Management Consulting Landscape
The vast number of SMEs operating in the Canadian economy suggests a niche market for the operators who would recognize the needs of SMEs and could offer customized solutions to meet their needs. Such services contribute to specialization, which is in nature strategic to SMEs’ businesses as there is a positive relationship between specialization strategy and small business performance. Enhanced performances result in profitability, increased market share, hiring and business sustainability if a management consultant’s approach were implemented successfully. Demand for management consulting services is correlated with business budgets and the number of companies participating in the overall economy. Companies are better able to afford discretionary expenditures, such as consulting, when corporate profit is high. Additionally, companies tend to take part in activities that will require management consultants’ services. Merger and acquisitions, initial public offering, regional operation expansion, new department creation and investments for organic growth of business are examples of such activities for which management consultants services are required. Operators in the Canadian management consulting industry have a diverse range of clients. Numerous businesses use management consulting services, as operational efficiency, strategic direction and financial advice are important in all sectors. Additionally, this industry provides services to governments, public institutions and nonprofit organizations, as well as individuals and households.
The management consulting industry in Canada is projected to continue expanding, albeit at a slower rate, over the five years to 2024. While an expected increase in corporate profit and a rising number of businesses would, in isolation, boost industry revenue, a shock such as the collapse of commodity prices is not expected to occur over the next five years. The absence of such an event that would spur strong demand growth results in more steady but slow projected revenue growth. However, businesses will still invest in management consultants who can provide advisory services regarding operations and overall strategy. Increasing regulatory requirements are expected to assist the industry, as more private businesses and government organizations tend to hire consultants to navigate a shifting regulatory landscape. Industry competition is anticipated to remain strong over the five years to 2024. While the industry will remain fragmented due to the vast number of small, non-employing companies that participate, more international companies and niche providers are forecast to capture additional market share. Management consulting will remain highly profitable, as companies that have a good reputation will continue to have a leg up on the competition. Industry revenue is forecast to increase at an annualized rate of 1.4% to total $17.5 billion over the five years to 2024. Management consulting sector is continuously evolving, and business models are emerging to respond to industry demand. A balanced business model comprised of value proposition, profit formula, resources and processes are adopted to serve the venture core strategy which is lower price, higher quality and customer focused consulting services. Combination of the service differentiation and these external factors can create synergy if the strategy implemented successfully.