Why Small And Medium Size Companies In The Bogotá – Cundinamarca Region Demand Consulting Services? (Essay Sample)

The University of Manchester,
Alliance Manchester Business School
Why small and medium size companies in the Bogotá – Cundinamarca region demand consulting services?
This project report is submitted in partial fulfillment of the requirements for the Degree of Master of Business Administration
Declaration:
No portion of the work referred to in this project report has been submitted in support of an application for another degree or qualification of this or any other university or other institute of learning;
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Acknowledgments: I would like to thank the time and the invaluable contributions of the supervisor of this project, who enriched the analysis and methodological aspects to produce a work of recognizable technical value, and the support of the directives of Prodoa, to have a greater understanding of a typical SME consultancy in Bogotá - Colombia. I would also like to thank all surveyed companies for their insightful responses to this important project. The regression results were performed using SPSS Statistical Software.
Table of Contents
TOC \o "1-3" \h \z \u 1.Executive summary. PAGEREF _Toc466007770 \h 52.Introduction. PAGEREF _Toc466007771 \h 63.Industry, Company Background and Client’s requirements. PAGEREF _Toc466007772 \h 74.Literature Review: PAGEREF _Toc466007773 \h 84.1. The characteristics of SMEs PAGEREF _Toc466007774 \h 94.2. The process and distinct features of the consultancy services for SMEs. PAGEREF _Toc466007775 \h 94.3. The effectiveness of consultancy from the viewpoint of the SME. PAGEREF _Toc466007776 \h 114.4. The drivers and motivations of the demand for consulting services for SMEs. PAGEREF _Toc466007777 \h 135.Analysis: Research Findings and Implication to Research Objectives. PAGEREF _Toc466007778 \h 145.1. Objective 1. To identify the main factors on the demand of consulting services from the studies of the academic literature. PAGEREF _Toc466007779 \h 145.2. Conceptual model. PAGEREF _Toc466007782 \h 17Figure 1: Conceptual Model. PAGEREF _Toc466007783 \h 185.3. Methodology and Data. PAGEREF _Toc466007784 \h 185.4. Results: PAGEREF _Toc466007785 \h 215.5. Objective 2. To test and validate the factors in the econometric model, with the highest explanatory value of the demand of consulting services. PAGEREF _Toc466007789 \h 255.6. Objective 3. To contrast the results from the model, with the findings from the academic studies. PAGEREF _Toc466007796 \h 306.Conclusions and recommendations. PAGEREF _Toc466007797 \h 347.References: PAGEREF _Toc466007798 \h 36Appendix A: PAGEREF _Toc466007799 \h 41Appendix B: PAGEREF _Toc466007800 \h 43
List of tables
Table 1. Determinant of the consulting services of SME in the academic literature. PAGEREF _Toc466007780 \h 14
Table 2. Main factors explaining demand for consulting services. PAGEREF _Toc466007781 \h 16
Table 3. Characteristics of the companies in the sample. PAGEREF _Toc466007786 \h 21
Table 4. Characteristics of the respondents in the sample. PAGEREF _Toc466007787 \h 22
Table 5. Characteristics of the demand for consulting services. PAGEREF _Toc466007788 \h 24
Table 6. Test of model coefficients. PAGEREF _Toc466007790 \h 25
Table 8. Model Summary. PAGEREF _Toc466007791 \h 26
Table 9. Percentage predicted by the model. PAGEREF _Toc466007792 \h 26
Table 10. Variables in the model PAGEREF _Toc466007793 \h 27
List of figures
Figure 1: Conceptual Model. PAGEREF _Toc466007783 \h 18
Figure 2 ROC Curve. PAGEREF _Toc466007794 \h 28
Figure 3 CHAID decision tree. PAGEREF _Toc466007795 \h 29
1 Executive summary.
This project aims to determine the factors of the demand for consulting services for small and medium-sized enterprises in the Bogota – Cundinamarca region, which, in principle, are hypothesized, different from those of developed countries. Understanding the reasons for those companies that have a greater probability of demanding the consulting services, is possible to offer insights to SME consulting services of the most important factors which determine the likelihood of hiring external advice. The main factors on demand for consulting services, were identified in the academic literature and are related to the respondents’ characteristics such as gender, age, educational level and features of the SME as the number of employees, total assets, number of years in the market and some related to the consulting activity itself, like the average tariff paid per hour and the type of services.
Furthermore, the corporate and respondents’ features information was obtained from a sample of small and medium-sized companies in the city of Bogota - Colombia, through online surveys and the data gathered was validated and analyzed through a binary logistic regression model and CHAID method. The results of the regression model show that the most important factors in the demand for consulting services is the size of the company measured by the number of employees and total assets and the type of services, as in the case of accounting and auditing, and this was validated by the CHAID method. Some of the variables tested to confirm what other academic studies have found in developed countries. Nonetheless, other variables do not explain the hiring of external advice, as in the case of the educational level of the respondent, the number of years of the companies in the market or even the tariff paid. The results of the model and the CHAID method, indicate that the SME in Bogotá - Colombia, should focus their efforts and would have a greater impact on larger companies, and by offering some consulting services.
2 Introduction.
The research aim of the project is to understand why small and medium-size companies in the Bogotá – Cundinamarca region, demand consulting services, where the factors in underdeveloped countries like Colombia, in this research are hypothesized, to be different from those of the developed nations.
To test the above, some data related to company profiles, respondent characteristics and consultancy features, was collected from a sample of SMEs in the Bogotá – Cundinamarca region, to be validated and tested with an econometric model and statistical methods, to contrast the results with the findings of some of the studies from developed countries, to offer insights to SMEs consulting companies, as in the case of Prodoa SAS, of the enterprises that would likely demand those services.
The project’s objectives are as follows:
Objective 1. To identify the main factors on demand for consultancy services from the studies in the academic literature. There are several studies from developed countries, as in the case of (North et al., 2001); (Johnson et al., 2007); (Robson and Bennett, 2000, 2010), and some from developing nations (Nicolescu, 2014), which have discussed some factors and motivations on the demand for consulting services by SMEs.
Objective 2. To test and validate the factors in the econometric model, with the highest explanatory value of the demand for consulting services. The data collected from the sample of SMEs in Bogotá will be tested and validated with a binary logistic regression model and CHAID method to find the relationship of the distinct variables with the demand for consultancy, and determine the ones with the maximum levels of significance.
Objective 3. To contrast the results from the model, with the findings from the academic studies. The results from the model will be contrasted with the findings in the academic literature, to understand whether or not the factors which explain the demand of consultancy are similar or differ between developed and developing countries.
The project document initiates with a discussion of the industry, company background and client’s requirements. Additionally, it will explore the academic literature within the context of consulting services from the demand side for the small and medium-size companies. Then, provides details of the data and methodology used with the corresponding analysis and the results of the model, to meet the project’s objectives. Finally, concludes a...