In this blog post, we explore the KPMG Business Model to explain and understand how the Business Model of KPMG is structured.
KPMG is one of the world’s leading professional services organizations, known for its expertise in audit, tax, and advisory services. Established in 1987, the company has grown into a global powerhouse, with a presence in over 150 countries and employing more than 219,000 professionals. The success and sustainability of KPMG can be attributed to its robust business model, which we will dissect in this blog post using Alexander Osterwalder’s Business Model Canvas.
Before diving into the business model, let’s take a brief look at the company’s history and its founding members. KPMG is an abbreviation for Klynveld Peat Marwick Goerdeler, representing the initials of the four founding members – Piet Klynveld, William Barclay Peat, James Marwick, and Dr. Reinhard Goerdeler. The company was formed as a result of a merger between several established accounting firms, with roots dating back to the 19th century.
The Founders’ Story
Piet Klynveld, a Dutch accountant, founded the accounting firm Klynveld Kraayenhof & Co. in Amsterdam in 1917. This marked the beginning of KPMG’s global journey. In 1870, William Barclay Peat founded his accounting firm in London, which later became known as Peat Marwick. James Marwick, a Scottish accountant, joined forces with Peat to form Marwick, Mitchell & Co. in New York City in 1897.
Dr. Reinhard Goerdeler, a German lawyer and economist, played a pivotal role in shaping the consulting division of Deutsche Treuhand-Gesellschaft (DTG) in the 1960s. DTG would later become KPMG’s German arm. The merger between Klynveld Main Goerdeler, Peat Marwick International, and several other accounting firms in 1987 resulted in the formation of KPMG as we know it today.
The founders shared a common vision of providing quality professional services to clients and contributing to the development of strong, global economies. The company has evolved over the years, adapting to changes in the business environment and continuously refining its services to meet the needs of its clients.
Now that we have a better understanding of KPMG’s origins, let’s examine its business model using Alexander Osterwalder’s Business Model Canvas. This tool offers a comprehensive view of a company’s value proposition, infrastructure, customers, and finances. The canvas is divided into nine building blocks, which we will discuss in detail below.
- Customer Segments
KPMG’s primary customers can be divided into three broad segments:
A. Large corporations: KPMG offers a comprehensive range of services to large multinational companies across various industries such as financial services, healthcare, technology, energy, and telecommunications. These organizations require audit, tax, and advisory services to meet regulatory requirements, manage risk, and drive growth.
B. Small and medium-sized enterprises (SMEs): KPMG assists SMEs with various services such as business planning, financial management, and regulatory compliance. The company also provides advisory services to help SMEs identify opportunities for growth and expansion.
C. Government and public sector organizations: KPMG works with government agencies and public sector organizations to improve efficiency, reduce costs, and ensure compliance with regulations. The company also advises on policy development and provides support for large-scale transformation projects.
- Value Proposition
KPMG’s value proposition is centered around delivering high-quality professional services that help clients manage risk, comply with regulations, and drive growth. The company achieves this through:
A. Expertise and reputation: KPMG’s long-standing history and strong reputation in the professional services industry instill trust in its clients. The company’s global network of experts across various industries allows it to provide tailored and insightful advice to its clients.
B. Comprehensive range of services: KPMG offers an extensive range of services, including audit, tax, and advisory services. This breadth of offerings enables the company to address clients’ diverse needs and serve as a one-stop solution provider.
C. Global presence: With offices in over 150 countries, KPMG can provide its clients with seamless, cross-border services. This global reach also allows the company to adapt to changes in regulations and market conditions, ensuring its clients remain competitive and compliant.
D. Innovation and technology: KPMG invests heavily in technology and innovation, enabling the company to provide clients with advanced solutions that improve efficiency, reduce costs, and manage risk. The company’s focus on digital transformation, artificial intelligence, and data analytics helps its clients stay ahead of the curve in an ever-changing business landscape.
KPMG delivers its services through various channels, including:
A. Direct sales: The company’s professionals engage directly with clients, offering tailored solutions based on clients’ specific needs and requirements.
B. Partnerships and alliances: KPMG forms strategic partnerships with other professional service providers, technology companies, and industry associations to expand its service offerings and reach new markets.
C. Digital channels: The company leverages its online presence, including its website and social media platforms, to showcase its expertise, share thought leadership content, and engage with clients and potential clients.
- Customer Relationships
KPMG’s customer relationships are built on trust, professionalism, and a commitment to delivering high-quality services. The company fosters strong relationships with its clients through:
A. Personalized service: KPMG assigns dedicated account managers and teams to each client, ensuring that clients receive personalized attention and tailored solutions.
B. Ongoing communication and support: The company maintains regular contact with clients, providing updates on regulatory changes, industry trends, and relevant insights.
C. Training and workshops: KPMG offers training programs and workshops for clients, helping them develop the skills and knowledge necessary to navigate the complex business environment.
- Key Activities
KPMG’s key activities can be grouped into three main categories:
A. Service delivery: The company provides a range of professional services, including audit, tax, and advisory services, to its clients.
B. Innovation and technology development: KPMG invests in research and development to create innovative solutions that address clients’ evolving needs and leverage emerging technologies.
C. Talent management and development: The company recruits, trains, and retains a diverse and skilled workforce to maintain its position as a leading professional services provider.
- Key Resources
KPMG relies on several key resources to deliver its value proposition, including:
A. Skilled workforce: KPMG’s professionals are its most valuable asset, providing the expertise and insights necessary to serve clients effectively.
B. Global network: The company’s extensive network of offices across the world enables it to serve clients seamlessly and respond to changes in regulations and market conditions.
C. Intellectual property: KPMG holds proprietary methodologies, tools, and technologies that differentiate its services and drive value for clients.
D. Brand reputation: KPMG’s strong brand reputation and recognition in the professional services industry help attract clients and talent.
- Key Partners
KPMG collaborates with a range of partners to expand its service offerings and access new markets, including:
A. Technology companies: KPMG partners with leading technology companies to incorporate advanced tools and solutions into its services.
B. Industry associations: The company works closely with industry associations to stay informed about regulatory changes, market trends, and best practices.
C. Professional service providers: KPMG forms alliances with other professional service providers, such as law firms and management consultancies, to offer complementary services and expand its client base.
D. Educational institutions: The company partners with universities and business schools to access research, develop talent, and contribute to the development of industry standards and best practices.
- Cost Structure
KPMG’s cost structure primarily comprises:
A. Employee salaries and benefits: As a professional services firm, KPMG’s largest expense is employee compensation, including salaries, bonuses, and benefits.
B. Real estate and infrastructure: The company incurs significant costs related to maintaining its global network of offices, including rent, utilities, and maintenance expenses.
C. Technology investments: KPMG invests heavily in technology and innovation to stay competitive and provide clients with advanced solutions.
D. Marketing and business development: The company spends on marketing and promotional activities to enhance its brand recognition and attract new clients.
E. Professional development and training: KPMG invests in employee training and development to ensure its workforce remains skilled and up-to-date with industry trends and regulatory changes.
- Revenue Streams
KPMG generates revenue through the following streams:
A. Audit services: The company earns fees for providing audit services, including financial statement audits, internal audits, and regulatory compliance audits.
B. Tax services: KPMG generates revenue by offering tax consulting, compliance, and planning services to clients.
C. Advisory services: The company earns fees for providing various advisory services, such as risk management, mergers and acquisitions, business transformation, and technology consulting.
D. Licensing and royalties: KPMG earns revenue by licensing its proprietary methodologies, tools, and technologies to clients and partners.
KPMG’s success as a leading professional services organization can be attributed to its robust business model, which leverages a global network of expertise, a comprehensive range of services, and a focus on innovation and technology. By analyzing KPMG’s business model through Alexander Osterwalder’s Business Model Canvas, we can gain valuable insights into the factors that have contributed to the company’s growth and sustainability.
The company’s ability to adapt to changes in the business environment, continuously refine its services to meet client needs, and foster strong customer relationships has allowed KPMG to maintain its position as a trusted partner for organizations worldwide. As the business landscape continues to evolve, KPMG’s commitment to innovation and excellence will undoubtedly enable the company to remain a global leader in the professional services industry.
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