ASSIGNMENT ON

Consulting case solutions:

1) The Confidential File
2) Premier Consultancy Organization

IN THE PARTIAL FULFILLMENT OF THE COURSE

REQUIREMENTS OF

Consulting Skills
TERM - 6
Submitted to: Prof. C. P. Srimali

AKASH KHATRI 14PGHR05

PARNEET SINGH 14PGHR45

The Confidential File

We will start by writing a letter to the client Ms. Tran:
To
Mr. Phan Boon Tran:
You have asked us to look into the affairs of your business quietly and to give you
recommendations about its future development. You will find a great deal of detail in the
pages of our Report which follows, but this is a summary as we see the position:

Your factory produces goods for which there is an increasing need in this country
and we think you ought to keep it going and consider expanding your output
sometime within the next year. If you don't, the market will get bigger, you will be
unable to supply all requirements and competitors will start.
Your retail stores are located in the right places and you should consider starting
another one at Rod case, where there is a big workers' estate being started.
The methods in your stores are out of date. They should be painted light colours
inside and out, with plenty of colour. Shelving must be cleaned and painted and kept
clean-looking. Your service counters should be covered with some light coloured
plastic or something of that kind. If you brighten up everything it will help attract
more customers and sell more goods. In the same way you should brighten your
staff - give them bright coloured uniforms and make sure they keep them clean and
tidy.
Your accounts show that profits are declining. You should examine all expenses and
see where you can cut them down. This is the best way to increase your profit.
We think your managers are all OK, but you might try giving them a bonus on results
so that they will try to work harder and make more sales.

In the main Report all these items are discussed in full.

If you take our advice, we think your problems will soon disappear.
Yours faithfully,
Akash Khatri, Parneet Singh
Consultants

General
The best impression will be given if the papers are different sizes and types and if the papers
are handwritten where this is indicated. Other notes appear on each paper (not all) to help
give reality.

Significance of the Papers

The papers consist of three groups:

Those that cover purely personal matters,

The accounts of the business,
Other papers concerning the business which help to show its state of health.

The last group and the accounts are the most important, for the state of the business. These
are:
The Accounts (Sheets 2 and 5)
Any trainee ought to be able to pick that profit has been falling. The important point,
however, is that gross profit has been falling over the period of the accounts while at the
same time sales have been going up. Probably this would be picked up only by accountants
or students of accountancy. Therefore, either the exercise should be confined to people
with this interest, or it should not be expected of the non-accountants that they see this
point. Suppose your group merely picks up the fall in net profit, the question you ask is :
why is it falling? The obvious answer is that expenses are going up. Are they? Examination of
the expenses after gross profit is determined (that is in the second part of each statement of
account) will show that these costs are tending down, not up. Why then are profits falling?
This leads to an examination of the gross profit. It is falling. Why? Sales are down? No, they
are up. What about Stock carry over each year? Not much change across the period.
Purchases? Yes, they are going up. So what do we conclude? Most likely that either the
costs of individual items purchased have been creeping up - that is the firm has been paying
rising prices for the same goods ; or that sale prices have not been high enough. They may
include too many items sacrificed at sales, allowed to become dirty or damaged so that they
have to be sold at a discount. Somehow, volume has been sacrificed to profit. Turnover is
up, gross profit on the turnover is down. Something is clearly wrong either with the buying
policy or with the pricing policy or both. With an accounting group, a lively discussion can be
provoked on this. With a non-accounting group, the accounts analysis gives the chance to
talk about the folly of going for turnover only - a company can 'go broke1 even while its sales
are buoyant. The inked notes on accounts show Tran has been understating profit by a stock
undervaluation or reserve. This is common enough and of no importance in revealing
conditions in the business.

The Other Business Papers (Sheets 3, 4, 6, 8, 9, 11)

Sheet 3 -- a list of government department contacts. This is a perfectly legitimate list. Every
business man needs this type of contact. Some trainees might want to suggest some
corruption; not necessarily.
Sheet 4 -- tells us little of importance. Suggest that costs are not rising at the factory, but
that there may be a bit of bother ahead. But how do we know Tran didn't do something
about the problem? Did he raise wages? What do the accounts reveal? On the other hand,
the sheet suggests something about Boom, who signed it. He is the Managing Director. He
ought at least to be making a recommendation, not asking for advice. This could lead to a
discussion of the need for strong managers willing to tackle problems or at least
recommend action which will solve them.
Sheet 6. -- A red herring, of no importance. It does confirm that Tran had some difficulties
with the taxation people, but it is settled and in any case tells us nothing about the present
state of the firm.
Sheet 8. -- Is this a way out for the widow? Should she get in touch with this company and
re-open discussions. We don't know what happened from this letter. Would the company
be willing to offer the same price now? (See continued fall in profit to a loss position after
the letter was written.) Incidentally, are the ideas about independent valuation of stock and
the suggested contract to keep out of similar business in the locality good ideas?
Sheet 9 -- Here is another possibility - expand the manufacturing side. If the gross profit fall
is due to higher cost per unit buying, it might be good business to manufacture your own in
greater quantity and so control buying price. But there is another trap here. Gross profits
include profits from the sale of goods manufactured. It might be that they have been sold at
too low a price and so have lifted turnover, but cut the profit. So the factory and the shops
need separate investigation. Anyway, this is a proposition which is worth looking at as a
solution to the firm's difficulties. By the way, 'Al1 can be identified as the contact man at the
Finance Dept. of the government so his advice should be reliable on that side.
Sheet 11. The first item of the summary Report supports the idea of expansion, and the
second item writes off one possible cause of loss - bad locations.
Item 3 seems sound and sensible enough.
Item 4 is up the creek and should undermine confidence in this consulting firm. Expenses
are down, not up - the cause of the losses lies somewhere else, as we have seen above.
Then the consultants have just recommended increased costs painting and so on. Finally,
is cost cutting the 'best way to increase your profits? This reveals a negative attitude. The
best way to profit is more turnover at profitable levels. If this consultant's advice is followed

and expenses are cut, this does not go to the root of the present problem because gross
profit is down, and no cost cutting later will do much about that.
Item 5 suggests a bonus on results. What results? This is a question for discussion. Clearly, in
the present result-of business position, a bonus on increased sales might merely add to the
loss - higher turnover in this company has been accompanied by falling profit. So we need a
bonus on profit results. This is a good type of bonus for management at all times. A
salesman may get a bonus on sales, since he is instructed on what his price is to be. A
manager, though, must manage, not just sell.
On this sheet, the last question for discussion is: if the consultant's advice were followed,
would the firm's difficulties be solved ?
The Remaining Papers (Sheets 1, 7 and 10)
Sheet 1 of no importance, it records an agreement which has no present effect on the
situation. Boom may of course want his annual rise considered. Should he get it?
Sheet 7 a red herring Best destroyed
Sheet 10 This is something of a bombshell, but it ought not to divert attention from the
main business in hand. The trainee has been asked to report on the apparent state of the
business and what ought to be done about it. He should go ahead with this and carry out his
instruction. It isn't his affair whether the widow owns the business or not.
Of course, he cannot ignore it. Top treatment would be to report on it separately to his own
boss, raising the question of whether he, the boss, should tell the widow about the 'will1 and
advise her to get legal advice on whether it is valid and where she stands.

Final Observations
The best performance will be by those who quickly eliminate the unimportant items,
dispose of the will by calling it to the attention of the boss, and then get down to analysing
the firm's situation. Three possibilities are open: expand, try to sell or set the present
business on its feet. In any case, it will be necessary to get out separate accounts for the
manufacturing side of the business and see what contribution it is making to the total
position. In view of the possible doubt about the widow's legal position, the boss might be
advised to suggest she tell Boom she cannot give him time as requested for discussion and
make an appointment for a couple of days later. This will give a breathing space for a more
leisurely examination of and report on the accounts, etc. But, the trainee must not 'trade'
on this. He can recommend it, but he must still come up with his report and analysis, even if
an interim one.

Premier Consultancy Organization

Causes of problems highlighted:

Structure and processes: the biggest problem at PCO is the system, reporting
structures and process are not in place which makes most of the efforts go vain and
causes a lot of confusions.
Reporting system: there is no formal reporting system which makes having ear to the
ground difficult, i.e. it will keep management away from ground reality, hinder
decision making, make conveying decisions difficult
Performance appraisal system: there is no performance appraisal system, hence no
way to identify the real talent and no way to make a proper person job fit to make
the best out of available resources
Record Management ; maintain record is extremely essential for better decision
making. Moreover it should not be very time consuming because then that uses
most of our resources.
Training: the staff is not properly trained and hence overall efficiency falls down as
we can not make the best of available resources and they end up wasting most of
their time
Inductions and job descriptions: the firm is talking about expanding its Human
Resource but they do not provide proper Job Descriptions. This is not only harmful
for the candidate joining but also the firm as they wont be able to identify the right
candidate for the right jo because of lack of clarity hence making the efforts and
resources go vain

Evaluation of terms of reference:

1. Restructuring of functions of different departments and regional offices for making it
more effective: how to measure effectiveness. It can be a long term result and does
one measure and what are the results might leave the client unsatisfied
2. Training of staff and executives: training on what aspects is not defined here. That is
if the training is for MIS, for their jobs, for their record management skills et.
3. Design of appropriate computer installation: who decides what would be
appropriate. It it is not done in harmony with the client it might end up creating
problems
4. The approach to work mentions gradually a lot of times which might create
dissatisfaction later
5. The time period of first phase of assignment is not clearly defined. It said about 6
months. It should be clearly decided and mentioned
6. Phase 2 of could be taken up sometime next year is a very misleading statement and
can create confusions next year

7. The fee for preparation of manuals training etc. is 50,000. But it is not mentioned
clearly if it is in addition to the 1.25 lacs mentioned earlier.
8. Phase 1 starts in beginning of July: the exact date should be mentioned
9. Dates of payment should be clearly mentioned rather than just the months

Sample terms of reference:

SIDC has taken up the mission of developing and expanding the roles, functions and
activities of the corporation and to boost industrial and infrastructural development
activities in backward states. The corporation has taken up a number of schemes and
programs of government but has not been able to make significant impact. Industrial
sickness amongst units has been 93 percent in order to turn around corporations activities
we offer you consultancy help the organization as per our discussion in the meeting.
It was observed that your organization could avail the following services:
Phase 1:
i.
ii.
iii.
iv.
v.
vi.

Reorganization of office systems and processes; including reporting systems

Improvement of record management system; computerization and training for the
same
Design of MIS for departmental units of corporation
Design of MIS for purposeful direction and control of promotional activities of the
organization
Design of MIS for the marketing activities in selected areas
Preparation of manual in respect of
a. Sanction of loan/ financial assistance
b. Personnel and office administration
c. Stores and purchase activities
d. Promotional activities

Phase 2:
i.
ii.

Implementation of above mentioned systems after approval by oth parties

Training of staff and executives for the same

If you agree with the above, PCO would like to undertake the assignment of analysing,
developing improved patterns, installing new systems and training staff and executives for
improving overall performance.
It will be a team of 2 consultants. Following information about them is attached:

Curriculum Vitae (CV)

Letter of Motivation outlining how your experience, skills, qualifications and
professional networks fit with the required deliverables (one page maximum)

Copies of the relevant articles/reports published through indication of www links or

submission of PDF version of these via e-mail attachments

Report submission will take place every fortnight.

As agreed during our discussion it would be desirable to associate at-least 2 of your
executives with these consultants so they would get trained in process to maintain and
sustain the systems after they have been introduced.
Consultancy Fee:
Total amount: 1.25 lacs
Proposed level of remuneration is paid in three instalments as noted below:
1st Payment Rs 50,000/- : Upon delivery of the
consultancy work plan, inclusive of an overview
of existing literature
2nd Payment Rs 50,000/- :Upon complete first
draft of MIS systems
Final Payment Rs 25,000/- : Upon completion of
phase 1

1st Payment Rs 50,000/- : Upon delivery of the

consultancy work plan, inclusive of an overview
of existing literature
2nd Payment Rs 50,000/- :Upon complete first
draft of MIS systems
Final Payment Rs 25,000/- : Upon completion of
phase 1

Travel involved: Travel is included in the above payment. It is expected that your
organization will provide free lodge, boarding, local transport for our consultants and
assistance of two of your executives on full time basis.
Fee for phase 2: Rs 50,000/- in addition to above payment payable on completion of phase
2.
Work plan:
Overall expected outputs:
Consultancy workplan and outline of report
First draft of assessment
Phase 1 completion
Phase 2 commencement

July 1983
Beginning of August 1983
January 1983
Mid-march, 1983

Professional ethics of consultants and issues relating to code of conduct:

Simply put, ethics involves learning what is right or wrong, and then doing the right thing
however, in organizational consulting, the right thing is not always easy to identify. Ethics
includes the fundamental ground rules by which we live our lives. Values that guide how we
ought to behave are considered moral values, for example, values such as respect, honesty,
fairness and responsibility. Statements around how these values are applied are sometimes

called moral or ethical principles. Ethical consultants must have a set of principles, which
defines ethical behaviour and guides the consultants actions toward those behaviours. This
is true whether you are an external consultant or an internal leader wanting to lead
employees fairly and equally. Many times, those principles are documented as a code of
ethics. Also, consultants must be able to recognize ethical dilemmas and have at least one
tool to use to address the dilemma. Information in this subsection will help you to develop
your principles for ethical consulting, recognize ethical dilemmas and resolve those
dilemmas, as well.
Consultants might refine description of their preferred values and behaviours by developing
a code of ethics or conduct of conduct. Here are some important ethical guidelines for
consulting during organizational change.
1.
2.
3.
4.

Do no harm to your client.

Keep client information private unless the client or law requests otherwise.
Do not create dependence by you on your client, nor by your client on you.
Anticipate and avoid conflicts of interest (for example, representing two opposing
interests at once).
5. Do not act in the official capacity as an advocate for your client.
6. Do not go beyond your own expertise.
7. Do not skip the discovery phase of consulting.
Examples of a Consultants Unethical Behaviours:
Because the consultant wants to have a good relationship with the client, the consultant
quickly adopts the clients perspective on all issues and does not voice any disagreement
with the client, thereby colluding with the client.
2. Because the consultant offered guidance or advice that was well beyond their expertise,
the clients organization implemented action plans that were destructive to the
organization.
3. Because the consultant did not conduct enough discovery (or diagnosis) to further
examine the clients reported issue, the clients organization implemented action plans that
were incomplete or destructive to the organization.
4. Because the consultant wanted the client to promptly do as the consultant advised, the
consultant pushed their point of view well beyond what the evidence of the discovery
process revealed in the clients organization.
5. Because the client wanted the consultant to come to the same conclusion about the issue
as the client, the client somehow did not tell the whole story to the consultant who, in
turn, made the wrong recommendations based on inadequate information.

6. Because the consultant wanted to further help the clients organization, the consultant
did not terminate the current consulting project when the outcomes (that were specified in
the projects work plan) are achieved.
7. Because the consultant wanted to help the overall community, the consultant told
investors information that the client believed was being held in confidence between the
consultant and client. 8. Because the consultant wanted to help the clients organization,
the consultant arranged a meeting to report concerns about the Chief Executive Officer to
the members of the Board, without telling the Chief Executive Officer of the consultants
attendance at the Board meeting.
9. When the consultant learned about a particular new model or technique, for example, in
evaluation, he or she tried to convince the client of an issue with the clients products or
services in order to create an opportunity to apply that new learning.
10. During the discovery phase of the consulting process when interviewing one of the entry
level employees, the consultant tried to build trust with the employee by sharing his or her
confidential impressions of what he or she has concluded about the Chief Executive Officer
so far.
How could the assignment have been handled?

Dr. Prasad should have done a little more research and calculation before taking up
the assignment when he knew resources were unavailable
He should have informed the same to the firm and told them that he has hired
external consultants
He should have looked personally into the work and the fortnightly reports
Instead of just mentioning the time period as roughly 6 months a detailed charter of
deliverables should have been developed and approved by both parties before
starting

How to close the assignment:

The first phase should be completed properly, as the responsibility was taken by Dr.
Prasad and he should take care that the first phase is at least completed properly,
that is it should be made implementation ready.
Clear terms should be set with SIDC regarding full payment at the end of the
implementation
This time go ahead using a proper charter
Once the first phase is completed proper record and documentation should be
delivered to the firm
It should then be a consensus if the two parties want to continue together for phase
2 or not

Once the phase one is completely successfully the payment should be asked for