practices and goals
  • Make suggestions for improvements
  • Analyse and advise on the direction a company is heading in

Once again, it is far from a comprehensive list, but it gives and idea of their function within an organization.

Differences between Management and Strategy Consulting

From the definitions it may still not be clear as to the differences between the two types of consulting. But, while there is a grey area where the two may occasionally touch, in general management consulting is an all-encompassing term that involves the practice of third parties providing advice and guidance to a company.

While, strategy consulting may fall under the umbrella of management consulting, its scope and responsibilities are confined to a distinct subset of a management consultants brief.

Let’s look at an imaginary example to further clarify the differences between the two.

Computers and Stuff is a small, high-street, computer retail outfit. The business has been struggling for a few months, and in order to boost sales they had just launched an advertising campaign. A campaign that, if anything, had made the situation worse.

Added to their problems was the company’s failure to react to a changing market, Laptops and PC’s were not selling as they once had and the staff were complaining about lack of training in the new range of smart phones and tablets that the company was stocking.

To top of it, senior management were receiving almost daily complaints from staff about the lack of leadership shown by the managers and area managers.

The company was failing, it was time to turn to the consultants. Let’s have a look at the two distinct approaches the consultants would apply to the situation.

How would a Management Consultant approach the situation?

If Computers and Stuff recruited a Management Consultancy firm the consultancy process may look something like this.

Initially the consultancy firm would take an overall look at the entire operation. They would do this with a view towards identifying the firm’s most pressing problems. With a broader span of responsibilities, they would look for those issues throughout the firm, from warehousing to marketing and everything in between.

In this instance they may look at the training the area and store managers receive. They may look at what the stores stock and advise on the possibility of branching out to a more modern market.

They would look at things like stock levels in the warehouses. Or HR issues, are the staff receiving enough training on the products they sell?

They would also look at the marketing campaign and offer advice on how they can be improved.

They could look at the finances of the organisation, how is the budget allocated? Are the rents they pay feasible to allow a stores profitability?  Are staff costs too high, is there too much money tied up in stock?

It is the overall picture, the sum of the parts, that a management consultancy firm would cover. From this they would likely implement some sort of ‘Organizational Change.’

In this example the consultancy firm would likely advise changes that would be described as – A Fundamental Change in how a company operates.  

How would a Strategy Consultant approach the situation?

A Strategy Consultant would take a different approach.

Whereas a Management Consultant would tackle the situation with a broad brush, a Strategy Consultant will not have been hired with such a brief.

A strategy consultant would be hired to advise on a specific management topic. It may be that the company have hired their services to look at the changing market, to advise on bringing the outlet’s up to date with new stock.

It is likely that they would perform market research. Asking consumers to complete questionnaires or even interviewing them. They would gather and analyse the data and from these results would draw conclusions that would be applied to Computers and Stuff’s long-term business model.

In very simple terms this is the difference between a Management Consultant and a Strategy Consultant.

Management Consultants take a general view of the overall state of the business, whereas a Strategy Consultant will look at remedying specific management issues.

To finish here are a few FAQ’s

What do Strategy Consultants actually do?

Strategy Consultants take a holistic look at specific problems companies are dealing with and give advice on how they should approach them.

What do Management Consultants actually do?

Management Consultants look at the broader aspects of a company and are likely to implement company wide organizational changes.

What Skills do Strategy Consultants need?

They require a sound knowledge of financial analysis, and are proficient in such field as data analysis, time management and communication skills.

What Skills do Management Consultants require?

Excellent communication skills, obviously business management skills and the ability to think analytically as well as the ability to use their judgement and make decisions based on their own initiative.