Access to skills, networks or resources you don't have. For any significant decision it can be valuable to get a different perspective. It can also be a way of protecting confidentiality.
Lets say that you are deciding whether to sell a business unit, or to ramp up investment to try and break through.
- Skills benefit: creating the financial models is something many companies don't do all the time. Using an external consultant may also benefit as they may know current industry valuations.
- Network benefit: They might know other people in the segment who would be interested in your business unit. (for product development this is a better benefit). Counter-argument, it's part of managements job to know about the industry so your own network should be enough.
- Resource benefit: The whole team is busy so bringing in external resource to consider the problem lets internal resource keep focusing on existing business. The counter-argument is that if this is the most important thing to do then existing resource should be focusing on it.
- Different perspective: Someone coming from the outside who's not part of your group think. You can sometimes get access to real expects - counter argument is that they're often not real specialists, you have to test.
- Protecting confidentiality: You may not want it known that you're considering selling the unit. Consultants can act as a natural firewall. Tends to be more useful if you're looking at an external purchase - since in my example they'd have to crawl through the numbers of the unit and that makes it obvious.
The benefit no-one talks about:
- CYA: it's a tough decision and may turn out to be wrong. Helps to have "blah blah international consultancy says that X market will do Y and recommended as follows ...". Counter-argument: get some integrity. In fairness it can help to bolster an argument to have external 'calls to authority'.
Don't forget the bypassing of anti-trust laws. Coordinating prices with your competitors directly: illegal. Asking the same consultancy as all your competitors about what prices you should charge: perfectly legal.
