The Big Four

GROUP 5

TABLE OF CONTENTS

1. INTRODUCTION…………………………………………………………… 2 2. MAJOR CLIENTS…………………………………………………………... 8 3. SERVICES…………………………………………………………………… 11 4. PEOPLE AND PROCESS……………………………………………………12 5. PRICING………………………………………………………………………13 6. MARKETING…………………………………………………………………16 7. DELIVERY…………………………………………………………………….29 8. COMPETITIVE ADVANTAGE…………………………………………….. 30 9. REFERENCES………………………………………………………………... 32 10. ACKNOWLEDGEMENT……………………………………………………. 33

1

GROUP 5

B2B PROJECT ON THE FUNCTIONING OF A PUBLIC ACCOUNTING FIRM The Big Four are the four largest international accountancy and professional services firms, which handle the vast majority of audits for publicly traded companies as well as many private companies, creating an oligopoly over the auditing industry. This group was once known as the "Big Eight", and was reduced to the "Big Five" by a series of mergers. The Big Five became the Big Four after the near-demise of Arthur Andersen in 2002, following its involvement in the Enron Scandal. None of the Big Four accounting firms is a single firm. Each is a network of firms, owned and managed independently, which have entered into agreements with other member firms in the network to share a common name, brand and quality standards. Each network has established an entity to co-ordinate the activities of the network. In two cases (KPMG and Deloitte Touche Tomatsu), the co-ordinating entity is Swiss, and in two cases (PricewaterhouseCoopers and Ernst & Young) the co-ordinating entity is a UK limited company. Those entities do not themselves practice accountancy, and do not own or control the member firms. The processes and the nature of business is same throughout the BIG 4. In most cases each member firm practices in a single country, and is structured to comply with the regulatory environment in that country. The figures in this article refer to the combined revenues of each network of firms.

2

GROUP 5

PricewaterhouseCoopers (PwC) is one of the world's largest professional services firms. It was formed in 1998 from a merger between Price Waterhouse and Coopers & Lybrand, both formed in London. In the United States, where it is the fifth largest privately owned organization, it operates as PricewaterhouseCoopers. PricewaterhouseCoopers earned aggregated worldwide revenues of $28 billion for fiscal 2008, and employed over 146,000 people in 150 countries.

CORPORATE GOVERNANCE Sound governance and transparency form the bedrock of leadership. At PricewaterhouseCoopers, they are committed to serving as a force for integrity, good sense and wise solutions to the problems facing businesses and the capital markets today.

CORPORATE RESPONSIBILTY No organisation should pursue commercial success at the expense of the communities in which it operates. There is a rising groundswell of opinion that the private sector's obligations go beyond avoiding doing harm, or even being willing to do good deeds every now and then. Today, many people believe that business has a positive responsibility to operate in ways that benefit society and foster its well-being on a sustained—and sustainable—basis. The people of PwC are committed to playing a leading role in achieving a sustainable future: We take responsibility for our actions and promote responsible business

practices;

support

the

growth

and

development of our people and communities; and seek to minimise our impact on the environment. 3

GROUP 5

Deloitte Touche Tohmatsu (also branded as Deloitte) is one of the largest professional services organizations in the world and one of the Big Four auditors. According to the organization's website as of 2008, Deloitte has approximately 165,000 staff at work in 140 countries, delivering audit, tax, consulting and financial advisory services through its member firms. Its global headquarters are located in New York City, New York. European headquarters are located in London. Deloitte is the brand under which tens of thousands of dedicated professionals in independent firms throughout the world collaborate to provide audit, consulting, financial advisory, risk management, and tax services to selected clients. These firms are members of Deloitte Touche Tohmatsu (DTT), a Swiss Verein. Each member firm provides services in a particular geographic area and is subject to the laws and professional regulations of the particular country or countries in which it operates.

DTT helps coordinate the activities of the member firms but does not itself provide services to clients. DTT and the member firms are separate and distinct legal entities, which cannot obligate the other entities. Each of the member firms operates under the names “Deloitte,” “Deloitte & Touche,” “Deloitte Touche Tohmatsu,” or other related names. Each DTT member firm is structured differently in accordance with national laws, regulations, customary practice, and other factors, and may secure the provision of professional services in their territories through subsidiaries, affiliates and/or other entities.

CORPORATE GOVERNANCE To advance responsible globalization and good corporate governance, DTT member firms have entered into strategic commitments with several organizations around the world. These organizations promote responsible global citizenship, good governance and sustainable development by encouraging business to recognize and commit to sustainable economic growth, environmental protection and social equity no matter where they operate. They provide a 4

GROUP 5

valuable forum for discussion of corporate social responsibility and best practices for acting on this commitment. In the case of the World Economic Forum, DTT's commitment includes a range of activities with the Forum including a commitment to the Forum's Global Corporate Citizenship Initiative.

CORPORATE RESPONSIBILITY Deloitte's commitment to the public interest goes back to the origins of our organization. Today the Deloitte Shared Values bind the people of Deloitte together across cultures, customs, and languages. Along with the Ethical Principles, of which one is "responsibility to society", these values define the way business is done in every member firm. Deloitte member firms strive to make social good a co-product of their work, alongside revenues and earnings—a business strategy that they are confident will foster their success over the long term. The corporate responsibility policy serves to reinforce the importance of corporate responsibility to our businesses and to align the global organization around a common agenda.

5

GROUP 5

Ernst & Young (EY) is one of the largest professional services firms in the world and one of the Big Four auditors. According to Forbes magazine, as of 2008 it is also the 9th largest private company in United States. Ernst & Young is a global organization of member firms in more than 140 countries. Its global headquarters are based in London, UK. EY Global does not perform client work. It sets global standards and oversees global policy and consistency of service. Client work is performed by the member firms. It has taken the bold leadership and countless contributions of people around the world to form the leading global organization Ernst & Young is today. Their roots go back to the 19th century and their founders Arthur Young and Alwin C Ernst. AC Ernst and Arthur Young never met in life, but died within days of each other in 1948. However their philosophies lived on and, in 1989, were brought together when the firms they started combined to create Ernst & Young. The new organization quickly positioned itself on the leading edge of rapid globalization, new business technologies and continuous business change.

CORPORATE RESPONSIBILITY Ernst & Young’s business strategy is founded on engagement

with

our

people,

clients

and

communities to help them achieve their potential. As

a

company

that

embraces

corporate

responsibility, we think carefully about how to invest in society today to make sure there will be a business context where both we and society can thrive tomorrow and long into the future.

6

GROUP 5

KPMG is one of the largest professional services firms in the world and one of the Big Four auditors. Its global headquarters are located in Amstelveen, Netherlands. KPMG employs over 136,500 people in a global network of professional services firms spanning over 140 countries. KPMG provides audit, tax and advisory services and industry insight to help organizations negotiate risks and perform in the dynamic and challenging environments in which they do business. KPMG operates as an international network of member firms offering audit, tax and advisory services. They work closely with their clients, helping

them

to

mitigate

risks

and

grasp

opportunities. Their network of member firms in over 140 countries worldwide share the same values. Their reputation is created by the way the people within their member firms act with clients, colleagues and their communities.

CORPORATE CITIZENSHIP Citizenship is embedded in the KPMG values and we recognize our firms have the scale, influence and business knowledge to make a significant and positive contribution to the issues that affect our communities and environments.

7

GROUP 5

According to the request of the interviewed industry professional we have not revealed the name of the company. Major clients The continents of Europe and North America account for about 81% of the company’s annual revenue, with Europe alone accounting for 45%. The firm's dominant practice, namely auditing, accounts for over 50% of its revenue. As of March 2005, its audit clients included four of the 10 largest public companies in the United States (ExxonMobil, Ford Motor Company, ChevronTexaco and IBM). PwC also audits four of the 10 largest companies in the United Kingdom (GlaxoSmithKline, Royal Dutch Shell, Barclays and Lloyds TSB). It audits 40 per cent of companies in the FTSE 100 Index and 45 per cent of the Fortune 1000 energy companies. The following are PwC audit clients that are part of the FT Global 500 (2006), grouped by FT industry: The following are the audit clients that are part of the FT Global 500 (2006), grouped by FT industry: Aerospace & defence: Raytheon, United Technologies, L-3 Communications Corporation Automobiles & parts: Goodyear,Toyota Motor, Volkswagen, Peugeot, Robert Bosch GmbH, Ford Banks: Afghanistan International Bank, Askari Bank, Bank of America, Bank of China (Hong Kong), Bank of Ireland, Banco Itau, Banco Popular Español, Barclays, Commonwealth Bank, Crédit Agricole, BB&T, BNP Paribas, Banco Bradesco, Commerzbank, Dexia, DnB NOR, Eurobank EFG, Fortis, Goldman Sachs, JP Morgan Chase, Lloyds TSB, Nationwide Building Society, Macquarie Bank, Sanpaolo IMI, Sberbank (Russia), SEB, Standard Bank, Westpac Banking Corporation Beverages: Anheuser-Busch, Miller, SAB Chemicals: Albemarle, Bayer, E.I. du Pont de Nemours, Praxair, Rohm & Haas 8

GROUP 5

Electricity: RAO UES, Chubu Electric Power, FirstEnergy, Exelon, Unified Energy System, ATCO Electronic & electrical equipment: Agilent Technologies, Kyocera, LG Philips LCD, Logitech Fixed line telecommunications: BellSouth, BT Group, Etisalat, KPN, Nippon Food & drug retailers: Krispy Kreme, Seven & I Holdings Co., Tesco Food producers: Danone, Kellogg's, Kraft Foods, Unilever, Bunge Gas, water & multiutilities: Centrica, E.ON, RWE, National Grid plc General financial: American Express, Freddie Mac, Franklin Resources, Goldman Sachs, Nikko Cordial, SLM General industrials: 3M, Honeywell International, Hutchison Whampoa General retailers: eBay, GUS, Marks & Spencer, John Lewis Partnership Healthcare equipment & services: Baxter International, HealthSouth Corporation, Medco Health Solutions, Medtronic, Zimmer Holdings, Southern Cross Healthcare Household goods: Reckitt Benckiser Industrial engineering: Caterpillar Inc., Volvo Industrial metals: Alcan, Alcoa, Nippon Steel, Nucor, POSCO, Tenaris Industrial transportation: Burlington Northern Santa Fe Corp., Deutsche Post Insurance: Ace, American International Group, AMB Generali, AXA, Legal & General, Millea Holdings, Progressive Corporation, Protective Life Corporation, Prudential Financial, Standard Life, Swiss Re, Zurich Financial Services Leisure goods: Nintendo Media: CBS, CTVglobemedia, Thomson, Viacom, Walt Disney, Pearson Mining: Barrick Gold, Newmont Mining, Rio Tinto, Vale 9

GROUP 5

Mobile telecommunications: Alltel, KDDI, MTN Group, Sonera, Telia, China Unicom, Oil & gas producers: BG, Burlington Resources, Canadian Natural Resources Limited, Exxon Mobil, Chevron, EnCana Corporation, Eni, Gazprom, Imperial Oil, Suncor Energy, Marathon Oil, Royal Dutch Shell, Shell Canada, Attock Petroleum Limited, Stuart Petroleum Oil equipment & services: Schlumberger Personal goods: Colgate-Palmolive, L'Oréal, Nike, Richemont Pharmaceuticals & biotechnology: Bayer, Biogen Idec, Bristol-Myers-Squibb, Genzyme, GlaxoSmithKline, Johnson & Johnson, Merck & Co., Novartis, Novo Nordisk, Sanofi-Aventis, Teva Pharmaceutical Industries, Wyeth Retail: Abercrombie & Fitch Software & computer services: IBM, Yahoo!, Satyam Sports: Laureus World Sports Awards Technology hardware & equipment: Cisco Systems, Corning Inc., Dell, EMC Corporation, Ericsson,

Hon

Hai

Precision

Industry,

Nokia,

Qualcomm,

Samsung

Electronics,

STMicroelectronics, BMC Software Telegraph and Telephone: PT. Telekomunikasi Indonesia Tbk., Saudi Telecom Tobacco: Altria, British American Tobacco, Imperial Tobacco, ITC, Philip Morris International Travel & leisure: Carnival, Las Vegas Sands, SKYCITY Entertainment Group

10

GROUP 5

SERVICES OF THE COMPANY GLOBAL 

Assurance,



Tax (international tax planning and compliance with local tax laws, human resourcing consulting transfer pricing)



Advisory - mainly consulting activities which cover Strategy, Performance Improvement, Transactions Services, Business Recovery Services, Corporate Finance, Business Valuation, and Crisis Management in a range of specialist areas such as accountancy and actuarial advisory.

Its service lines face the market in each country by broad industry specializations such as: 

Consumer and Industrial Products and Service (CIPS)



Financial Services (FS)



Technology, Information, Communications and Entertainment (TICE)



Infrastructure, Government and Utilities (IG&U)

CONSULTING ACTIVITIES The company has developed several broader consulting initiatives in the Enterprise Risk Management (ERM) framework, including a global effort to assist corporations with outsourcing, as well as a global political risk assessment with the political risk advisory firm Eurasia Group. Advisory services offered by the company also include two actuarial consultancy departments; Actuarial and Insurance Management Solutions (AIMS) and a sub branch of "Human Resource Services" (HRS). Actuarial covers mainly 4 areas: pensions, life insurance, non-life insurance and investments. AIMS deals with life and non-life insurance and investments while HRS deals mainly with pensions.

11

GROUP 5

PEOPLE AND PROCESSES The company is a reputed one and has hence invested a lot in their human resource in order to maintain the same. Also the process and operation techniques are of high quality and order. It can be explained as below: 1. Well Trained Professionals: Unlike smaller audit firms, the big 4 only hire only highly qualified professionals. As mentioned earlier the company invests highly on its human resource. It is this pool of talent that sets them apart from small audit firms owned by individuals. The employees of this company are mainly from the CA, CPA, CIMA, ACS or CWA background. They are well trained and equipped to handle the accounts clients which include Fortune 500 companies. These professionals are also highly paid which is the reason behind the high cost incurred by the company.

2. Identical Team Structures: Quality and structured functioning is an integral part of any company which has global presence. The company has set a standard in the industry when it comes to fulfilling the above mentioned criteria. They maintain identical team structures all over the world in order to facilitate clients in a better way. For example, if the team in Mumbai for merger and acquisitions’ consulting have 25 members it would the same in any other office across the globe.

3. Organisational Structure: The organisational structure is more or less similar among the big 4 audit firms. They all follow the same pattern of management which is traditional in nature. The company is a Limited Liability Partnership. As such the global firm is in fact a collection of member firms that are run autonomously in their respective jurisdictions. The senior partners of member firms sit on a global board of partners and there is also an 'umbrella' organisation which provides co-ordination.

4. Similarity in functioning: The Company has a policy to maintain similarity in functioning and operations all over the world. Even the offices are set up in similar fashion so as to appeal to the clients. This is mainly done to be convenient to the clients

12

GROUP 5

across the globe. For example, the office in Delhi will be nothing different from an office in Durban. They offer similar services and even look the similar to some extent.

5. Connected Thinking Approach: The company sets itself apart from the big 4 by the Connected Thinking Approach. The firm has a keen interest in how events, people and ideas are connected. They believe everything is interrelated and every action has its consequences. They aim to score higher than just “good” and want to see this vision reflected in the way they work. It is our conscious application of these principles that has earned the company its current leading position in the world of business. This is called ‘Connected Thinking’. It is done by bringing fresh perspectives to looking at an issue, new ideas, whether they are analysing or finding solutions to a client’s business issue. That is what is crucial to the assistance of clients. It is required in today’s rapidly changing business environment

PRICING Audit fees and costs of Indian Big 4 firms are influenced by various factors such as client size, complexity, risk, and bargaining power. Audit pricing and cost strategies differ among these firms. Much emphasis has been devoted to investigating audit fee determinants. Audit fee determinants also influence audit costs, and whether the relationships between audit fees/costs and the determinants differ among the large audit firms. Much emphasis was laid to examine not only audit fees but also audit costs in terms of audit team size. Client Size and Complexity It is generally expected that when the client is larger and more complex, then the audit fees and costs are also higher. This expectation is well supported by many audit fee studies and audit production studies. That is, when a client is larger or more complex, more audit effort is necessary to conduct the audit, and this leads to higher costs. As a result, audit fees are higher to compensate for the higher costs. This relationship between client size/complexity and audit

13

GROUP 5

fees/costs is considered to hold true for all audit firms regardless of their audit pricing and cost strategies.

Client Risk The effects on audit fees of client risk factors such as quick ratio, ROA (ROI), the ratio of longterm debt (or liabilities) to total assets, and whether the client reported a loss in any of the past few years, and they generally find evidence of a positive association between audit fees and client risk. However, some studies on audit planning decisions, using data from working papers, find that audit planning decisions do not necessarily reflect auditors’ risk assessments, and that the relationships between the planning decisions and the assessed client risks are moderate. These findings suggest that even if client risk is higher, the higher risk may not result in higher costs (more effort) in order to respond to the risk. When auditors identify higher client risk, they may respond to the risk by increasing audit effort and, as a result, raising audit fees, or they may raise audit fees only as a risk premium to cover possible future loss (e.g., litigation loss or loss of reputation). Which of these two possibilities is the case is an empirical issue, and it depends largely on the audit firm’s pricing and cost strategies. The studies generally determine that audit fees are higher for the more risky clients. However, such higher fees may be the result of the greater effort required to addressing higher risk or they may be a risk premium for possible future loss (e.g., litigation loss or loss of reputation). Higher fees involve higher costs in the former, but not in the latter case. Examining both audit fees and costs makes it possible to determine which of the possibilities the case in each audit fee determinant is.

Other Client-Related Factors Some other client characteristics may also affect audit fees and costs. The three client-related variables are whether the client is a SEC registrant, whether the client has its headquarters , and whether the fiscal year ends in a busy season. If the client is a SEC registrant, its audit fees are expected to be higher. The fees associated with IPOs are higher when the IPOs involve ADRs. For a SEC registrant client, the audit firm may have to undertake more audit work to adapt the 14

GROUP 5

financial statements to the U.S. GAAP, and to ensure that they comply with other additional regulations. In addition, the audit firm may charge a risk premium on the client and the litigation risk for an audit firm is much higher when the client is a SEC registrant.

Auditor-Related Factors In relatively, much attention has been paid to the effect of auditor-related factors, such as audit market concentration, auditors’ industry specialization, and the auditor-client relationship (i.e., bargaining power), on audit fees. Higher audit market concentration results in higher audit fees. The audit fees are lower after switching auditors when the auditors before and after the switching are both market leaders, where the market leaders are defined as the three audit firms that have the largest market share in the industry, and they conclude that there is strong competition among the market leader audit firms. Differences in Audit Pricing and Cost Strategies among Big 4 Firms The audit fees differ between the large audit firms (i.e., Big N firms) and other firms and they find evidence of a fee premium for the large firms. However, there are differences in audit fees/costs and their determinants among the large audit firms have not been thoroughly examined. Most prior studies seem to have an important assumption in common, the large audit firms adopt the same strategies on audit fees/costs, client acquisition and portfolio, the audit quality they provide, and risk preference. The existence of this assumption is evidence by the fact that the analyses in the studies are conducted using a sample in which the clients of the large firms are pooled. Whether an audit firm responds to client higher risk by increasing its audit effort (and, as a result, raising audit fees), or by charging a risk (insurance) premium without increasing audit costs, depends at least partly on the firm’s risk preference and the audit quality that the firm intends to attain. In addition, while some firms may seek a higher reputation by expanding market share and developing expertise in particular industries others may do so by obtaining and maintaining large well-established companies as clients regardless of their industry. These differences in strategy among the large audit firms should influence audit fees/costs and the associations with their determinants. Premium Pricing is maintained as the huge costs usually push the Final customer price higher

15

GROUP 5

MARKETING

In the beginning, accounting firms as well as other businesses used the Internet as a way to get their name to customers and show the array of services that they provide. More recently, the firms see Internet sites as a substantial resource in obtaining new business, meeting current clients' needs, and publicizing themselves and information they feel is relevant. While some of the earlier look may remain, all the sites have evolved to become more sophisticated than their beginnings. The presence of the company in the BIG 4 is seen as the biggest advantage when it comes to marketing its services. Presently, Big 4 are applying following marketing strategy: 

Managers have Client Acquisition targets.



Promotion is mostly by using One to One Interaction – Networking.



It is usually through internet as this is one medium which can be extensively used at cheaper rates with a greater reach.



All the managers have particular locations wherein they are supposed to acquire clients by developing relationships through informal meetings and socializing.



The managers are supposed to reach their specified targets given by the higher executives. 16

GROUP 5

All the firms' sites have international or global home pages. They also organize their sites by country and allow for easy navigation through to the nation of interest. KPMG's first site had a popular "tip of the day" which helped them to average 80,000 hits per day. Their site does not include this any longer. As in the past, they still offer visitors the opportunity to review and/or retrieve publications, and other writings. Ernst & Young past design featured a question and answer format. "Ask Ernie" was a popular tool in which, for a fee, subscribers submitted questions online for answering. Deloitte Touche offered tax release information. These firms utilize the Internet as a marketing tool like so many other major companies in promoting their business. These firms are leaders in the field of technology because they have to be well informed and "cutting-edge" due to expectations from clients. All four firms have well established websites with a wealth of information for internal and external users. The strengths in each website far outweigh weaknesses. Utilizing this marketing tool as a rapid, cheap, and efficient way to get out massive amounts of information to potential and established clients, employees, and other interested parties is a prime reason for organizations taking the time and effort to establish and maintain them. Disseminating the same amount of information could not be accomplished as easily, shared, or updated, through websites. WEBSITE DEVELOPMENT: It is expected that the Big Four accounting firms be a leader in their online realms. The future of e-commerce is bright, with boundaries only limited by technology, the government, and competition. Creating and maintaining a competitive advantage within these boundaries will rest in part on the establishment of a firm's cyber presence. The website, in the evaluation of current and potential customers, will have to deliver value, foster and nurture the customer-firm relationship, and be responsive to customer needs as they evolve.

17

GROUP 5

METHODOLOGY According to Netraker Corporation, the top three factors that ensure repeat visitors to web sites are content, speed and ease of use (www.WebCritique, 2003). PricewaterhouseCoopers, KMPG, Deloitte Touche, and Ernst Young websites were accessed and critiqued in these areas. Web content was reviewed for authority, updated subject matter, and relevant information. The review measured to see if there were any substantial problems in using the search engines and navigating the sites ensuring no broken links. In addition, usability testing looked at graphic design, innovative use, and readability of content. TARGET MARKET A website should reflect the personality of a business. Using a website as a marketing tool will be highly effective when an enterprise gets serious about advancing customer relationships though its online service. It should mirror the needs of its target market (McIntyre, 2000). It is obvious that the firms use websites to present their image and as a promotional tool to share information with current and potential clients, prospective employees, and other third parties. Ernst Young uses phrases such "People First", "client trust" and "global village" in their site. They not only address client confidence, they also speak highly of their relationship with their employees.

18

GROUP 5

PROMOTION NETWORKING PriceWaterhouseCoopers' website also places a high emphasizes on its current and potential client base. They convey a message that they put high importance on compliance and code of conduct. Interestingly, Deloitte Touche, while their main target seems to be their clients, puts emphasis on a site that "alumni" employees can visit and network when the site was first visited. Six months later, Deloitte Touche's web site focused more on external customer and client services. KPMG's homepage highlights books and papers they have written. They also offer information about services and recruiting information. CLIENT REFERRAL Client referral is a major marketing tool wherein a company suggests the big4 to other companies for any auditing service. The big 4 have already developed such a brand that most of the fortune 500 companies are its clients. So every1 goes for big4. Hence advertising and marketing is only for competition and to get top most position or rank amongst the accounting firms of the globe. INDIRECT ADVERTISING Indirect advertising as the name indicates is a form of advertising wherein the companies do not opt for direct comparison or conventional advertisements. Reports on Cost cutting measures for an organization, on general topics like recession, advertising, media etc. it also comes out with annual budget reports. One of its major advertising strategies is to give reports free of cost, just to create awareness.

19

GROUP 5

MARKETING CAMPAIGNS BY BIG 4

DELOITTE’S ADVERTISING CAMPAIGN  Deloitte has launched its largest ever advertising campaign in a determined bid to overtake PricewaterhouseCoopers (PWC) as the number one professional services firm in the UK.  Marketing director Nick Pike says Deloitte intends to oust PWC from the number one spot by significantly ramping up the amount it spends on marketing the brand. Pike says Deloitte is in a prime position because "none of the other big four" have heavily invested in a corporate advertising strategy in the last five years.  A five month long awareness campaign, launching outdoor, print and online platforms marks Deloitte's biggest advertising push in the history of the company, and is part of an overall global strategy to position itself as number one. It has branded 100 taxis across London with messages about the firm's client service approach, scheduled national press advertising, targeted key business websites such as the Financial Times and The Times and spent money improving its search marketing strategy.

PWC’S ADVERTISING CAMPAIGN  PWC is working hard on attracting graduates from a wider spread of backgrounds than just accountants. Major think tanking is directed towards improving the brand awareness of arts & marketing graduates. The main problem was diagnosed recently at the graduate fairs, when most students (outside Accounting) were unable recognize the brand or recite any of their community actions.

20

GROUP 5

 PWC has become more and more environmentally focused in recent times, trying to endear themselves to the societally minded youth of today. Continual attraction of the best and brightest graduates is essential to the ongoing success of PWC, on top of this, ingraining brand awareness at a young age is worth thousands of dollars of advertising years later on.

ERNST & YOUNG BEGINS E-BUSINESS AD CAMPAIGN  The new campaign of E&Y aimed at rapidly growing dot com companies as well as established companies looking to transform into e-businesses, is an extension of the "From Thought to Finish" branding campaign. Initially, the focus will be on e-business themes including speed, growth, efficiency and trust, and the firm's strong track record in target industries. The campaign will include print, broadcast, cable, online and out of home advertising.

21

GROUP 5

 In March 1999, Ernst & Young said that it was embedding electronic commerce capabilities across its Consulting, Tax, and Assurance and Advisory Business services and had assembled a new team to drive a global electronic commerce push for the firm.

SPONSORSHIPS, EVENTS ETC. USED IN BRAND BUILDING In order to build its brand the big4 usually go for sponsorships and events in order to give visibility to the firms. Below is an example of E& Y sponsoring an event called entrepreneur of the year. PricewaterhouseCoopers (PWC) has been named as the first sponsor to support England's bid to host the 2018 football World Cup. It is hoped the PWC deal is the first of a series of partner and sponsor contracts. PWC has a strong regional network of offices which is very well aligned with the list of applicant host cities, and the sponsorship therefore benefits the firm across the UK."

David Beckham and Wayne Rooney launched the England bid at Wemble

MARKETING MIX FOLLOWED BY BIG4 At the beginning of the year Deloitte also confirmed that it would be investing more heavily in Web 2.0 technology as part of its advertising strategy, in particular looking at how it can

22

GROUP 5

incorporate Internet TV into its marketing mix to build stronger relationships with clients, bolster recruitment opportunities and communicate with new business prospects. The global auditing and financial services firm says the medium is a "key focus" for it in 2008 as it seeks to build stronger relationships with clients bolster recruitment opportunities and communicate with new business prospects. "Video content is very much in demand now and we will be pushing (the medium) and using more of it this year," says Sharon Bennett, head of online solutions at Deloitte. "We currently have a good library of podcasts and audio casts which we want to take to the next level." Deloitte has recruited video production agencies CTN and Broadview to develop the multimedia content, which will be rolled out later this year. Plans include using online TV content to promote thought leadership and allowing Deloitte's graduate bloggers, which are key in attracting new recruits to the business, to post video blogs. As blogging and social networking sites become increasingly commonplace B2B marketing tools, brands must find new ways of using Web 2.0 technology to gain an edge, says Broadview programme director

Nicholas

competitive

B2B

Walton.

"In

marketplace,

a it's

becoming increasingly important to use these

means

to

differentiate

the

organisation and educate prospects and clients," he says. ERNST

&

YOUNG

LAUNCHES

GLOBAL INTEGRATED CAMPAIGN The campaign consists of print, broadcast, cable, airport and Internet advertisements. The campaign launches in editions of 23

GROUP 5

national and international business publications, general news and lifestyle publications. TV spots using animation will appear on selected television programming in April. The theme of the campaign is "New Rules for the New Economy." Ernst & Young will keep its original tag line "From Thought to Finish" in this campaign as part of the major. The campaign, which will include print, broadcast and billboard advertising, was created by Lowe & Partners/SMS, in New York, part of the Lowe Group unit of the Interpublic Group of Companies. It represents the initial phase of a $60 million worldwide branding effort for KPMG, which operates in 155 countries. ''Our marketing strategy is to deploy a brand advertising campaign that will significantly increase prospect and client awareness for KPMG, help us create a place at the table when there is business to be won -- and help our partners and professionals win more of that business,'' said Tim Pearson, chief marketing officer for the company. ''This is advertising that helps articulate KPMG's strategy and captures who we are.'' KPMG will expand the television advertising to such channels as CNN, the Discovery Channel, MSNBC, the Learning Channel and CNBC. The company will also run commercials during golf and tennis tournaments and N.C.A.A. football bowl games. Print advertising will appear in business newspapers and magazines and special interest publications. The campaign will also include advertising on billboards at major airports.

A CREATIVE APPROACH Deloitte meets agencies over 'non-advertising projects'. The project has a focus on nontraditional advertising elements, and is understood to be strategically focused, bypassing television, radio and press. It promoted Deloitte's services, with messages including a "complete approach to business" and an "ability to view a problem from all angles".

24

GROUP 5

The campaign included a 360-degree wrap that spanned 120x15 metres around the entirety of London's Imax Cinema, which is currently the largest outdoor site in the UK. It was implemented by Ocean Outdoor.

The campaign also included similar giant posters positioned outside of London and posters in key commuter train stations across the UK, as well as national print and online media. The campaign uses massive posters positioned outside sites in London, in key commuter train stations across the UK and national print and online media over the next six months. Deloitte launches ad campaign to build its brand and flag its ‘Always one step ahead’ position. The first ad in Deloitte’s ‘Green Dot’ campaign will highlight the wide range of professional services that the company is providing to its clients in Thailand.

COST REDUCTION MANAGEMENT The PwC approach to cost reduction is outlined below. It should be noted that as part of the spend analysis phase, we not only focus on identifying cost reduction drivers, we also focus on cost management and control which reflects on the cost culture within the organisation.

25

GROUP 5

PWC’S FOUR STEP PROCESS TO SUSTAINABLE COST REDUCTION

PwC’s consultants have significant commercial experience in driving performance improvement initiatives across multiple industries. We offer a flexible approach to cost reduction that enables clients focus on known areas of concern or on enterprise wide operations. The services we provide include: 

Identifying cost drivers



Benchmarking performance against peer groups



Challenging cost management and control framework



Establishing KPI’s that are aligned to corporate strategy



Simplifying and standardizing business practices



Structuring shared services and outsourcing arrangements for Finance, IT, Treasury, Logistics, Operations, etc



Adapting IT to support business needs



Embedding a culture of continuous improvement within Organizations



Benefits Realisation

26

GROUP 5

The key to successful cost reduction programmes is to focus first and foremost on strategic priorities, linking these very closely to operational targets and the subsequent change management activities. PwC’s client experience highlights the importance of designing, developing and implementing a benefits realisation plan when implementing cost reduction initiatives. By maintaining focus on target benefits, the opportunity to divert from pre-defined cost reduction initiatives is limited. Our Cost Reduction team focuses on identifying and validating sustainable cost reduction opportunities for our clients and supporting them, as appropriate in implementing these changes. Our focus is enterprise wide focusing on such aspects as procurement; IT; treasury; supply chain; sales administration; finance, etc and includes an analysis of alternative sourcing structures, e.g. shared services and/or outsourcing. A well organised end-to-end program is needed – cost cutting programs must be aligned across the organisation to avoid sub-optimal execution and must be championed by senior management.

CSR PricewaterhouseCoopers has donated US$4 million towards the education of refugee children in eastern Chad's camps, in the single largest corporate donation ever received by the UN refugee agency. The firm, also known as PwC, presented UNHCR with a cheque for US$4 million in New York on Monday. The funds will be used to build and operate schools for refugee children who have fled the conflict in Darfur, western Sudan. Specifically, more than 20,000 children aged between six and 14 years in the refugee camps of Iridimi, Touloum and Am Nabak in eastern Chad will have access to education in a safe learning environment. The children and their teachers will receive a daily meal. Teacher training and school supplies will also be provided. The donation from PwC employees is the largest single company donation UNHCR has ever received More than 6,000 PwC staff members in more than 100 countries contributed to the 10-day "Power

of

10"

campaign,

which

was

created

by

professional

services

firm

PricewaterhouseCoopers together with UNHCR to recognize the 10th anniversary of the company's creation. UN

27

GROUP 5

PwC donates $1 million to University of Alabama accounting program New York-based accounting firm PricewaterhouseCoopers pledged a $1 million donation to the University of Alabama to support accounting education at its Culverhouse College of Commerce and Business Administration.

IMPACT OF RECESSION ON BIG 4 It was the Advisory operations of PwC that faced the hardest hit of recession. With this impact, the service line earned revenues of US$6.1 billion and was down by only 3%. This fall was actually driven by the clients’ reduction in their discretionary spending as well as by the drop off in initial public offerings and transactions. However, it was partially balanced by the rise in the restructuring work. Dennis M. Nally, the Global Chairman of PwC said that the last 12 months was challenging for the company. A number of member firms were facing major economic turbulence. Though the revenues of PwC's FY 2009 have declined, they were good enough for the given circumstances. Nally also added, "In addition the combination of first rate customer service and very competitive pricing has allowed us to increase our market share in many of our markets around the world". Some of the member firms of PwC were less affected by this global recession than the others. The revenues of South and Central American firms increased by 13.3% and the Middle East and

28

GROUP 5

African firms had revenue growth of 9.1%. In Asia, revenues increased by 5.4%. It was the member firms of North America, Central and Eastern Europe and Western Europe where the revenues declined. There was very good revenue growth in Russia, Sweden, Japan, Spain and Canada.

DELIVERY OF SERVICE

The company has an advantage of having branches across the world; hence the clientele are directed to the nearest branch for services. Each branch has a field around it, the accounts of clients within this field are handled by that branch. The reasoning behind this initiative is to ensure that there is a personal contact with the client. The company assigns a “Go To person” or an account manager for the client who not only acts as a liaison with the company but also is their single point of contact. These account managers are people engage PricewaterhouseCoopers to help them design, manage and execute lasting change. Increasingly, value is created across a complex network of partners, suppliers, customers, regulators and stakeholders. Survival and success depends on collaboration amongst them hence client preferences are given utmost importance by the company. They deliver services locally and through our integrated network. This well bound network helps in getting client referrals which is a great source of client acquisition The account managers make sure that constant feedback is collected. The account managers and professionals visit the company often as the service delivery does not stop with rendering the service but a strong relationship has to be maintained.

29

GROUP 5

COMPETITIVE ADVANTAGE

Standardised Process

Standardization of business processes helps to improve personnel efficiency and performance and is aided by the information intensive nature of the process. The emphasis on similar organisation set up and team structures facilitates rapid permeation of process standardization throughout the company. Wladawsky-Berger states that standardization will occur for business processes "where differentiation brings little or no incremental value". But, process standardization may well give rise to a class of service providers that, while competing along dimensions of process expertise, best practices and business improvement, may level the playing field sooner and across a wide range of business processes. This transformation has happened in the case of this company and they thrive on process standardisation.

Pool of resources

The company has access to a varied pool of resources which gives it the ability to compile comprehensive reports as a part of its connected Thinking approach. The company has access to approximately 1700 publications across the world. The company also has own publications compiled by the professionals. The employees who are professionals with a compounding experience adds value to the already existing pool of resources of the company.

People Expertise

Because PricewaterhouseCoopers' only product is the output of its employees, the firm has a competitive recruiting program. PricewaterhouseCoopers was recently included in Fortune's "100 Best Companies to Work For" list, coming in at number 58 in 2009. In the UK the company has been voted number one in the Times Top 100 Graduate Employers for 5 consecutive years. These measures have ensured that the best employees are intact with the company and the expertise is maintained.

30

GROUP 5

Credibility as a criterion

The clients who avail the assurance services or audit services from the company gain the reputation as the attestation of the company has high credibility. The high credibility also increases the loan availability of the client. This is a great advantage to the clients in obtaining project finance.

Other Factors

The other factors which provide a competitive edge to the company are the ability to mobilise huge amounts of capital. The audit firms of different origins have come together in order to exploit this benefit of being able to pool in huge capital in order to maintain a high quality by employing skilled professionals as a part of the workforce.

Conclusion

The company despite its superior expertise in financial services has a very small market share in Tax consulting services. The company faces severe competition from smaller audit firms when it comes to tax consulting for select individuals. The smaller firms have higher expertise and also charge lower prices. The company despite its cost cutting efforts fails to reduce the cost when compared to a smaller firm because the cost of the professionals appointed and other administrative costs are very high for a company which is part of the Big 4. The high costs iplies that the services will be priced at a premium which means that only large MNC’s can avail its services the small and medium enterprises cannot avail their services. The company makes sure that the client gets the value for the huge premium price he pays by maintaining a good relationship with client.

31

GROUP 5

REFERENCES http://www.big4.com/view_letter/1141/pricewaterhousecoopers_2009_revenue_falls_on_tough_condi tions.html http://news.bbc.co.uk/2/hi/business/8332316.stm http://www.b2bm.biz/news/?groupId=&articleId=27601 http://bigfouralumni.blogspot.com/ http://www.ciims.net/2008/08/pwc-seeks-wider-range-of-graduates.html http://www.ilovebig4.org.ua/2008/08/pwc-leader-for-donations.html http://www.clickz.com/211711 http://www.highbeam.com/doc/1G1-67454419.html http://www.nytimes.com/1998/08/13/business/media-business-advertising-kpmg-peat-marwick-usingbrand-campaign-set-itself.html http://accounting.smartpros.com/x36620.xml http://www.faqs.org/abstracts/Business-general/Celebrities-join-efforts-to-persuade-people-to-readmore-books.html#ixzz0WQ4RLrMa http://www.campaignlive.com/news/search/671101/Deloitte-meets-agencies-non-advertising-projects/ http://globalbestpractices.pwc.com/Home/Document.aspx?skipgbpsmgateway=y&Q=273,4537,205,675 6C94B-23FB-425F-8047-2268A11D4BC3 http://it.toolbox.com/blogs/bpo-journal/process-standardization-the-new-business-imperative-5946 http://www.pwc.com/gx/en/about-pwc/index.jhtml

32

GROUP 5

ACKNOWLEDGEMENT

We would like to express our deep sense of gratitude to Mr. Srinath Varadarajan (Account Manager, Chennai), for his support and guidance in the course of data collection. We extend our heart felt thanks and appreciate him for sharing his valuable knowledge, information, and experience.

33