The business strategy of Bain and Company in the 1980s

1. Bain & Company, Inc.:
Growing the Business
艾凱文_0353522

2. Bain & Company, Inc.
Global management consulting firm
headquartered in Boston,
Massachusetts. It provides advisory
services to businesses, non-profit
organizations, and governments,
Bill Bain and six former BCG consultants
founded Bain & Company in 1973.

3. Stock Market Performance Bain & Company Clients
Bain ad Company clients had outperformed competitors by a significant margin.

4. Challenges Bain & Company face from
competition
McKinsey
• McKinsey &
Company
• Has
established
42 offices
in 23
countries
BCG
• The Boston
Consulting
Group
• a laggard in
the early
1980s, had
been
showing
signs of
resurgence.
Monitor,LEK
• Monitor
Company
and the LEK
Partnership
• Had been
increasing
their staffs
at rates of
50%-100%
per year.

5. Possible Business Strategies?
 Should Bain focus on developing its position in traditional “advanced
markets,” or were “developing markets” a more attractive option?
 Should Bain rely exclusively on internal resources to build its international
market position, or were external opportunities, like acquisitions, a joint
ventures, and hiring well-positioned outsiders, an appropriate way to expand?
 How would change affect the strong commitment to “one firm” and “client
exclusivity” that had differentiated Bain over the years?

6. Top-Tier Management Consulting Industry
 Top-tier firms charge much higher
fees compared to other
management consulting firms.
 The firms differ by capabilities,
Marketing, Specialization
(function, Industry and Analytical
methods), Firm culture,
Willingness to work for multiple
clients in an industry.

7. Economics of the Top-Tier Firms
 The cost structures of the top-tier
management consulting firms were
similar.
 The strategic planning segment
prices its services at three and
one-half to four times staff salary.
 Large segments of the consulting
industry bill services at two to
three times staff salaries.
 According to a Bain director, the
key driver of profitability was
capacity utilization.

8.  Founded by J.O McKinsey in 1926
 One of the largest management consulting firms, with 1989
revenues estimated at $635 million.
 Early and broad international expansion gave McKinsey a
strong competitive position.
 57% revenues originated from outside the United States.
 Expansion began in London, In 1971 there 17 offices on four
continents
 Objectivity, independence and professionalism were critical
elements of the package.
 Maintain “one firm” culture: exchanging professionals
between offices, worldwide training programs, multioffice
development seminars, and interoffice personnel evaluations.

9. Expansion of Top-Tier Management Consulting
Firms(Year offices founded)

10.  Founded in 1963 by Bruce Henderson, a former Arthur D. Little
consultant.
 First large management consulting firm to specialize in strategy
consulting.
 BCG was responsible for two major concepts of the 1960s: the “growth-
share matrix” and the “experience curve”.
 In 1984 BCG had 160 clients and 350 professional staff. In 1990 14 offices
in 9 countries
 The firm’s non-U.S. offices were responsible for about half BCG’s total
revenues.
 BCG encourage its consulting staff in Europe and japan to spend a portion
of their careers in United States and urges U.S. consultants to do the
same.
 In 1987 they had six worldwide practice areas: consumer products,
corporate development, financial services, health care, high technology,
and operational effectiveness.
 In 1989, two other practices were set up: organisation and information
technology.

11. Geneology of top-tier Management Consulting firms
Former BCG professionals had founding roles in various firms

12. Relationship Consulting
Help the client
to implement
its strategy
recommendatio
ns
Judge its
performance
through
external
measures
Don’t work
for clients
competitors

13. A “One Firm” Culture
 Promoting a Common Standard of Quality – develop a set of common values and
employee capabilities
 Recruiting Top Students Worldwide – top minds and team players
 Emphasizing Global training programs – two week training programs for associate
consultants (boot camp).
 Fostering Interoffice Communication – The most critical element of communication
is breaking down the barriers between offices (phonemail, Videoconferencing).
 Sharing Worldwide Expertise – “experience center” contained over 10000
documents chronicling 15 years of work for Bain clients. Annual meetings.
 Organizing Internatioanally by Client – not by office
 Role of Country Managers – dual roles, developing client relationships and office
management responsibilities.
 Role of Central Decision-Making

14. International Expansion
1978
• Bain & Company opened its first office outside the United States in London
1979
• John Theroux was appointed managing director of the London office
1980
• The London office was working for a large European bank
1981
• A British consumer product company was added.
• The Tokyo office opened
1982
• Bain opened office in Munich
1985
• Bain opened office in Paris
1990
• Bain expanded its business in Italy with 50 full-time professional staff

15. Growth Strategies: Where to Build
 Traditional Strategy – Based on high quality client relationships Bain
focused on penetrating the British, French, Italian, German, Japanese, and
American markets.
 Penetrating Advanced Markets –
 Developing Markets – Latin America, Asia

16. Growth Strategies: How to Grow
 Commitment to Client Exclusivity – Whether the client
exclusivity had outlived its usefulness and in fact limited the
company’s ability to market its expertise.
 Conflicts caused Bain to drop projects