Mckinsey Presentation2

McKinsey and the Globalization of Consultancy Fernando Vasconcelos 152108169 João Leite 152108167 Manuel Abreu 152109030 Pedro Palos 152109022

1 9 2 0 ’s • 1926 - The accountant James McKinsey, a former professor at the university of Chicago founded McKinsey & Co. • 1926 - First office was opened in Chicago • Adoption of the M-form in the early 1920s 1920

1930

“In the ‘30s and ‘40s a ‘management consultant’ was looked upon as something slightly nefarious. People would say ‘Oh, an efficient expert,’ but that made all the men in McKinsey draw up in horror.” – Ruth Neukom, wife of John Neukom. LA Office

1930’s

member, 1933-1975

• 1933 – Marvin Bower, graduated from Harvard Law School and Harvard Business School, joined McKinsey • 1935 – Turning point for the company: contract from the retailer Marshall Fields • 1937 – Split between Chicago (managed by Tom Kearney) and NY offices (managed by Bower) • 1937 – Bower wrote a memo explaining his vision for the firm: successful firm known for its quality work, the prestige of its clients and the professionalism and caliber of its staff • One-firm approach as the key to McKinsey´s success 1920

1930

1940

“After the war [WW II] we had to upgrade the caliber of the people. And we did. That led to being the first employer of a Harvard Business School graduate.” – Everett Smith, NY Office member,

1 9 4 0 ’s

1944-1977

• 1946 – Bower purchased the exclusive use of the McKinsey name from the Chicago Office, which was renamed A. T. Kearney and company • 1949 – The firm had first begun considering incorporating to help build capital • During the 1940´s U.S consultancy firms struggled to make an impact in 1920 Europe 1930 1940 1950

“Marvin wanted the firm to be distinctive, quite unlike any other consulting firm. He wanted it to exemplify the highest standards of professional conduct.” – Warren Cannon, NY/Chicago Office member, 1949-

1 9 5 0 ’s

1988

• 1953 – Marvin Bower starts a debate within the firm about the advantages of international expansion

1920

1930

1940

1950

1960

1950’s – Debate on the internationalization

“Marvin wanted the firm to be distinctive, quite unlike any other consulting firm. He wanted it to exemplify the highest standards of professional conduct.” – Warren Cannon, NY/Chicago Office member, 1949-

1 9 5 0 ’s

1988

• 1953 – Marvin Bower starts a debate within the firm about the advantages of international expansion • 1954 – McKinsey establishes a formal “up or out” policy for associates and had its first multinational client (IBM world trade) • 1956 – McKinsey shifts from a legal partnership to a corporation • 1959 – First international office in 1920 London, 1930 1940 1950 1960 UK

Obstacles faced by McKinsey Geowth – “Boer wanted to create a large, successful firm known for its quality of work, the prestige of its clients, and the profissionalism and caliber of its staff” •

Staff •

U.S • •

Hired professionals with years of experice 1953 – Recruitment MBA directly from Business school (31 out of 84 were from HBS) •

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Europe •

Hard to find local high quality staff • •

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Bower wanted to focus on young, relativly malleable individuals

No business schools Mckinsey was unknown and therefore it was not an obvious employer for European elites Elites atended different types of school

Mckinsey needed ro biuld contacts with local elites in foreign companies in order to develop a domestic client base • •

1954 – first multinational client 1959 – Shell announced publicly that it had accepted McKinsey´s recommendations

“We began to see ourselves as architects of change. We must not solve the problem the clients bring us in to solve, but also bring about changes within the client organization.” – Dick

1 9 6 0 ’s

Neuschel, NY Office member, 1945-1979

• First mover advantage in most countries • Expanded in Europe, by establishing contacts with local elites • 1964 – Launched “McKinsey Quarterly” • Foreign offices developed much faster than the U.S. offices • By the end of the 1960´s McKinsey had become a corporate savior in Europe 1920 1930 1940 1950 1960 1970 • Will McKinsey be able to maintain its identity?

“We should begin to view our primary purpose as building a great institution that becomes an empire for producing highly motivated, world class people who, in turn, will serve our clients extraordinarily well.” – Fred Gluck, NY Office member,

1 9 7 0 ’s

1967-1995

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1980

C o m p e tito rs Company A.T. Kearney Arthur D. Little Bain & Company BCG Booz Allen McKinsey and Company

Number of U.S 5Offices 6 1 1 12 7

Number of Foreign 6Offices 6 0 3 5 13

U.S Consulting Firms before 1973

Questions •

Would the cynism that appeared to be on the upturn in the United States spread elsewhere? •

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The competition in Europe was not as fierce as in the United States Low recognition of local european competitors

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Would international companies still pay for McKinsey services? •

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McKinsey can support multinational companies to enter in local markets Mckinsey had office all over the world which allow them to integrate and take advantage of diverse knowledge

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Had Mckinsey grown too big? • • •

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Prestige clients are multinational companies and Global clients require global companies There are emerging markets, thus McKinsey can grow even more – example: Penetration in the Japanese market