Management Practice CA1
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Case study: Brownloaf MacTaggart: control and power in a management consultancy Background
Brownloaf MacTaggart (BM) is the engineering consulting division of Watkins International, a large international firm of chartered accountants and management consultants. Watkins was established as a chartered accountancy practice in 1893. Following decades of moderate growth it entered the management consultancy market in 1955 primarily as a ‘spin-off’ from audit and taxation work. In the following years this diversification proved to be profitable. What had started as a very small sideline activity has developed into a multidivisional management consultancy business employing in the UK alone some 700 people. Worldwide Watkins employs around 70 000 people through a network of firms and associate firms. The international firm has at least one office in most countries, and in the early 1990s has established new offices, particularly in Eastern Europe.
Watkins has endeavoured to grow primarily by acquisition and internal growth, but acquisition has been by far the most successful strategy, particularly in the 1980s when a software development company and BM were acquired. The firm now has five consultancy divisions in the UK covering information technology and software engineering; public sector management; financial services and treasury; leisure and retailing; and general engineering. Brownloaf MacTaggart and Co. had started business in 1962 as a two-man partnership. Alex MacTaggart had been a successful production engineer, who had assiduously built up a long list of good contacts while working for blue-chip engineering companies. Duncan Brownloaf had been a successful engineering company salesman selling diverse products such as hydraulic pit props and mining pump equipment. The two men combined their undoubted strengths by taking small premises in Walsall, in the West Midlands. The business flourished and in 1977, now employing 20 people, two additional employees were admitted into partnership: Heinrich Grubber, a German national, and William Smallpiece, a native of Shropshire. Having admitted the two new partners, both founder partners were beginning to think of retirement. Duncan Brownloaf’s health was failing and perhaps it was time for a change. In 1980 the company moved into bigger offices in the heart of Birmingham. One month after the move both Alex MacTaggart and Duncan Brownloaf were gone. It was suggested, although never proven, that both men suffered a ‘palace coup’ led by Heinrich Grubber. The BM name was continued, after all the goodwill generated was considerable, and Heinrich Grubber and William Smallpiece set about planning for the future. For some time both partners worried about future strategy. Should they stay as a small stand-alone company or actively seek merger or acquisition? In 1988 the future direction was effectively settled. Watkins International had been looking to acquire an existing engineering consulting company. Merger negotiations were started with BM. These negotiations proved to be unusually protracted. Besides issues of partner capital, there were a number of issues surrounding managerial autonomy. Surprisingly, merger was nearly aborted by the insistence of the BM partners that young Eric Reliant be admitted into partnership. The partnership qualities of Eric were not immediately obvious to the senior partners of Watkins. A redemptive new age traveller, he tended to be seen as a disorganised blue sky thinker (or ‘head in the clouds’ visionary). Underneath, however, he was an artful schemer who had carefully flattered and fawned around the BM partners. What he lacked in technical engineering skills he more than made up for in low-life cunning. With agreement reached on the admission to partnership of Eric Reliant, the way to merger was clear. Following the merger life appeared to continue much as before. BM...
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