C O N F I D E N T I A L | www.oliverwyman.com

What is Management Consultancy?

4 November 2008

Ian Shipley

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Agenda

What is Management Consultancy?

What do we really do?

Who does it and why?

Questions

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What is Management Consultancy?Overview

What’s in it for me?

What do you do for

your clients?

What is management consultancy?

Difficult, high stakes situations

Help senior executives with their toughest problems

These are problems which they cannot solve themselves– Lack of relevant

expertise– Shortage of

resources– Need for outside

objectivity

The type of projects cover a broad scope

Often characterised by– Driving revenue or

profit growth– Increasing market

share or competitive advantage

– Changing the way the company thinks and works

Outstanding opportunities for training and development to build a strong foundation in– How businesses and

markets really work– How to make

money(!)

Interaction with senior-level executives from day one

A truly global experience

Very good compensation…

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What is Management Consultancy?Some differences between types of consulting firms

Clients

Length of project work/ team size Team size

Where you will work

What you will do and learn

Large International Strategy Firms

CEOs and Executive Board

2-6 months Generally small (3-20)

Mixture of local and global staffing opportunities

A balance of high-level strategy, process and analytics across a broad range of businesses

Smaller (Boutique) Firms

CEOs and Executive Board

Typically smaller companies

1-3 months Small (3-5)

At the margin, more local office staffing

As above, typically across a narrower range of businesses and partners

Process/ operations

Operational management

3-9 months Medium-large (5-50)

Mostly home staffing (UK)

Focus on detailed operational and process outcomes

IT Operational and IT management

6-18 months Large (20+)

Mostly home staffing (UK)

Focus on systems architecture, specification and coding

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What is Management Consultancy?Top strategy consulting firms in 2006

Rank2

Firm(Ranked by growth)

Revenue 2006 ($BN)

Market share2006 (%)

CAGR 2003-2006

4 McKinsey $4.0 8% 7%

1 Oliver Wyman $1.21 3% 25%

2 BCG $1.8 4% 16%

3 Bain $1.3 3% 14%

Source: Kennedy 2007 Global Consulting Marketplace Report. 2005 market, defined as Strategy + 50% Operations, is $44.2 BNNotes: 1. Figures include all Oliver Wyman Group companies; 2. Ranked by 2006 revenue

Management and economic consulting market

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Agenda

What is Management Consultancy?

What do we really do?

Who does it and why?

Questions

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Example case #1Leading US Consumer Lender – Bank banking strategy

The context: Considering expansion into branch banking– Strategic importance of retail deposits for funding asset growth– Access to new profit pools – desire to become multi-line retail FS provider

What we did: Soup to nuts strategy development– Educate key managers (up to and including CEO) on the economics and

operating practicalities of branch banking– Developed multiple entry strategies (organic, acquisition, combined)

Tangible changes– Client acquired SE and then NE regional bank– Currently discussing further increases in business footprint (e.g. first mortgage)

Visible impact– Framework for business value used in client presentation announcing acquisition– CEO personally thanked Oliver Wyman team for positive impact on strategy –

said our work was among the best pieces of consulting he had ever seen

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Example case #2Leading US consumer/universal bank – New business launch

The context: Desires to launch a market leading product in home-equity release/“reverse mortgage”– Current leader in home equity lending and branch banking– Keen to get ahead of the market for RE lending solutions for retirees

What we did: Full support for the product launch– ~15 Oliver Wyman staff on multiple teams to support customer demand

analysis/marketing; pricing, risk and economics; and Ops and IT– Overall responsibility for coordinating multiple client teams with dozens of

participants

Tangible changes– Product pilot launched in November 2006– Full rollout during 2007

Visible impact– Oliver Wyman team front and centre to drive launch timelines– Retail CFO told us that “the highest NPV initiative we could undertake would be to

spend another $10 MM on Oliver Wyman”

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Example case #3German Insurer – International strategy

The context: Global financial services institution with large domestic but small international primary insurance business. Client wanted to build off sub-scale international footprint from a follower-position in most relevant markets

What we did – Analysis including – aside of market and portfolio review – risk diversification

benefits and a thorough assessment of core competences within the Group– Base case scenario model without international business or with continuing

existing business as “burning platform” for internal commitment– Strategic portfolio design with granular entry strategies focused on leveraging

competitive advantages and market segments still open for entry– Internal readiness and change program as enabler

Client benefit (after 1 year of implementation)– 2 divestments of non-core and 2 new market entries done– Core competencies strengthened– Implementation of new organisational design and cultural change still ongoing

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Example case #4US Fortune 500 chemicals company – Financial and commodity risk management The context: A leading US chemicals company wanted to stabilise earnings in an environment of

highly volatile raw material costs and currency rates

What we did – Developed a quantitative financial and commodity risk management tools

- A market model that projects correlated spot and forward prices for a variety of chemicals and FX rates

- A company simulator that projects the earning-at-risk driven by- Product pricing managers responses to commodity markets levels- Purchasing managers responses to commodity market levels- Current book of hedge instruments- Future incremental hedge instrument purchases

- An optimiser that searches for hedge structures that are efficient from a risk and return perspective

– Presented recommendations on the design and development of best practice commodity risk management governance processes and infrastructure support

Client benefit– Risk management tool enables fact-based quantitative decision-making and the identification

of optimal hedging strategies in accordance with risk appetite– A clearer understanding of earnings at risk as a result of overall commodity and currency risk

management strategy

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Agenda

What is Management Consultancy?

What do we really do?

Who does it and why?

Questions

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Who does it and why?We are looking for outstanding people, whatever their background

Andrew graduated from Imperial College in Electrical Engineering

He was heavily involved in the theatre at Imperial, which he continues to do in his spare time

He is heavily involved in charity work and recruiting in the office

Miriam graduated from the London School of Economics with a degree in European Political Economy

She enjoys running and participated in the JP Morgan Challenge, running with her colleagues and tens of thousands of others for a good cause

Kumaran graduated from Oxford in Economics & Management

Represented his college at rugby and cricket, continues to play cricket competitively

Edits the satirical office newsletter, plays for the office football team and is heavily involved in recruiting

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Who does it and why?In different ways, each of the consulting firms offer great opportunities for learning and development

First class business training

Collaborative environments where everyone contributes to solving problems

Exposure to the most senior management in industry, private equity, non-profits

Results-oriented meritocracy

Flexible career paths

Commitment to mentorship and investment in you as an individual

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Who does it and why?Opportunities for diverse careers and rapid progression

Kath

JoinedSept 2000

JoinedSept 2000

Chris

Government(London)

Steel Mfg.(UK, Paris)

Supermarket(US)

ISP(UK, FR, DE)

SABBATICAL!!

Motor Breakdown (UK)

to LippincottRoyal Opera House(London)

ISP(UK)

Supermarket(UK)

Financial Services(Turkey, Dubai)

Transfer

Petrochemical(London)

Paper(London)

Government(London)

Pharma(NYC)

Travel(N. England)

Leisure(Midlands)

Pub-Sector(Midlands)

2 mth leave(Ibiza)

Telco(London)

Insurance(London)

Paper(Finland/ London)

Telco equipment(Berlin/London)

Engineering(Phoenix, AZ)

2001 2002 2003 2004 2005 2006

Telco(Finland)

Climate Group(UK)

Insurance Broker(London)

Telco equipment(Hickory, NC)

2007

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Who does it and why?Opportunities for diverse careers and rapid progression

Sean

JoinedOct 2002

6 month sabbatical(15 countries!)

Economic capital

(UK insurer)

2002 2003 2004 2005 2006 2007 2008

Portfolio management

(UK corp. bank)

Basel II(UK retail bank)

Bulk annuities(UK insurer)

Strategic assetallocation

(Euro insurer)

Model validation(US mortgage co.)

Mobile phone insurance(UK private equity)

EVRM(S. Africa insurer)

Sales force redesign

(UK insurer)

Chris

JoinedJan 2002

Sabbatical(Tibet, Nepal…)

Economic capital

(UK insurer)

Corporate bank strategy

(Netherlands)

Branch productivity

(Belgian bank)

Leasing strategy

(Netherlands)

Business redesign

(Thai bank)

Country strategies

(Global I-Bank)

Commodities business plan(Global I-Bank)

Equities reorganisation

(S. Africa broker)Post-merger integration

(French brokers)

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Agenda

What is Management Consultancy?

What do we really do?

Who does it and why?

Questions

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Questions?

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Next steps

Enjoy getting to know different firms

Take the opportunity to ask as many questions as you need to – This is an important decision – We are here to help you make the right decision for you

Good luck

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Back-up slides

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Historic UK pub industry: inside-out/ product-led

Pub Case Study: Context

Breweries Products Pubs

Vertically integrated business growing network to maximise sales

OW perspective: Outside-in/customer-ledLife-style segments

Occasions Pub segments

Hollyoaks

Friends

Sex in the City

Only Fools & Horses

Royale Family

One Foot in the Grave

Steptoe & Son

Young local

Great local

Classic local

City day

City night

Value food

Mid-market food

Upscale food

Continually evolve pub offers to maximise returns from each site

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Sales growth levers

Offer Service

Food Manager

PricingDécor / Interior

Investment

Which levers to pull? What investments to make in each lever? Which segments and pubs to target?

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Applying multiple leversThe trick was to find the right set of initiatives by pub, executed in the right sequence to generate substantial returns

Sales impact

Declining Base

Boost from Pricing and Decor

Boost from Food

Boost from ServiceIndexed sales

The best sequence of initiatives depended on the type of Pub

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The impact in the pubs has been significant

Sales

Margin

Example Pub

Price mechanic introduced

~35% sales uplift

~40% margin uplift

Weekly sales and margin

Overall impact of ~£29m sales and ~£15m margin

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What makes it all worthwhile…

"Disneyland Paris is about to experience their second best attendance year and a record revenue year. I truly believe that the focus your work provided played a big part in enabling this growth. Next year's plans...look even better.“

"Thanks so much, as none of what we have done to turn this company around would have been possible without your help… I strongly believe the decision to hire Oliver Wyman to help us on pricing and segmentation was one of the most profitable ever…Well done and hope to work with you another time..."

Example email from senior client