Report: Price Waterhouse Coopers Supply Side
The assignment acts as a progress report of the final project to demonstrate understanding of the
relevant Phase of the Group Marketing Project and as such detailed feedback will be provided by tutors.
You are required to complete an analysis of the marketing strategy of our Client Partner �
PriceWaterhouse Coopers, focusing on the particular marketing issue (what does PWC look like in 2-5
years?) related to the organisation. Blue Ocean Strategy (BOS) will be applied to the marketing issue and
the framework provided by BOS used to formulate a marketing solution supported by other marketing
concepts and analytical tools.
The analysis must demonstrate:
(a) understanding of the predominant marketing systems in the Client Partner industry
(b) the potential to develop �blue-ocean� strategies for the Client Partner
(c) application of the analysis to the Client Partner.
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Report: Price Waterhouse Coopers Supply Side
In this paper, an analysis of the marketing strategy of Price Waterhouse Coopers (PwC) is
provided that focuses on the particular marketing issue – that is, what PwC looks like in the next
2 to 5 years – related to the organization. The supply conditions, intermediaries, the environment
and observers are analyzed exhaustively. PESTL and Porter’s Supplier Power are described
pertaining to PwC’s supply side. The Blue Ocean Strategy (BOS) will be employed to the
marketing issue and the framework provided by BOS used in formulating a marketing solution
supported by other concepts and analytical tools.
1.0 Supply Conditions and Intermediaries, Environment and Observers
PwC is an international professional services network, and it is currently the second
largest professional services network in the world as measured by its revenues of the year 2014.
Along with Ernst & Young, KPMG, and Deloitte, PwC is one of the Big 4 auditors worldwide
(PwC 2014). With regard to the conditions for supplying the service – auditing, tax, advisory,
and consulting services –, the main competitors to PwC include KPMG, Deloitte, and Ernst &
Young. Out of four biggest auditors in the world, Deloitte is the largest. In the year 2012, the
world revenue of Deloitte was $32.4 billion; PwC had aggregated gross revenues of $32.09
billion; Ernst & Young had combined revenue of $25.83 billion; and in the fourth place was
KPMG with worldwide revenue of $23.42 billion (Saito & Takeda 2014, p. 205).
Deloitte, KPMG, and Ernst & Young are each a network of firms, and they are managed
and owned independently. They have entered into accords with other member companies in the
network to share common quality standards, brand and name. Each of these networks has created
an entity for co-coordinating the network’s activities. In most instances, these 3 major
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competitors to PwC have member firms in countries all over the world. Deloitte, KPMG, and
Ernst & Young have separate legal entities in India, Europe, Americas, Africa, the Middle East,
as well as the Asia-Pacific region in countries such as Japan (Strahler 2013, p. 19). As such,
Deloitte, KPMG, and Ernst & Young are the main direct competitors to PwC not only nationally
in Australia, but also internationally. Besides these three main competitors, PwC also faces direct
competition from many small auditing firms nationally and this impacts on PwC’s financial
bottom-line.
The main environmental impacts on supply consist of regulations, economic, socio-
cultural environments. Accounting firms and auditors face market discipline that works towards
a decreased likelihood of future accounting scandals. The Auditing and Assurance Standards
Board develops guidance and standards for auditors and accountants. The regulations set by the
Australian Securities and Investments Commission must be observed, which are intended to
ensure that Australia’s fiscal markets are transparent and fair, supported by informed and
confident consumers and investors (Francis, Michas & Yu 2013, p. 1629).
Blue Ocean Strategy (BOS) theory
This theory postulates that there are unexploited markets as well as the opportunity for
higher growth without having to eat away at the competitors’ profits. Competition is not relevant
according to the Blue Ocean Strategy, since the rules of the game are yet to be laid down. With
supply being more than the demand in many industries, to compete for contracting markets
would not be adequate in sustaining high performance (Kim & Mauborgne, 2005). With the use
of BOS, PwC can be able to succeed not by fighting with the competitors in the marketplace, but
through the creation of blue oceans of uncontested market space. Such strategic moves would
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lead to a leap in value for Price waterhouseCoopers, its staffs, and clients, whilst unlocking new
demand and rendering the competitors irrelevant.
2.0 Intermediaries, Environment and Observers
Industry Observers Outside the firm
There are several organizations that have a considerable influence to the auditing industry
in Australia. The Australian Securities & Investments Commission (ASIC) administers the
requirements of the Corporations Act as it pertains to auditor independence as well as audit
quality. ASIC’s audit oversight activities assist with maintaining and raising the standard of
conduct in the profession of auditing. It is of note that whilst these activities have both a
compliance and educational focus, enforcement action could be taken when considerable non-
compliance is identified (Australian Securities & Investments Commission 2014).
The other industry observers are the Australian and Assurance Standards Board and
Australian Auditing Standards, which set the requirements and offer application on other
explanatory material regarding: (i) the form as well as content of the auditor’s report. (ii) The
responsibilities and duties of an auditor when engaged to carry out an audit of a fiscal report, or
complete set of fiscal statements, or any other historical fiscal information (Auditing and
Assurance Standards Board 2014). Another industry observer is the Australian Accounting
Standards Board (AASB), a statutory, independent agency with the responsibility of creating
standards and guidance for auditors as well as providers of other assurance services. The
Australian Financial Security Authority (AFSA) administers and regulates the proceeds of crime,
personal insolvency system, and trustee services. The Financial Reporting Council (FRC)
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provides board oversight of the process for establishing standards of accounting in Australia
(Australian Government 2014).
PESTL
A scan of an organization’s external macro-environment may be described in terms of
Legal, Political, Economic, Technological, Environmental, and Social factors (Porter 1998).
Political: at present, there is political stability in Australia and in a lot of other countries in which
PwC operates in, and this is favorable to PwC and other auditors. Economic factors: the
economic growth in Australia was 2.8% in 2013 and the rate of inflation is 3% (World Bank
2014). This is favorable to PwC and other auditors since it illustrates that there is a growing
market and opportunity of the services offered by PwC.
Social factors: in terms of demographics, Australia. has a population of about 23.13
million, with 89 percent living in suburbs, cities and other urban areas as of the year 2014. The
rate of population growth is currently 1.4 percent, and the education level in the Australia is very
high (World Bank 2014). Technological factors: technology has a substantial influence and
impact on auditing. The incessant evolution of software and hardware provides auditors with the
capacity to do more complex calculations with greater accuracy, speed, ease and mobility. Now,
auditors can speedily collect data, produce reports, and explicitly communicate the results
(Montgomery 2010, p. 50). Some of the new technology available to auditors include IDEA from
CaseWare IDEA Inc., and ACL from ACL Services Ltd which are software programs for data
mining and data extraction.
Legal factors: these include consumer protection, rules on monopolies and mergers,
international trade regulations and restriction, as well as national employment laws in Australia
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and in other nations around the world wherein PwC operates in. In the Australia, PwC must pay
its workers no less than the stipulated minimum wage of $16.87 per hour or $640.90 per week as
mandated by the Fair Work Commission (Montgomery 2010, p. 42). Auditors must also comply
with the regulations established by the government and government bodies such as the
Australian Securities and Investments Commission, and the Australian Accounting Standards on
auditing quality, standards, and integrity.
Porter’s 5 Forces: Supplier Power – Low
In Porter’s 5 Forces, the supplier power is understood as the pressure that suppliers can
exert on business organizations by raising the prices (Gurau 2007, p. 380). At present, the
bargaining power of suppliers is not a significant force in such a fragmented industry.
Essentially, universities are suppliers considering that nearly all employees in this market come
out of business schools. The auditing firms can obtain workers from the many universities and
business schools across Australia, and therefore this makes the supplier power to remain low.
3.0 Nature of Industry Marketing and Competitive Positioning Strategies
Kinds of strategy selection
Cost leader with Product Life Cycle Focus: in essence, this would entail seeking to
reduce the costs through expertise and efficiency (Montgomery 2010, p. 58). The services
offered by PwC would be allowed to age and alter in appeal from High End, to Traditional, and
ultimately Low End clients. The firm will focus on profits, return on investment, and ROS, and
the company will spend moderately on promotion and sales. Moreover, the firm will spend low
on research and development, and invest in technology early enough in the life-cycle of the
product (Porter 1998). Differentiation with Product Life Cycle Focus: with this strategy, the
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company will be seeking to be recognized everywhere as the auditing firm that provides best
quality auditing and consulting services in terms of objectivity, integrity, and competence. The
firm will offer several product lines in targeted segments – Low End, Traditional, and High End.
There will also be high investments in promotion and sales with the aim of creating maximum
awareness as well as accessibility. The focus will be on Asset Turnover and ROA (Montgomery
2010, p. 61).
Broad Cost Leader: the firm will strive to be the low-cost producer in all segments of the
market. The company would enjoy good profit margins on all sales whilst keeping prices low for
clients who are price-sensitive (Murray 2008, p. 390). The firm will be more probable to
reposition its services than introduce new services to the marketplace, and it will tend to spend
less on sales and promotion. The focus will be on profits and market share, and capacity
improvements are not likely to be undertaken. In addition, the firm would finance investments
using stock issues and/or debt (Porter 1998). Broad Differentiator: the firm aims at creating
maximum awareness as well as brand equity, and wants to be known as an auditing firm which
provides high-quality and very sought-after auditing and consulting services. The firm focuses
on profits and market share, maintains a presence in every market segment, and it spends greatly
on sales and advertising with the purpose of creating maximum awareness and accessibility. The
firm will tend to charge higher prices for its services (Montgomery 2010, p. 62).
Niche Cost Leader: the firm will be seeking to dominate each of the price sensitive
market segment, and it will aim at setting prices below that of all the competitors in the
marketplace, and still remain profitable. The company focuses on profits, returns on investment
and ROS, and invests in several service lines within the low-tech segments – traditional and Low
End segments. The firm will also spend moderately on advertising to clients who are cost
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sensitive (Porter 1998). Niche Differentiator: the firm will be seeking to be recognized as the
best provider of high quality consulting and auditing services in all the targeted segments. It will
offer several product/service lines in segments that are high-tech, and there is little focus in the
other segments (Montgomery 2010, p. 61). The business also focuses on ROI, asset turnover, as
well as ROE.
Product Life cycle: this is essentially a concept of how a particular product moves
through 4 basic stages which are (i) introduction; (ii) growth; (iii) maturity; and (iv) decline.
Introduction: this is when the service is introduced into a marketplace. Growth stage: the
marketplace has accepted the new service and demand of the auditing and consulting services
provided by the company start to increase along with sales. Maturity: sales attain their peak.
Decline: sales start to reduce as the product/service gets to its saturation point (Murray 2008, p.
392).
4.0 Competitors: KPMG, Deloitte, and Ernst & Young
Market Positioning and differentiation of competitors
As noted earlier, the main competitors to PwC are KPMG, Deloitte, and Ernst & Young.
The 4Ps of marketing strategy include product, price, place/distribution, and promotion.
Product: product is the auditing and accounting services offered by PwC’s competitors. Ernst &
Young, KPMG, and Deloitte all provide high quality accounting and auditing services and
consulting practice, which has contributed to their wide popularity not only in Australia, but
internationally. Deloitte focuses on providing uniquely high-quality and innovative auditing and
consulting services, and this has enabled it to hit global revenues record of $34 billion (Saito &
Takeda 2014, p. 205). KPMG provides exceptional professional services and provides 3 basic
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service lines including advisory, audit and tax. Ernst & Young also offers high-quality audit
services to clients in more than 150 countries worldwide (Francis, Michas & Yu 2013, p. 1644).
The auditing and consulting services provided by each of these firms is virtually the same, and
there is little differentiation.
Price: the pricing of the services offered by the competitors is dependent on various
variables and thus it is always updated. The main consideration is costing of the service, the
expenses incurred in marketing and advertising, as well as price fluctuations in the marketplace.
Since the three main competitors are all prestigious and highly-respected firms, they tend to price
their services highly. Smaller competitors, however, tend to charge less expensively for auditing
and consulting services (Saito & Takeda 2014, p. 205). Place/distribution: this pertains to how
companies get their products/services to the clients and customers. KPMG, Deloitte, and Ernst &
Young have member firms throughout Australia and in countries all over the world. They have
separate legal entities in India, Europe, Americas, Africa, the Middle East, as well as the Asia-
Pacific region, and they use these member firms to get their services to clients worldwide.
Promotion: this is when a company communicates the value and benefits of its services/products
to the consumers. KPMG, Deloitte, Ernst & Young and other competitors of PwC often make
use of personal selling to promote themselves (Robson & Roseman 2009, p. 76).
Cooperative strategies
The three top competitors of PwC have established cooperation with customers and
suppliers in Australia and in many other nations the world over. Ernst & Young works with
various universities and business schools which supply the firm with employees. Some of these
universities and business schools include Warwick Business School; Nottingham University;
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Leeds University Business School; Bangor University’s Bangor Business School; Pace
University’s Lubin School of Business; and School of Business, University at Albany. Ernst &
Young cooperates with various customers including Lehman Brothers and PNC Financial
Services Group. KPMG cooperates with the University of Exeter Business School, Birmingham
Business School, and also works together with Durham University Business School which are
some of its suppliers. KPMG also works with the Institute of Chartered Accountants of England
and Wales (ICAEW). Deloitte cooperates with many customers and a lot of these clients are
among the FTSE 250 corporations. It has also partnered with various suppliers such as Columbia
University’s Columbia Business School; and School of Business, University at Albany in New
York (Francis, Michas & Yu 2013, p. 16).
Environmental factors affecting competitive and cooperative strategies
The key environmental factors that affect competitive as well as cooperative strategies
include state and national governments and regulations considering that policies established by
the government can enhance or impede competition strategies and cooperation strategies. All the
competitors in this industry must observe the ASIC, and AASB standards, rules and regulations.
The companies in this industry take into account the Blue Ocean Strategy and understand that
there are unexploited markets as well as the opportunity for higher growth without having to eat
into the profits of other players in the industry. KPMG, Deloitte, Ernst & Young have been able
to succeed not by fighting with each other and other auditors in the marketplace, but through the
creation of blue oceans of uncontested market space (Kim & Mauborgne 2005).
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5.0 Conclusion
In conclusion, regarding the conditions for supplying the service – auditing, tax, advisory,
and consulting services –, the main competitors to PwC include KPMG, Deloitte, and Ernst &
Young. Each of these networks has created an entity for co-coordinating the network’s activities
both in the Australia and in more than 150 nations globally hence they are PwC’s competitors
both nationally and globally. The main industry observers are Australian Accounting Standards
Board, Australian Prudential Regulation Authority, and Australian Securities and Investments
Commission. The competitors have partnered with suppliers and clients including universities
and business schools across Australia. By using Blue Ocean Strategy, PwC can be able to
succeed not by fighting with the competitors in the marketplace, but through the creation of blue
oceans of uncontested market space.
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References
Auditing and Assurance Standards Board 2014, Australian Auditing Standards.
