KPMG is a multinational leading professional services firm, which deals with both audit and tax with over 10,000 partners and staff. They have achieved a vast amount of awards for both employment and health and safety, and this in turn reflects their dedication to excellence in their services. In 2008, KPMG merged with other firms in Europe, which formed KPMG Europe LLP. This therefore makes the company the largest integrated accountancy firm in Europe, with the headquarters based in Frankfurt. KMPG has a wide range of human resources, and these results in a diverse and highly skilled workforce. Furthermore, it can be seen that KPMG treat their workforce as an intangible resource, and this contributes to the firm’s competitive position.
KPMG deal with three key areas: audit, tax and pensions and advisory. Their audit department deals with decision making within capital markets (KPMG, 2011 p.1). Therefore, they provide a service to stakeholders, by ensuring that they are able to independently audit organizations. Their tax and pensions function helps individual organizations to reduce their tax burden and to ensure they meet the highest levels of compliance. Therefore, this involves key areas such as corporate reputation, pensions, and effective tax rates. Finally, they offer advisory support, which supports businesses through their business life cycle. This therefore helps and encourages firms to develop within regulatory environments. An analysis of the firm’s macro-environment
Table 1: PEST analysis
Increased governmental regulation.
Increased taxes reducing consumer spending and corporate spending. Focus on environmental governance for example: environmental auditing.
Difficult and restrictive economic times.
Businesses closing down on the UK high street.
Unstable economic times, which has resulted in an increased focus on the financial sector. Social
Consumer demand for CSR.
Social concerns over the stability of the economy – this result, in firms such as KPMG coming under increasing scrutiny.
Integration of economies – the need for global expansion. Boundless economy – technology has facilitated 24-hour communication across borders. Advances in technology, which can be used to promote the detailed nature of KPMG’s services.
The PEST analysis highlights a dynamic environment, which is ever changing. In particular, it can be seen that the company must utilize strategic tools to understand and deal with many of the issues presented in the PEST analysis. At present, the main difficulties facing the firm are in the economic and political environment. The economic recession has resulted in a scrutiny of the financial sector, and this in turn demands a need to offer an increasingly integral service. Furthermore, the secondary result of which has been increased regulation, which, not only affects KPMG itself but the many services it offers to its clients.
An analysis of the company’s microenvironment
Figure 1: Porter’s Five Forces
Porter’s five Forces model is an excellent tool for understanding how powerful is a company in its particular business environment. It is very useful, because it can recognize the business’s strength in the competitive market and the possible future position will occur if the company thinks to change its plans. As a result the firm can take benefit in a condition that has power; also it can avoid any wrong steps in the future. On the other hand it can improve a situation that seems to has weaknesses.
As KPMG belongs to a market that can be defined as oligopoly; the level of competition is not too high. This kind of market is controlled by the “Big Four” because they share a huge proportion of the market. Because of this the firms have the power to have high fees.