Challenges Faced by Deloitte: A Strategic Management Analysis

This report analyzes the challenges faced by Deloitte in their global business operations and recommends resource-based view as the most suitable strategic management tool. It also recommends differentiation as their business strategy and coaching and directing style of leadership for employee management.

Running head: STRATEGIC MANAGEMENT
Strategic management
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Executive summary
The aim of this report is to discuss about the challenges being faced by Deloitte in their global
business operations. In doing so, PESTLE analysis is being done and the major factors are
identified. It is also evaluated that resource based view will be the most ideal and suitable choice
of strategic management tool for Deloitte. This report recommended that Deloitte should follow
differentiation as their business strategy. The major advantages to be gained from the initiation
of the differentiation strategy are being discussed in this report. It is also recommended that they
should follow coaching and directing style of leadership for the employee management.

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Table of Contents
Introduction......................................................................................................................................3
Identification of the strategic management theory..........................................................................3
Justification for the choice...........................................................................................................5
PESTLE analysis.............................................................................................................................6
Political factors............................................................................................................................6
Economical factors......................................................................................................................7
Social factors...............................................................................................................................8
Technological factors...................................................................................................................8
Environmental factors..................................................................................................................9
Legal factors..............................................................................................................................10
Determination of the business strategy..........................................................................................10
Determination of the leadership styles..........................................................................................12
Existing leadership styles in Deloitte........................................................................................13
Implementation plan......................................................................................................................14
Recommendations..........................................................................................................................15
Conclusion.....................................................................................................................................15
Reference.......................................................................................................................................17

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Introduction
Strategic management process of the business entities will be effective only when it will
be well aligned with the expectations of the stakeholders and organizational performance. This is
due to the reason that the more will be the alignment between the different internal and external
elements, the more will be the effectiveness of the entire strategic management process. This
should also be noted that different business entities are having different external and internal
factors to consider and thus the strategic management approach should also be designed
accordingly (Hill, Jones and Schilling 2014). On the basis of the selected approach of the
strategic management, the other factors such as business strategy and leadership roles should be
designed. This will only ensure the long term viability of the management process
Deloitte is one of the leading consulting firms in the world and is having majority of the
Fortune 500 companies as their clients. However, with the emergence of other consulting firms
across the world, Deloitte is facing the challenge like never before. Hence, in this case, they are
having the need for effective strategic management process to deal off with the competitive
challenges. This report will discuss about the relationships between the stakeholder expectations,
organizational strategy and performance and will select the most effective one for Deloitte. In
addition, the pestle analysis will also be done in order to have the understanding of the impacts
of the external factors on the strategic management process along with the recommendations of
the most effective leadership style and business strategy for Deloitte. Implementation plan will
also be discussed to have the proper understanding about how to implement the process.
Identification of the strategic management theory

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The selected strategic management theory should have proper alignment with the
organizational performance and stakeholder expectations. This is due to the reason that the
selected theory should meet the expectations of the involved stakeholders as well as enhance the
performance of the organizations. According to Lin and Wu (2014), the business strategy and the
expectations of the stakeholders should be related because fulfillment of the expectations of the
stakeholders is the ultimate objective of initiating the business strategy. In addition, it is also
being stated by the authors that the initiated business strategy should also be beneficial in
enhancing the organizational performance. In this case, it is concluded that resource based view
method of the strategic management will be the most effective choice. This is due to the reason,
each of the internal and external factors is being considered in this theory. As per Wiengarten et
al. (2013), resource based view considers the internal stakeholders such as the employees as the
source of gaining competitive advantages and also as an intangible resource. According to the
resource based view, skills and expertise of the employees are considered as the resources based
on which the business entities can gain competitive advantages in the long term.
On the other hand, it is stated by Kull, Mena and Korschun (2016) that resource based
view also considers the different sources by which the entity can gain competitive advantages.
This refers to the fact that organizational performance can also be enhanced with the help of the
resource based view theory of strategic management. It is further identified that with the help of
the resource based view theory, the extent to which the organizational resources can put value for
the external stakeholders is considered as the competitive advantages. Thus, it can be concluded
that both the internal and external stakeholders along with their expectations are being
considered in this theory. Coleman, Cotei and Farhat (2013) have given the example of a new
firm where they stated that meeting of the expectations of the stakeholders by the strategy will

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lead to the enhancement of the organizational performance. This is due to the reason that in the
case of the new firms, they do not have favorable brand value or identity to attract the customers.
Hence, they depend on the extent to which the expectations of the stakeholders are getting
fulfilled. The more will be the fulfillment of the stakeholders from the strategic implementation,
the more will be the business opportunities for the new firm. This will ensure the long term
viability for the new firms.
Justification for the choice
There are number of strategic management theories available for the business
organizations but from the perspective of Deloitte, resource based view is selected. This is due to
the reason that resource based view will be the most effective choice. This is due to the reason
that resource based view is the most ideal strategic management theory in terms of consideration
of different factors. For example, the skills and expertise of the internal stakeholders are
considered as the key competing resource for the firms. Thus, the fulfillment of the expectations
of the internal stakeholders is important to enhance their skill sets to get higher sets of
competitiveness. In addition, the resources identified in this theory should be valuable for the
external stakeholders to gain the viability. Thus, it can be concluded that resource based view
considers the expectations of both the internal and external stakeholders. In terms of the
organizational performance, resource based view theory includes the organizational capability
for each of the identified resources (Szymaniec-Mlicka 2014). This is important because
organizations having capability for managing the human resources might not have the same
capability of managing the technologies. Hence, according to the resource based view theory of
strategic management, it is the performance of the organizations that meet the expectations of the
stakeholders. All these reasons lead to the fact that resource based view is the most effective

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choice of strategic management theory over any other for Deloitte. This will enable them to
consider each of the relevant factors associated with the initiation of the strategic management
process.
PESTLE analysis
Political factors
Political factors are having both positive and negative impacts on the strategic
management in an international context. One of the major impacts of the political factors is the
difference in the involved stakeholders. This is due to the reason that different countries are
having different political scenarios, which should be aligned with the strategic management
process. For example, Deloitte is having their operations across the world with different political
state of affairs. There are certain restrictions relevant in some countries. Thus, Deloitte is having
the challenge of maintaining the uniform approach of the strategic management across their
global operations. The approach and the involved stakeholders in the strategic management
process for Deloitte will be different in different countries. On the other hand, it should also be
noted that political factors can also affect the competitive advantages that can be gained from the
initiation of the strategic management (Türedi and Altıner 2016). This is due to the reason that
countries with the conservative government style and negative diplomatic relationship with other
leading economies will not have the access to all the sources required for Deloitte in gaining
competitive advantages. In this case also, the effectiveness of the same strategies will have
different sets of utilities in different countries. This should also be noted that political factors will
also change the effectiveness of the strategic management by changing the course of business.
This is due to the reason that with the emergence of rapid political risks in the particular country,

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Deloitte will face the challenge in running their business. In this case, the objective of the
strategic management of Deloitte in that country will get changed and will become more
defensive. Hence, due to the diversity in the political factors, Deloitte is having offensive
strategic marketing approach in some countries, while defensive approach in others.
Economical factors
One of the major economical impacts on the strategic management process of Deloitte is
access to the financial resources. This is due to the reason that initiation of the strategic
management process involves practices, which requires proper allocation of funding. Hence, the
more favorable will be the economical factors, the more will be the access to the funding sources
and vice versa. Deloitte will have extensive approach of the strategic management process in the
counties with having favorable economic conditions. Another major impact will be in terms of
the global economic slowdown. This is due to the reason that emergence of the global economic
crisis will reduce the flow of the funding process for Deloitte. In addition, the business of
Deloitte will also get affected by means of lowered market potentialities. Hence, the access to the
financial resources will get limited for Deloitte in investing in the strategic management process.
This should also be noted that changes in the intensity of the competition will also have
implications on the effectiveness of the strategic management (Castano, Mendez and Galindo
2015). This is due to the reason that with the increase in the intensity of the competition, the
approach of the strategic management process should also get changed and vice versa. Thus, as
Deloitte are having their operations in different countries, they are facing different levels of
economical factors. In accordance to these factors, they are following different designs of
strategic management.

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Social factors
In terms of the social factors, the major point is the expectations and requirements of the
external and internal stakeholders. This is due to the reason that competitive advantages from the
initiation of the strategic management process can be gained only by meeting the expectations of
the stakeholders. Thus, countries of operation of Deloitte are different in terms of cultural and
social elements and Deloitte is gaining competitive advantages by meeting different expectations
of the clients. For example, customers are expecting less technological advanced in one country
while in other areas; advancement in technology is the key to success. Thus, with the core
strategic management process in place, Deloitte is meeting different expectations of the
stakeholders in different countries of their operation (Kaynak, Fulner and Keys 2013). In
addition, the social trends and preference patterns in the global market scenario are changing in
rapid pace and it is important to change the approach of the strategic management process also in
coping up with these changes. Thus, the approach of the strategic management cannot be
remained same in order to stay competitive. The current social factors are ensuring that strategic
management process should be flexible to have long term competitiveness.
Technological factors
The current business state of affair where Deloitte is currently operating is highly
competitive and extensive use of technology is evident. However, the development and
improvement of the technologies determines the extent to which the strategic management
process will be effective. In the case of Deloitte, extensive use of the technologies will increase
their effectiveness in terms of the strategic management. However, it should be noted that
technological infrastructure available in the particular country will enable Deloitte in developing

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their technologies. For instance, the particular country where Deloitte is operating might not be
the developed economy and thus they will have limited access to the improved technologies in
the country. On the other hand, Deloitte will have the advantage of getting the access to the
improved technological infrastructure in the developed countries. Thus, the effectiveness of the
strategic management process of Deloitte will be different in different countries. The cost should
also be considered in the initiation of the strategic management process due to the reason that
technological development process involves cost. Cost effectiveness is one of the major features
of an ideal strategic management process. Different countries are having different levels of cost
involved for the technological development. This is another reason behind different approaches
of strategic management of Deloitte in different regions.
Environmental factors
Environmental factors are having lower impacts on the strategic management of Deloitte.
This is due to the reason that business process of Deloitte is not having direct impact on the
environment. However, in the current business state of affairs, environmental factors should be
considered in designing the strategic management process. This will ensure the sustainability in
the business process. In this case, the consideration of environmental sustainability will be
different based on internal and external factors. For example, the extent to which the business
sustainability standards are set by the authority in a particular country determines the
environmental factors in the strategic management process. On the other hand, the business
objectives also determine the extent to which the environmental factors are to be considered. In
the case of Deloitte, if their business objective is to gain the maximum sustainability, the
presence of the environmental factors will be more relevant and vice versa.

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Legal factors
Legal factors are having huge impacts on the design process of the strategic management
due to the reason that aspects of the regulations and legislations will determine the standards to
be followed in the strategic management process. For example, in a particular country, if the
legal aspects regarding the social responsible activities are stringent, then the strategic
management of Deloitte will be more concentrated towards the responsible activities. In addition,
the ethical principles and standards to be followed in the strategic management process will also
get determined by the legal factors. This is due to the reason that it is important for Deloitte to
consider the ethical factors in implementing the strategic management activities and they should
align with the stated standards. Thus, it can be concluded that legal factors will determine the
elements to be included in the strategic management process.
Determination of the business strategy
Based on the external business factors identified in the above section, it is recommended
that differentiation strategy will be the most effective. This is due to the reason that initiation of
the differentiation strategy will be beneficial for Deloitte in leveraging on the innovation for
development of new services. According to Banker, Mashruwala and Tripathy (2014),
differentiation strategy is more effective compared to the competing strategies such as cost
leadership. In the contemporary business scenario of the global consulting industry, majority of
the small brands are following cost leadership strategy to attract more business clients. However
as per the authors, with the initiation of the cost leadership strategy, volumes can get increased
without increase in the profit margin. In this case, Ray Gehani (2013) stated that initiation of the
differentiation strategy will help Deloitte will help in leveraging in their innovation. Innovative

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services can be developed and clients will be offered with more distinctive values. Distinctive
services can also fetch higher profit margin as clients will pay for premium for the unique value
propositions. It should also be noted that value propositions of the competing firms of Deloitte
are having lower points of differences. Hence, differentiation strategy will be the most effective
business strategy for Deloitte.
There are number of competing firms of Deloitte following market focus strategy, which
refers to the process of targeting a certain section of customers and meeting their expectations by
offering customized services. According to Chung, Lin and Hu (2013), market focus strategy is
effective for the niche services and for limited market exposure. However, limited market
exposure will not be applicable for Deloitte along with the fact that the services of Deloitte are
not niche. Thus, following market focus strategy by Deloitte will not be effective in gaining
market leadership status. Differentiation strategy will be the ideal strategy for leveraging on the
innovation and new technologies. This will further increase the sources for gaining competitive
advantages for Deloitte. According to the Ansoff matrix of business growth, differentiation
approach will be beneficial in following the market development, penetration and product
development strategies. This is due to the reason that differentiation strategy will lead to the
access to new innovations and technologies that will contribute in enhancement of the business
growth rate.
As per Boltoon et al. (2014), both the service development and market development will
only help Deloitte to increase their existing market and gain the market leadership status. In this
case, initiation of the differentiation strategy will help to develop new services for the new
markets. The consulting services of Deloitte should also be diverse in order to meet the diverse
requirements of the clients across the world. Differentiation strategy will enable Deloitte in

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leveraging on their innovative processes to develop new services. These new services will be
helpful in meeting the expectations of the new market segments. On the other hand, Abraham
(2013) stated that innovation through the differentiation strategy will also help Deloitte in further
penetrating in their existing markets. This is due to the reason that the existing services can be
made different and unique to meet the expectations of the customers across different levels.
Hence, it can be concluded that differentiation strategy will be the most ideal and suitable choice
of business strategy that will contribute in the success of Deloitte.
Determination of the leadership styles
There are different styles of leaderships suitable for the business operation of Deloitte
and each of them is suitable for managing different types of situations. However, prior to
analysis of the effective leadership styles for Deloitte, it is important to identify the key area of
improvement and the change needed. It is identified that Deloitte should increase their off
shoring facilities in the developing countries such as India and China to reduce the cost of their
business operation. This is due to the fact that countries such as India and China are having
adequate supply low cost and skilled human resources that are required for the consulting
business of Deloitte. This will reduce their cost of operation for them and profit margin can be
enhanced. According to Saeed et al. (2014), one of the most suitable leadership styles that are
required for Deloitte is directing. This is due to the reason that Deloitte is facing the challenge of
increasing competition in the global market and their leadership is having less time to cope up
with the change in the external business factors. Thus, with the help of the directing approach of
the situational style of leadership, the leadership roles will take less time in the decision making
process and can direct the employees in dealing with the competitive rivalry.

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On the other hand, it is also identified that coaching approach of the situational style of
leadership will also be effective for Deloitte. According to Berg and Karlsen (2016), coaching
style of leadership will involve the mentoring activities from the side of the leaders. This will
help in guiding the employees towards achieving the vision of the organization. In addition,
initiation of the coaching approach of leadership will also be beneficial in creating positive
relationships between the employees and the leadership. Thus, the probability of gaining
competitive advantages from the side of the employee management will get increased with it.
However, on the other hand, it is also stated by Cunningham, Salomone and Wielgus (2015) that
initiation of the coaching style of situational leadership might reduce or dilute the authoritative
power of the leaders. This is due to the reason that coaching will reduce the power distance in the
workplace. Hence, the leaders will face challenge in directing the employees during the
challenging situations and the employees might not be self sufficient in dealing with the
challenges.
Existing leadership styles in Deloitte
It is identified that supporting style of leadership style is being followed currently in
Deloitte. This is due to the reason that as per the current management style of them, leaders are
having positive and favorable relationship with their employees and are equally involved in the
job profiles. This denotes that leaders in current workplace scenario of Deloitte are effective
enough in supporting their employees. However, according to Saleem (2015), initiation of the
supporting leadership style is hampering the maximum productivity from the side of the
employees. This is due to the reason that in the case of supporting style of leadership, employees
are not facing the challenges of achieving by them rather they are continuously being supported
by their leaders. Delmatoff and Lazarus (2014) further stated that initiation of the supporting

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style of leadership is increasing the time involved in the decision making process. This will have
negative implications for Deloitte in the long term. Thus, it can be concluded that instead of the
supporting style of leadership, coaching will be more effective where the power distance can
maintained.
Implementation plan
Effective implementation of the recommended strategy is important because business
strategy will not be fruitful enough it is not implemented in the most desired manner. In the case
of Deloitte, a few key performance indicators will be identified and evaluated. These
performance indicators will be used as yardstick to gauge the effectiveness of the business
strategy and leadership strategy of Deloitte. The first performance indicator will be the
satisfaction rate of the employees. This will be based on the qualitative data that will be collected
in terms of the feedback of the employees. Thus, if the employees are found to be satisfied
enough in the new workplace, then the recommended strategy will be considered as successful
and vice versa. The next indicator will be the performance rate of the employees, which will be
based on the numerical data. It will indicate whether the average performance of the employees
got increased with the implementation of the new practices. Positive outcome will denote the
effectiveness of the strategies and vice versa. The next performance indicator will be average
new market acquisition rate of Deloitte. This will also be based on the numerical data and will
denote the rate of new market acquisitions of the company. The more will be the rate of new
market acquisition, the more will be the successful nature of the recommended business strategy.
On the other hand, this if the new market acquisition rate is going down, then the recommended
strategy should be changed. The last performance indicator that will be used is the changes in the
business revenue and profit margin. This will denote the entire business effectiveness to be

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gained from the implementation of the recommended strategy. With the increase in the profit
margin and business revenue, the recommended strategy will prove successful and vice versa.
Recommendations
 It is recommended that market adaptability approach should be initiated by Deloitte in
terms of their new business strategy. This is due to the reason that different business
clients from different market regions will have diverse sets of expectations, which can
only be fulfilled by the market adaptability approach. This will ensure that services of
Deloitte are meeting the local trends and requirements of the customers from across the
world.
 It is also recommended that irrespective of the leadership styles to be followed, consensus
should be maintained in the decision making process. This is due to the reason that
without the consensus in the decision making process, employees cannot get involved in
the organizational processes with having any types of leadership styles. Hence, employee
involvement should be majorly focused.
 Lastly, Deloitte is recommended to have flexible approach towards the business strategy
due to the fact that flexibility is important to cope up with the changing external business
environment. The more flexible will be the business strategy, the more will be its
effectiveness in adopting with the change.
Conclusion
Thus, it can be concluded that Deloitte is currently having effective choice of business
strategy in place but due to the turbulent external business environments, they are facing multiple
challenges. PESTLE analysis in this report identified that major external challenges for Deloitte

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in their global business. In addition, it is also identified that resource based view will be the most
effective strategic management theory for Deloitte, which will consider all the relevant factors.
This report recommended that Deloitte should initiate differentiation approach or strategy as
their business strategy. There are number of advantages such as increase in the profit margin will
be gained by Deloitte from the initiation of the differentiation strategy. On the other hand, it is
also recommended that Deloitte should follow coaching and directing style of leadership to have
the maximum utility in terms of their internal management. The implementation plan is also
discussed in this report.

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