1. Module 2 Assignment 2
Designing Value-Based Service
Katrina Caver
Product Risk Factors and Risk Drivers
AGENDA
Risk factors for a tax and audit firm compared to risk factors for
a management consultancy
Distinctions between management consultancy and tax and audit
business
Three major risks in management consultancy
Analyzing whether to buy or to grow organically
Recommendation
Product Risk Factors for a Tax and Audit Firm
DEMAND FACTORS
Competition from other tax and audit firms
Product uniqueness
Marketing and brand name recognition
The regulatory framework
Product platform
SUPPLY FACTORS
Knowledge and skill of human resource
Motivation of the employees to deliver
management structure

2. The finance base
(Ramsey, 2014)
This is a monopolistic market conquered by many large firms
that compete. Is the product different? The reputation of the
firm is very important, which makes gaining customers simple
and easy. The character includes the ethic affects, which can
very well empower the business. Businesses should always be
structured according to the law. Highly, skilled employees
brings more to the company, which brings new ideas to the
company. It is always recommendable for employers to motivate
their workers, which will lead them to go the extra mile to
provide quality services and products. Management structure is
an advantageous step that is why it is the guidance of the
workplace. Financial base is an essential component, which
covers inadequate funding, thus determining the quality and
quantity of workers.
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Additional Risk Factors For A Consultancy Business
DEMAND FACTORS
Industry maturity
Cost structure
Industry cyclicality
The marketing effort
SUPPLY FACTORS
Financing
Regulatory environment
Ability to attract top talent in the field
(Independent consulting boot-camp, 2014)
An industry environment characterized by well, large

3. established business will provide a good business opportunity
for this kind of consultancy. The pricing of products should be
quality, at the same time affordable. If businesses stay loyal to
their customers, customers will remain loyal toward them.
Financial resources can determines the range of services on
offer. Businesses should seek great investors who are willing to
provide them with great investment opportunities. There are few
industry specific requirements, but the businesses must fulfill
certain obligations.
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Distinctions Between Tax and Audit Business and Management
Consultancy
Three Major Risk Facing the Business
Management consulting is diverse from providing tax and audit
services. The management of a business has limited experience
in this field, which will require management leadership skills
and consulting skills. Many times, firms fail to seek
management that can cover multiple skills. A new business in
this field will require the firm to have a wide network where
they can obtain a possible market for their service. Customer
satisfaction is related to meeting customers’ expectations and
ensuring that they experience great customer services.

4. 6
- Lack of expertise
- Marketing
- Choosing the right employee
Analyzing Whether to Buy or To Grow Organically
Advantage of Organic growth
Advantage of Acquisition
By means of organic growth, a consultancy can start small and
expand as demand increases just like many other businesses. It
also can introduce new and unique products to establish the
marketing cost. Through buying, the business will acquire the
customers of the business and reduce marketing cost. Buying
also allow the business to operate on an established platform.
Employees will remain in the new business retaining experience
and expertise within the business, which creates cash inflow in
a short period of time.
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Analyzing Whether to Buy or To Grow Organically(Cont’d)

5. Organic Growth
Buying
CONS
High marketing cost
Has no reputation and clients are unsure
Has to spend a lot of time recruiting in a trial and error method
Business has to wait for sometime before it can break even
CONS
High cost of purchasing the business
Any adverse image issues are passed on to the business
(Queensland government, 2014)
Organic growth can possibly cost the business a lot of money.
Most clients like conducting businesses with well-known
brands, which can cause an interruption with the recruiting
process. Businesses owners like to remain loyal to well-known
brands and not take any risks of using new brands due to
loosing profits. most of the time, firms make investments to buy
new products and they don’t always bring revenue. This also
leads to a bad ROI. A business has to wait before it can
breakeven, where it doesn’t gain or lose any profits. sometimes,
it takes a firm a longer time(in years) to gain capital for
investment.
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Recommendation
Using any business project, it always necessary to follow the
appropriate steps with effective planning. This includes
identifying goals and objectives that managers are expecting to

6. meet as well as following the research process. Research can
assist with seeking new data, which can help managers gain new
ideas that can help assist with meeting goals and objectives
efficiently. Lastly, managers must ensure that the pros outweigh
the cons, which can lead to an acceptable plan.
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Acquire an already established business
Identify market goals and objectives
Identify product drivers and risks
Establish an effective plan
Ensure that pros outweighs the cons and accept the plan
References
Independent consulting boot-camp. (2014). Starting a
Consulting . Business How to Make it Happen.
Retrieved from http://www.netplaces.com/consulting-
business/managing-business-risk/degrees-of-risk.htm on 2i July
2014

7. Queensland Government. (2014). Advantages and disadvantages
of buying a business. Retrieved from
http://www.business.qld.gov.au/business/starting/business-
startup-options/buying-a-business/buying-business-advantages-
disadvantages on 31 July 2014.
Ramsey, D. (2014). Start your own consulting business: degree
of risk. Retrieved from http://www.netplaces.com/consulting-
business/managing-business-risk/degrees-of-risk.htm on 31 July
2014
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