Business Strategy for KPMG: Internal and External Analysis, Competitive Environment Analysis, and Competitive Advantage Identification

This report provides an in-depth analysis of KPMG's business strategy, including an internal and external analysis using PESTLE and SWOT frameworks, competitive environment analysis using Porter’s Five Forces model, and identification and justification of the organization's existing and/or potential competitive advantage. The report also includes a discussion of KPMG's large customer base and dominance in the sector as key competitive advantages.

Unit 32 – Business Strategy

Table of Content
Introduction 3
Part A: An internal and external analysis that provides a platform
for strategic decision making: 3-8
1. PESTLE and SWOT of the organisation and an evaluation of the
organisation’s resources and capabilities 3
2. Competitive environment analysis using Porter’s Five Forces model
6
3. Identification and justification of the organisation’s existing and/or potential
competitive advantage 7
4. Valid strategies and tactical objectives to achieve overall strategic objectives
8
Part B: On the basis of this analysis critically evaluate and justify
strategic options for the organisation: 8-10
1. Critical evaluation of the different types of strategic directions available to
the organisation 8
2. Justification and recommendation of the most appropriate growth platform/s
and strategies 10
3. Evaluate ways and means by which the chosen strategy/ies can be
monitored in order to ensure success 10
5.0 Conclusions 11
References 12

Introduction
Strategic management is the Continuous process which include
planning, controlling, evaluating of all the requirements of the businesses
through which the firms can be able to fulfill their aims and targets (Budisusetio
and et.al., 2019). Organizations have to analyze their business environment
regularly so that they can make their business strategies according the situation
of the businesses. This report contain the strategies which are implemented by
the consultancy firm known as KPMG. This company based in UK while the
headquarter of this company is in London. KPMG firm provides various services
like taxation, Auditing, legal and it is also work as management consultancy.
KPMG Firm provide their services in 144 countries all over the world. This firm is
also listed in the big four audit consultancy firms across the world. This report
includes the various strategies through which this company is able to achieve
the goals. The strategies which they have adopted are going to be discussed in
the below report.
Part A: An internal and external analysis that provides a platform for
strategic decision making:
1. PESTLE and SWOT of the organisation and an evaluation of the
organisation’s resources and capabilities
PESTLE analysis of KPMG
KPMG is one of the biggest consultancy firm among the top four
management firm of the globe while they have a mission to make their
footprint all over the world. Using Pestle analysis, companies wants to
analyze their related external environment which will make huge
implication on the whole industrial sector and specially it make impact on
KPMG like their model of business, market action plans and innovation
growth. By evaluating their external environment, company able to
reduced their threats while increasing chances of better opportunities. All
the factor of Pestle analysis are discussed below:
Political factors
This factor critically make analysis on how a business sector be influenced
by this element which help them in ascertaining the enterprise long term
sustainability (Dau, Moore and Kostova, 2020). Some of the political factors
are fiscal policy, governance trade policies, taxation system and political
stability. In reference to KPMG,
who have footprint in many countries which are affected badly by recent
political situation in UK. As there is change in Government, KPMG seeks to
ensure the new policies of new government which help them to grab the
opportunities. KPMG has to study the new corporate taxes which might get
reduced that assists in attracting new foreign direct investment.
Economical factors
In the Pestle framework, this elements directly influenced the business
sector through various variables which help them to accomplish their
economic targets. Economic factors includes inflation, interest rate,
exchange rate fluctuation and demand and supply of material. In context

to KPMG, they have targets only those nation which have high efficiency
financial markets where they can easily available with human resource and
financial.
Social factors
This is the third factor of Pestle analysis where culture of organization is
highly influenced by societal measures, worth and trends (Oliveira Claro
and et.al., 2021). Some of the examples of social factors are consumption
pattern, demographic trends and cultural norms. KPMG have to research
about their client perception, in depth study of societal norms and to
increase the brand image.
Technological factors
In today's developed market, constant innovation is generally required and
it also need huge amount of investment in technologies. It is necessary for
companies like KPMG in order to enhance their quality of audit and bring
audit team software which help in enhance their operation. Some of the
factors are infrastructure, innovation and research and development.
Legal Factors
This factor provides wider scope than political factor which provides
specific details about more information on different laws and regulatory
requirements, laws related to consumers and workers and intellectual
property laws. As KPMG has operating in many countries where they have
to comply with host country regulation in terms of facing lawsuits.
Environmental factors
The last element of Pestle framework where stakeholder increase their
concern on environment protection which required companies to follows
regulation regarding environmental laws. Due to this, KPMG has initiate its
global climate response which has goals to reduced enterprise global
impact. This system has help KPMG to work on it to reduce energy use by
some percentage.
SWOT analysis of KPMG
Swot analysis is a framework which help companies in evaluating their
performance so as to compared with benchmark. This strategic analysis
help them to evaluate the internal and external environment. In terms of
KPMG, as they are highly rely on excellence and quality in audit and
taxation (Dey, 2019). As KPMG serves to different sector like governments,
public sectors and not for profit organization where they offer consultancy
services and assurance practice. All the key elements of Swot analysis are
discussed below:
Strength
 It is a assets type resource or ability of the enterprise can utilize
efficiently in accomplishing their targets.
 This is internal analysis which help in building present and future
operation and also help in developing strategic goals.
 KPMG has various strength like extensive geographic range where
they have above 640 offices across 140 nations with 230,000
employees.
Weakness
 It is defined as organization not performing at their optimal level.
 These internal analysis factor help in increase brand position in the
market.

 Many weakness are to be faced by KPMG are as being top four
consultancy firm, it is sometime become unapproachable because of
high consulting charges and professional expertise.
Opportunities
 This factor mean chances of different situation by which organization
could take some positive results (Hutahayan, 2020).
 In other words, it consists of some areas which need improvements
to expand its business in new market.
 KPMG, being a consultancy firm seeks opportunities in expansion of
geographical market, improvements in providing services and
communication should be better.
Threat
 These are factors which affect any type of business negatively. As
this is external factor which identifies variables that impact
company's growth in long term.
 Some of threats which are available for KPMG like recession which
would impact negatively the growth of firm.
 Many competitors are entering in the market of audit, tax accounting
and consultancy which directly influence the KPMG's market share.
Mckinsey’s 7s model- The 7s of Mckinsey Model are as follows-
Structure- Structure is considered as the path which the KPMG have to
follow for making their operations well organized and effective.
Strategy- The very next s is strategy. It is considered as a plan of the
KPMG which allow their managers to implement them for achieving the
competitive advantages.
System- It refers to the technical aspects of the company named as KPMG
like infrastructure of the company which make flow of work and continuous
decision making.
Skills- It refers to the ability and knowledge of the employees of kPMG
that allows their employees to attain their aims.
Style- The senior employees of the KPMG have to create the code of
conduct by the help of which different ways of interaction and decision making
the style of management can be created in the leaders.
Staff- Staff in the business includes the skilled employees of the
organization who are taking the effective decision for the growth of the business.
Shared Values- The mission, aims, and values of the organization plays a
very important crucial role in combining of the all the important elements which
can make the effective design of the organization (Kadir, 2018).
Value Chain Analysis- It is way of analyzing of every activities in the company
through which the opportunities for development can carry out. The value chain
management team of HPMG can helps help the companies to integrate their
palling if taxation in a business which can improve the growth and can decrease
the expenses and risk. The value analysis of KPMG also helps them in increasing
their investment and also direct the operations the efficiencies across the
operations. By the help of this analysis KPMG also able to find out their right tax
position for their end to end international operations.

2.Competitive environment analysis using Porter’s Five Forces
model
Porter's five forces is a model through which the competitive forces
can be find out and analyzed (Koutsoukos, 2019). These five forces help in
shaping the every industry or firm in term of doing their operations effectively.
These five forces helps the business in identifying their deficiencies and
soundness. This model can be implied in every kind of economical sector so that
the level of the competition can be identified. The five forces through which the
business organizations are able to shape their operations are as follows-
Competition in the Industry-
The very first force of porter's five forces generic model is
competition in the industry. If the company have large number of competitors in
their industry along with the same type of product then it is obvious that the
company have lesser control over their industry. It is because the more and
more suppliers provide their product and services at a very low prices to the
customers so that they can beat their fellow competition. Due to this the
companies are not able to make their desirable profit. The Firm like KPMG also
have major competitors in their field who provide same kind of services. The
major competitors of the KPMG firm are Deloitte, EY and PWC. By the help this
force the managers of the firms like KPMG are able to analyze the level of
competition in the global and make their strategies according to the market
situations.
Capabilities of the New firms into the Industries-
The second force which included in the porter's five general model is
the capabilities of new firm in the industry. If the new firm get successfully
entered in the industry, then the existing firms can loose their share in the
market. If the new firms are continuously get entered in the industry then they
can create several issues for the existing firms. So that's why the existing firms
have to create the strong barriers for the new firm so that they cannot be able to
enter in their industry. KPMG have create a large barriers in the way of the new
firm due to which the new firms are not able to get enter in the industry. KPMG
has expand their business all over world which proves that the company have
dominance in their industry.
Powers of Suppliers-
The next factor which included in the porter's five generic model is
power of suppliers. Many service provider companies outsource their work to the
suppliers which reduce their work load. This act also helps in saving the cost and
time of the businesses. The audit firm lie firms are also outsource their work to
the suppliers. Due to this they are able to attain their objectives. If their is a few
suppliers in the market then it can create more dependency on them. Due to the
high demand the suppliers can charge high amount which can increase the cost
of the KPMG. SO to tackle these kind of situation firms like KPMG has to bring the
new strategies so that they cannot face this kind of situation. KPMG can sign a
deal with suppliers for a specific time period due to which the suppliers are
bound to give their services to KPMG (Kushins and Behounek, 2020).
Power of Consumer- The next force which is included in the porter's five
generic model is power of consumer. Consumers have a power to reduce the
prices in the market they can also switch the brands very easily. They can create

a pressure on the company for reducing the prices the in the market. For that
reason the firms like KPMG have to bring the innovation in their business
regularly due to this they are able to give the best and effective work to their
customers. This kind of activity helps the businesses to achieve the target.
Threat of Substitute- The last force which is included in the porter's five
forces model is is threat of substitute. If the companies have more and more
substitute goods in the market (Malerba and Ferreira, 2020). Then the company
can face loose the costumers in the market. It can lead the firm to the losses.
For reducing the effect of substitute KPMG can use various techniques and
strategies by the help of which they can decrease the substitute effect. KPMG
can reduce their price of their services and and also bring new technologies
through which the errors can be reduce completely.
3.Identification and justification of the organization's existing
and/or potential competitive advantage
The major competitive advantages of KPMG are as follows-
Large Customer base- The very first competitive advantage of KPMG
is that they have a very large customer base. That's why they are able to
increase their profitability. The services which are provided are by the
KPMG are very effective and efficient which gives the satisfaction. Due to
these type of effective services the organization can are able to grow their
services easily.
Dominance in the sector- The next competitive advantage of KPMG is
that the company is dominate in their industry. KPMG gives big
competitions to their rival. Due to their huge reach there are only few
competitors in the market which proves that this company have a full
dominance in their own industry. Due to this kind of dominance KPMG is
listed in top auditing firms in the world.
Brand Identity- The another competitive advantage of the KPMG is
that they have big brand and goodwill in their market. Due to this the
company is able to dictate their industry easily. Companies like KPMG did
not have to do the promotion at a very large scale (Singer, ed.St-Hilaire
and Boisselier, 2018). It is because they have their offices or branches in
144 countries in the world which prove that they did have any kind of limit
related to the geographical area.
By the help of these competitive advantages the organizations like KPMG can
easily give competition to their competitors. Due to these advantages they are

able to earn huge amount of profit for the longer period and can also be able
top beat their competition in the market.
4.Valid strategies and tactical objectives to achieve overall
strategic objectives
The valid strategies and tactical objectives through which the overall
strategic objectives can be achieved are Porter's generic strategies, Bowman's
strategy clock, Mckinsey's 7s model and VRIO all of them are given below-
Porter's generic strategies- Porter's generic strategies are the solution
for the business organizations through they are able to run their operations of
the business successfully (Telyatnikova and et.al., 2020). The various generic
strategies provided by the porter are as follows-
 Differentiation- In this strategy the organization decided to make
their products, commodity and services different from their
competitors so that the consumer get more attract towards them
as compare to them.
 Cost leadership- The next generic strategy which porter's gives is
cost leadership. It means that the organization have to cut down
their cost of operation and focus the effective work by the
employees due to this the organization can be able to generate the
profit for future.
 Focus- In this generic strategy the porter gives an idea that the
organization have focus on the specific market. Due to this they are
able to hold one type of market and create the monopoly in it.
As per the above three strategy the best and effective strategy for the Auditing
firm is Focus. Because this strategy provide an idea that the organization can
focus on one particular segment and make the profit out of it. Due to this the
organizations can easily achieve their target and can also their operation
management as well.
Part B: On the basis of this analysis critically evaluate and
justify strategic options for the organisation:
1. Critical evaluation of the different types of strategic
directions available to the organisation
Ansoff Matrix Model- Ansoff matrix model include various strategies which
gives direction to the organization so that they can achieve the success which
they want. Ansoff matrix model is given below-
Market penetration- The managers of the organization decided to
use market penetration strategy in the business. It means that
management of the organization have to always looking for selling of the
familiar or existing product into the market. It is because the customer are
already feels relatable with that product which means that they already
knows about that product. And the customer will go for buying that product
again and gain in future (Valenti and Horner, 2019). The organization can
also decrease the price of the product in the market because they workers

of the organization are already used to the process which saves time and
resources due to this they can decrease the price of the product.
Market Development- The very next strategy which is include in
the Ansoff Matrix Model is Market development. This strategy did not
require large amount of money and capital (Wu and Yang, 2021). The
managers of the organization just have to do some research in the market
through which the they can make some policies and strategies which can
increase their profitability. Some of the key factors on which the managers
have to focus during their research are as follows-
 Catering to a different customer segment or target demographic.
 Entering of New domestic product.
 Entering into a foreign market.
Product Development- A enterprise that firmly has the ears of a
specific market or target gathering may face to expand its share of wallet from
that consumer base. Think of it as a play on brand loyalty, which may be
achieved in a variety of ways, including:
 Investing in R&D to develop an altogether new products.
 Acquiring the rights to produce and sell another firm’s products.
 Creating a new offering by branding a white-label product that’s
actually produced by a third party.
Diversification- In all the strategies of the Ansoff matrix model.
The most risk oriented strategy is diversification. This strategy says that
the organizations have to make all their all types of products in the
market due so that the business firms can earn huge profit out of it. But
the major issue is that it contains huge risk. It is because it is not
necessary that every consumer will go for purchasing all of the product
which can also decrease the cost of the product.
Bowman's strategy clock- This was developed by two popular economist Cliff
Bowman and David Faulkner. The main objective of this model is to provide the
awareness regarding position of the company in the market. The strategies of
Bowman area s follows-
 Low prices and low added value- In this strategy the companies
have to keep their prices low as much as possible. Due to this they
are able to give competition to their competitors ad can survive in
the market for longer period of time.
 Low price with large quantity- The next strategy is similar to
the first one but in this strategy the organization also have to
produce large number of product and sake of them in the market
due to this the consumer get used to with their product and able to
earn long term profit.
 Hybrid- This strategy contain two basic operation at first the
organization have to make product innovative and effective which
can create the differentiation and uniqueness as compare to
product of competitors. By providing them at low price the
consumer get more attract toward their product and can earn large
amount of money (Yacoub and Castillo, 2021).
 Focused Differentiation- In this Strategy the organizations have
to focus on the particular premium product and can sale them at
the higher cost due to this the company can earn the huge goodwill
as well.

 Differentiation- The organization have to make their product with
unique quality and features due to this their product can became
different then others.
 Risky High Margins- The organizations using that strategy from
the model which charge huge price for the commodity that are
recognize as ordinary in value by the consumer. This strategy is
very risky and also contain high chances of getting failure (Yukhno
and Osipov, 2021).
 Monopoly pricing- In that state of the strategy clock the
organizations can find themselves as the monopoly leader in the
market because they are considered as one who provide that kind
of product in the market.
 Loss of Market share- This is the last strategy in the bowman
clock strategies. This strategy is not the desirable one for the
organizations. It is because the company have found them selves in
the position that they are not able to provide the product which the
consumer wants.
2.Justification and recommendation of the most appropriate
growth platforms and strategies
From the above strategic model the best strategies for the business like
KPMG are product development strategy from the Ansoff matrix model and
Focus differentiation from the Bowman Strategy clock. By the help these two
strategy the organization make their base effective and efficient due to which
they are able to run their operations continuously. Strategy like product
development always provide a way to the organization for being innovative
continuously due to this they are able to maintain their very strong position in
the market. The another strategy which can adopt by the KPMG is that focus
differentiation. Due to this they are able to take themselves at the monopoly
position. Because the have choose the different market segment and also have a
effective and efficient products.
3. Evaluate ways and means by which the chosen strategies can be
monitored in order to ensure success
The internal environment can be defined as the set of factors which can
help the business in understanding the surroundings and the culture of the
organization which can attract the practices in company (Zavidna and et.al.,
2019). The Mckinsey 7s model is an effective structural framework through
which the internal sources of the business power can be understand properly.
This would be permit the business organization to measure capability and
deficiency by positioning essential factors with a vision in relation to attain in
demand purpose and objectives in a amended manner. This would also ease in
making proper application and execution of scheme, plan of action and
regulations which is upmost frame management in relation to KPMG.

5.0 Conclusions
The above report include various model and strategies through
which it can be observed that without applying these strategies and model
the organizations cannot be able to run their operation successfully. By the
help this report it can understand that how the big companies like KPMG
have implement their plan in their operation. It can be concluded that for
achieving the all strategical objectives. KPMG have identify their strategy
so that they can survive in this competitive market.

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