Leong- Essay WHAT Happened TO Monitor Group PDF

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Evita Faith Leong BSA-IV

“WHAT WENT WRONG TO MONITOR GROUP AND WHAT HAPPENED TO THE COMPETITIVE SUSTAINABLE ADVANTAGE CONCEPT WHICH THE MONITOR GROUP IS EXPECTED TO BE AN EXPERT”

Monitor group co-founded by Michael Eugene Porter , a renowned master in business strategy and the founder of Porters Five forces went bankrupt on November 2012 and was bought by their biggest rival Deloitte Consulting Group. The reason for their bankruptcy was that they could no longer pay their bills and their liabilities exceed their revenues and they are forced to file bankruptcy protection. Now what made a very successful company to be bankrupt? It all happened when financial crisis came in November 2008. While Monitoring group was focused on expanding and creating new infrastructures, it turns out that they could no longer support it by their revenues due to recession, and also competitors was focused on expanding into more operational areas like IT and operational improvement while Monitoring group focused on expanding their horizons without improving their services and adapting to technological advances which really hit a wrong timing in their business strategy. They believe that through sustainable competitive advantage and getting ahead of the competitor would make them successful in their business ventures but it does not work on their favor. They were lacking something important that they fail to consider and that is, Macro external forces facing an organization. ( a business tool called PESTEL) the letters stand for Political, Economic, Social, Technological, Environmental and Legal, depending on the organization it can be reduced to PEST or some areas can be added (e.g. Ethical). They were too preoccupied with competition that they don’t weigh other factors that can affect their business like RECESSION, they were not prepared when an economic downfall happens which cannot be controlled,

and they have

underlying bills which are not yet paid, and recession happened so what’s the result? Bankruptcy. Due to recession they started losing money and their revenues

could no longer cover their cost. Other factors to consider in PESTEL was technology, it was a threat to the Monitoring group rather than an opportunity because they were not able to catch up with their technological advances. To add up, they were also involved in a controversy of entering into a million dollar contract to Libya's ex-dictator Qaddafi for consulting and publications work and monitor group was used to improve the Libya's ex-dictator international image. It made a bad image to the consulting group leading to a loss of customers. Monitoring group was also focused on gaining sustainable competitive advantage and defeating their rivals but they do not add value to their customers. Especially in the modern world were new entrants can easily enter due to the rise of the internet era. It seems like getting ahead with the competition is not enough to be successful in business, since customers are in charge in the market place, what matters the most is the product and the service that you will give to a customer. Lastly, Monitors consulting group was not studying the market niche and the rise and fall of the market. It also has something to do with their working capital management. If monitors consulting group studied the economic trend of boom and bust cycles, they can make a better strategy and timing on when they will expand and invest and be aggressive, and when they will be conservative in their working capital. They were also not efficient in their payable management and how they can forecast their revenues and cost and they did not planned well their capital budgeting projects which yields long term cost. Will it outweigh revenues or will it affect the business stability in the long run? In short they did not focus on their financial health. Monitor Consulting group also did not focus on strategic cost management for strategic cost management plays a critical role in moments of crisis. An example of this is that if Monitor’s control group has good strategic cost management then they will have enough funds and resources to overcome recession or the downfall of the economy. And they will not come out as fragile because they have good control in their waste, costs and failures. They failed to take on account their strategic cost management and they expanded their horizon but ending up in debts, loss of customers and bankruptcy. To sum it up, there is a lot lacking in Monitors consulting group this includes using other business strategy to make their business sustainable , because competitive advantage is not sustainable alone, and also taking consideration, the

cost, the customers, the external forces, their financial health, their financial management which includes their payable management, their working capital management, their capital budgeting management, strategic cost management and maintaining their good reputation to make the company running for many years....