The group was recognized as one of the leading HR Consultants in Asia in March, 2014. The group was also recognized as one of the leading players in the mobility IT strategy consulting business and in the implementation services for SAP solutions business by leading consultants. The group’s strong market position and recognition provides its a competitive advantage to drive growth from the ongoing globalization trend. Multifunctional organization with presence across several verticals and geographies @ Marketl_ine Page 4 Deloitte has wide reach in terms of service portfolio, end markets and geographies.
The group’s portfolio of offerings includes audit and enterprise risk services, financial advisory, consulting and tax services. Deloitte serves diversified markets across the world. Over the last few years, the group has strategically expanded its presence in number of end markets to increase revenue stability and expand its opportunities for growth. Deloitte provides services to a wide range of customers in a variety of industries and customer segments, including financial services (accounted for 28.
1% of the group’s overall revenues in FY201 3); consumer business (19. 8%); manufacturing (13. ); public sector (10. 8%), technology; media and telecommunications (10. 8%), energy and resources (9. 3%) and life sciences and health care (8%). In addition, the group has a diversified geographic presence. Deloitte has strategically expanded its presence across the globe and currently operates in over 1 50 countries through 47 member firms and enjoys a strong presence in high growth developing and emerging markets. Deloitte’s portfolio of offerings coupled with end market diversification enables it to cater to multinational clients with an enhanced ability to cross sell, thus enhancing the its top line growth.
The group is involved in several lawsuits and administrative proceedings, which could impact its brand image. For instance, in April 2014, the group was ordered to pay a fine of $85. 6 million by a court in Canada in the Livent scandal due to its failure to detect fraud at Livent in the 1 9905. Similarly in February 201 3, a group of us-based investment funds led by Special Situations Fund filed a lawsuit against Deloitte for allegedly misleading their investment in ChinaCast, a provider of post-secondary education and e- learning in China.
The investment funds that purchased securities offered by ChinaCast during 2007-10, alleged that Deloitte’s affiliates failed to uncover in audits that significant amounts of assets listed as cash-term deposits were pledged to third parties, with no disclosure made to investors. The plaintiffs sought millions of dollars as damage from Deloitte for certifying false financial statements of ChinaCast. Earlier in 201 2, Deloitte was sued for its alleged role in Hewlett-Packard’s acquisition Of Autonomy. The lawsuit accused the group for consistently misleading the public with improper statements.
It also accused Deloitte for failing to spot that Autonomy was verpriced and misrepresented the deal’s value. Any negative outcome of the pending lawsuits and administrative actions by regulatory authorities could dent the group’s brand image and result in litigation expenses, which could impact its operating results. Page 5 Increased adoption of international financial reporting standards (IFRS) provides Deloitte with significant opportunities. It is estimated that more than two thirds of the G20 members require the use of the IFRS as a reporting standard.
Further, more countries are expected to continue to adopt accounting standards to gain public trust and build confidence among nvestors globally. As the globalization continues at a strong pace, adoption of IFRS will continue to grow. Deloitte through its audit practice offers auditing services and global IFRS services, which include IFRS implementation services, reporting advisory services and cross-border offerings services. The group’s presence in this domain will benefit from the increased IFRS adoption. The economic growth in emerging markets presents a significant opportunity for the group.
As per IMF’s World Economic Outlook update published in January 2014, growth in Emerging and Developing Economies is forecast to reach 5. %in 2014 and 5. 4% in 2015. The emerging markets are in complete contrast to the advanced economies and provide strong growth prospects. The advanced economies are expected to grow at a rate of 2. 2% in 2014 and at 2. 3% in 2015. Within this region, India and China are the major contributors of this growth. The group has established presence across all these regions and specifically in the two high growth markets of India and China.
Deloitte is well positioned to take advantage of the rapidly growing emerging markets. The group has a significant presence in the China, India and other emerging markets around the world. The group’s increased focus and the rapidly growing emerging markets will provide an opportunity to establish itself as leading player in these markets. Further, the group can also leverage on its established customer base in the developed markets to participate in the growth prospects offered in these countries. Deloitte is well poised to exploit this aspect due to its geographical footprint and scale.
Robust outlook for global management and marketing consultancy The outlook for management and marketing consultancy services is robust globally. According to MarketLine (a unit of Informa), the global management nd marketing consultancy market grew by 6. 6% in 2013 to reach a value of $325. 2 billion. Further, the performance of the market is forecast to remain healthy, with an anticipated CAGR of 7. 1 % for the four-year period 2013-17, which is expected to drive the market to a value of $427. 8 billion by the end of 2017.
Deloitte’s consulting business offers human capital services including actuarial and advanced analytics, human resources transformation, strategic change and organization transformation and talent performance and rewards. It also offers technology consulting services, including application anagement services, Oracle services, Salesforce. com, SAP and technology integration services. The positive outlook for the global management and marketing consultancy market coupled with Deloitte’s strong presence in this market will enhance its top line growth in the coming years.
Page 6 Deloitte operates in a highly competitive industry. The group faces competition from large players such as Ernst & Young International, McKinsey & Company, PricewaterhouseCoopers, KPMG, Grant Thornton and Boston Consulting Group. It also competes with management consulting firms in the trategy implementation and system integration services. The management consulting environment has seen a propagation of competitors since the 1990s, many formed through divestments with major financial service firms, particularly accountancy firms.
This growth in the number of competitors has put pressure on the operating environment Other than the firms that originated in the strategic consulting environment such as Bain & Group, ADO International, Mercer International, Accenture and Capgemini, firms proficient in IT solutions such as IBM and Hewlett Packard also entered the consulting ndustry, bringing a new breed of innovations and solution design, allowing other smaller IT firms to do the same. This has put pressure on the margins of mainstream consultancy firms such as Deloitte. Intense competition may erode the group’s market share and reduce its profitability.
Weak economic recovery in key European countries According to IM” Europe in general is still facing a gradual and uneven economic recovery. In the January 2014 update of its World Economic Outlook Report, the IMFforecasted that the GDP growth rates in the Euro area will be 1% in 2014. Outside the Euro zone, the IMF expects the LIK to grow by 2. % in 2014 and decelerate to 2. 2% in 2015. The GDP growth in France was 0. 2% in 201 3 and France’s economy is expected to recover sluggishly at a rate of 0. 9% in 2014. Germany grew at 0. 5% in 2013 and is estimated to grow at 1. 6% in 2014.
Similar growth rates are projected in economies such as Denmark, the Netherlands, Poland, Sweden, Switzerland, Turkey, Greece, Ireland and Portugal. These economies are engulfed in deep sovereign debt crises. High debt, both public and private, and financial fragmentation are further expected to hold back domestic demand. Owing to all the above factors, the ecovery in Euro zone is likely to remain weak which could decrease the demand for audit, tax and financial advisory services. Weak economic growth could lead to a rapidly rising rate of bankruptcies amongst companies of all sizes and higher unemployment in Euro zone.
This is likely to have an adverse impact on the overall growth prospects at Deloitte, as it derived around 34. 3% of its revenues from EMEA in FY2013. Sluggish recovery in key European countries will have an adverse impact on Deloitte’s growth prospects. After the Andersen’s infringement, accounting firms are being subject to mplified scrutiny, and are potentially at risk from any allegations, which may have a more immediate impact upon business than was the case in a pre- Enron environment. Enron and WorldCom collapsed in the two biggest bankruptcies in the LJS history, and the respective audit firms played important role in the fraud.
Enron’s decline wiped out $68 billion of market value and at least $1 billion in retirement funds. WorldCom’s Sl 1 billion accounting fraud prompted investors in 110 countries to file 450,000 claims. The government increased scrutiny of the reports and audits after the ollapse. This prompted the introduction of Sarbanes Oxley Act in order to govern audit, provide management reports on internal page 7 controls over financial reporting and have outside auditors issue formal opinions on those reports.
Further, Internal Revenue Service (IRS) may take steps that will limit service offerings. The IRS has singled out various companies for their tax sheltering strategies (by way of which they allegedly misreported clients’ financials to minimize their tax obligations). Moreover, in the recent times, Anglo Irish Bank, Satyam Computers, and Lehman Brothers ccounting scandals also negatively impacted investor confidence on Big 4 auditing firms, including Deloitte.
Cite this Deloitte SWOT
Deloitte SWOT. (2017, Jul 19). Retrieved from https://graduateway.com/deloitte-swot-43207/