User:CorporateM/draft Bain
South African Revenue Service Inquiry
[edit]In late 2018, a new South African government investigated the South African Revenue Service (SARS) for suspected corruption under the administration of former President Jacob Zuma.[1] It found that in 2015 Bain & Company billed $11 million for consulting projects, where the firm gave bad advice.[1] After interviewing just 33 employees over six days,[1] Bain provided a restructuring plan that included downsizing the SARS Business Centre, which produced one-third of the tax agency's revenues.[2] An investigation found that then-SARS head Tom Moyane followed an unusual procurement process favoring Bain, who Moyane had been in touch with before his appointment at SARS.[3]
Critics claimed Bain intentionally collaborated in then-President Zuma's corrupt acts to favor his wealthy allies and help Zuma avoid taxes, contributing to a dysfunctional tax agency in the process.[1] Bain claimed the consulting firm was an unintentional pawn in Zuma's conspiracies working under the head of the tax agency, a Zuma collaborator that hand-picked the SARS employees Bain interviewed.[1] SARS officials said Bain's reports were based on false and outdated information and that senior SARS officials were not consulted.[4] Bain replaced its executive in South Africa and offered to refund the consulting fees.[5]
Reception
[edit]According to The New York Times, the results of Bain's consulting "have often been impressive."[6] An audit by Price Waterhouse found that the aggregate market value of Bain clients increased 456 percent from 1980 to 1989, whereas the Dow Jones industrial average increased 192 percent during the same time period.[6][7] Bain promises clients it will not work with competitors, but in exchange requires that the client commit to a long-term engagement.[8] The firm's approach to non-competiton was unique and helped Bain growth through word-of-mouth among corporate boardrooms.[9] However, since Bain insists on long-term engagements and implements the advice they provide, competitors claim Bain preys on insecure CEOs that are looking to outsource their jobs.[10] In some cases, Bain's billings increase every year, but the client becomes so dependent, and the firm so embedded in the client's operations, that Bain becomes unfirable.[11]
References
[edit]- ^ a b c d e de Greef, Kimon (September 2, 2018). "Boston Firm Admits 'Massive Failure' in Plan to Aid South Africa Tax Agency". The New York Times. Retrieved January 1, 2019.
- ^ Umraw, Amil (December 14, 2018). "Nugent recommends criminal proceedings over Sars contract with global consultancy firm Bain". TimesLIVE. Retrieved January 1, 2019.
- ^ Marrian, Natasha (September 6, 2018). "What brought Sars to its knees?". BusinessLIVE. Retrieved January 1, 2019.
- ^ Khumalo, Sibongile (August 27, 2018). "Consulting firm Bain ready to defend itself at Nugent inquiry into SARS". Fin24. Retrieved January 1, 2019.
- ^ Marrian, Natasha (September 9, 2018). "Bain & Co replaces SA head and offers to repay Sars fee". BusinessLIVE. Retrieved January 1, 2019.
- ^ a b Gallese, Liz Roman (September 24, 1989). "Counselor To The King". NYTimes.com. Retrieved July 3, 2017.
Over the years, Bain's list of major clients grew to encompass some of the leading corporations of the nation, including the likes of Baxter International, Burlington Industries, Dun & Bradstreet, Hughes Tool, Iowa Beef, Monsanto and Wells Fargo. The results have often been impressive. In a March 1989 Price Waterhouse audit, the market value of all of Bain's clients was shown to have increased 456 percent since 1980. The audit was based on the in-house Bain Index. It compares the performance of clients' stocks with that of the Dow Jones industrial average, which was up only 192 percent. Bain claims that, for every dollar it charges clients, they increase their profits by a factor of 5 to 10.
- ^ Perry, Nancy (April 27, 1987). "A Consulting Firm Too Hot to Handle? Bain & Co. gets its hands deep in the trousers of client companies, says an executive who knows it well. Maybe too deep, the Guinness scandal suggests". Fortune. Retrieved July 3, 2017.
Four years ago the firm developed a Bain Index, which charts the performance of Bain client stocks against various indexes. The index, audited for FORTUNE by Price Waterhouse, shows that the stock market value of all Bain's U.S. clients has increased 319% since 1980, compared with 141% for the Dow Jones industrial average and 67% for an index of stocks in industries in which Bain has clients.
- ^ Perry, Nancy (April 27, 1987). "A Consulting Firm Too Hot to Handle? Bain & Co. gets its hands deep in the trousers of client companies, says an executive who knows it well. Maybe too deep, the Guinness scandal suggests". Fortune. Retrieved July 3, 2017.
In order to guarantee clients a proprietary strategy, he promised that his firm would not work for their competitors. The notion was unique; other consultants thought nothing of working for two or more competitors simultaneously. In return for abiding by that restriction, Bain ultimately expected a long-term commitment from the client.
- ^ Perry, Nancy (April 27, 1987). "A Consulting Firm Too Hot to Handle? Bain & Co. gets its hands deep in the trousers of client companies, says an executive who knows it well. Maybe too deep, the Guinness scandal suggests". Fortune. Retrieved July 3, 2017.
For one thing, Bain has seldom had to market itself; it lets satisfied customers do the job. Word of Bain's unique product has spread, primarily by word of mouth, from boardroom to boardroom. Chief executives at Baxter Travenol, Chrysler Motors, Dun & Bradstreet, Owens Illinois, and Sterling Drug rave about Bain's services.
- ^ Perry, Nancy (April 27, 1987). "A Consulting Firm Too Hot to Handle? Bain & Co. gets its hands deep in the trousers of client companies, says an executive who knows it well. Maybe too deep, the Guinness scandal suggests". Fortune. Retrieved July 3, 2017.
If a satisfied chief executive is worth his weight in billings, a dependent one is even better. Indeed, competitors carp that the Bain approach demands an insecure C.E.O. To that end Bainies stick around to implement their recommendations.
- ^ Perry, Nancy (April 27, 1987). "A Consulting Firm Too Hot to Handle? Bain & Co. gets its hands deep in the trousers of client companies, says an executive who knows it well. Maybe too deep, the Guinness scandal suggests". Fortune. Retrieved July 3, 2017.
This also helps the firm achieve another of its objectives -- to grow its billings from a client every year. With Bainies swarming all over them, it becomes difficult for clients to disengage themselves from the firm. Says one: They anchor themselves in the stomach of the business. They forge a dependent relationship: 'If you have a problem, call us.' There should be a weaning-away process.