A Model of Management Consultants

Posted: 11 Aug 1999

See all articles by Stephen C. Hansen

Stephen C. Hansen

University of Southern Maine - School of Business

Date Written: May 1999


This paper creates a model of how management consultants aid clients in their cost reduction programs. It shows the impact of four distinct types of consultants. Brains consultants increase the number of potential options and improve the pool of possible cost reduction techniques. Procedure consultants reduce the cost of installing techniques and allow the firm to attempt techniques with lower potential payoffs. Grey hair consultants provide two distinct types of guidance. Grey hair customization consultants increase the benefit from successfully installing a technique and raise the expected value of all techniques. Grey hair evaluation consultants provide improved information about the firm's possible options. Improved information can have two potential effects: it can weed out unfavorable techniques, or it can allow the firm to place greater reliance on its information and attempt more marginal techniques.

JEL Classification: D80, L84, M40, M46

Suggested Citation

Hansen, Stephen C., A Model of Management Consultants (May 1999). Available at SSRN: https://ssrn.com/abstract=169808

Stephen C. Hansen (Contact Author)

University of Southern Maine - School of Business ( email )

P.O. Box 9300
Portland, ME 04104
United States

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