W16499
MACPHIE & COMPANY: THE GROWTH IMPERATIVE
Karin Schnarr and David Kunsch wrote this case solely to provide material for class discussion. The authors do not intend to illustrate
either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying
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Copyright © 2016, Richard Ivey School of Business Foundation
Version: 2016-08-24
In March 2015, Hugh MacPhie, the founder and principal of MacPhie & Company (MacPhie) knew that
his company was at a crossroads. Founded in 2004 in Toronto, Ontario, Canada, the company offered
consulting services related to strategy development, marketing and communications, reputation
management, and branding, primarily to Ontario-based firms in the public, non-profit, and private sectors.
Hugh worked hard to ensure that his company maintained an entrepreneurial culture that fostered
innovation and continual learning while ensuring that all client projects followed “the MacPhie Way.”
Although MacPhie had been financially successful over the years, it had struggled with growth. Hugh had
set a goal of growing MacPhie to at least 20 consultants by 2020. He knew that in order to do that, he would
need to figure out how to appropriately scale the business. This would include considering all facets of the
business: revenue generation to support a larger model; ensuring consistent profit margins; an appropriate
client mix; services offered; teachable methodologies and consulting processes; most effective
organizational structure and human resources; geographic locations; and awareness-building efforts. Hugh
was confident that there was a larger market for his company’s services; historical data demonstrated that
once organizations hired MacPhie, they kept coming back.
It had been over a decade since MacPhie had been established. Hugh felt that it was time to be bold. He
commented, “I want to push MacPhie to the next level.” The challenge was how to get to that level and
sustain it.
THE CONSULTING INDUSTRY
MacPhie provided consulting services related to management, strategic planning, communications, and
market research. Given the volatility of the consulting sector, companies had to balance doing work out of
scope that would bring in guaranteed revenue with staying true to the vision for the company and hoping
that business in that area would come through the door.
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Management Consulting
According to Statistics Canada, management consulting firms in Canada were defined as follows:
Establishments primarily engaged in providing advice and assistance to other organizations on
management issues, such as strategic and organizational planning; financial planning and budgeting;
marketing objectives and policies; human resource policies, practices and planning; and production
scheduling and control planning.1
In 2014, the Canadian management consulting industry had revenues of approximately CA$8 billion,2
employing 65,970 people in 44,271 businesses. Given the service nature of the industry, it had suffered a
negative impact from the 2008 financial crisis, which created stagnant demand from the business
community. From 2009 to 2014, there had been only a 0.9 per cent annual growth rate. However, over the
next five years, revenues were expected to grow faster “as a result of rising corporate profit, an increasing
number of businesses, and growing demand from the financial services sector.”3 The industry was
fragmented: 87.4 per cent of companies in this sector were micro firms (one to four employees), and 12.5
per cent companies were small firms (five to 99 employees).4 The market leaders were companies with
national and international scope, including Accenture PLC, Deloitte, and McKinsey & Company; however,
there were many unincorporated firms where the owner would draw earnings from the firm’s profits rather
than from a salary. The largest expenses of firms in this sector were wages and commissions, as well as
rent. Geographically, firms were generally situated in Canada’s urban centres, with the majority in Ontario
(44.3 per cent), Quebec (18.8 per cent), Alberta (15.7 per cent), and British Columbia (15.3 per cent).5
Strategic Planning and Communications Planning
The boundaries of the strategy and communications industries in Canada were not fixed; they often
overlapped, depending on the needs of clients. Strategic planning included leading mission/vision/values
definition programs for clients and developing focused plans to help clients prioritize and achieve their
strategic aims. Further, strategic planning could be more broadly interpreted to include issue management
activities, or simply providing guidance and counsel to clients (often around the clock) to assist with
organizational and personal goal achievement.
The communications industry included disparate activities like public relations, advertising, public affairs,
corporate communications, brand management, and marketing activities. Due to the significant overlap in
the services offered, it was difficult to determine the market size of the segments in the communications
sector. In 2014, Statistics Canada reported that there were 17,441 advertising and related communications
(e.g., public relations) firms and sole practitioners in Canada. Similar to management consulting, firms in
this sector were concentrated in urban centres to be close to businesses, primarily in Ontario (44.8 per cent),
Quebec (25.4 per cent), British Columbia (13.5 per cent), and Alberta (9.4 per cent). The vast majority of
firms were micro (61.9 per cent) and small businesses (36.8 per cent).6
1
“Management Consulting Services (NAICS 54161): Definition,” Government of Canada, accessed May 16, 2016,
https://strategis.ic.gc.ca/app/scr/sbms/sbb/cis/definition.html?code=54161&lang=eng.
2
All figures are in CAD unless otherwise specified; CA$1 = US$0.78 on March 1, 2015.
3
“Management Consulting in Canada: Market Research Report,” IBISWorld, accessed February 27, 2015,
www.ibisworld.ca/industry/default.aspx?indid=1421.
4
“Administrative Management and General Management Consulting Services (NAICS 541611): Establishments,” Government
of Canada, accessed February 28, 2015, www.ic.gc.ca/app/scr/sbms/sbb/cis/establishments.html?code=541611&lang=eng.
5
“Advertising and Related Services (NAICS 5418): Establishments,” Government of Canada, accessed February 28, 2015,
https://strategis.ic.gc.ca/app/scr/sbms/sbb/cis/establishments.html?code=5418&lang=eng.
6
“Administrative Management and General Management Consulting Services (NAICS 541611): Establishments,” op. cit.
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Strategy and communications consulting firms were hired by companies to augment in-house resources, or
because they had subject-matter expertise or specific skill sets (e.g., speech writing). The lack of industry
specificity made it challenging to determine core competitors because firms competed on multiple elements
based on particular staff abilities, experience, and relationships. In addition, many firms offered related
services. For example, in the past, MacPhie had offered clients corporate communications, speech writing,
communications content development, project management, and issues management services. MacPhie had
also been involved in joint client projects with advertising, public relations, and public affairs firms to
develop communications programs and hone communications messages on behalf of clients.
Market Research
The market research industry in Canada accounted for approximately $0.75 billion in market research
activity annually. Traditionally, this industry included all aspects of market intelligence and survey
research, including social research, competitive intelligence, data mining, insight, and knowledge
management.7 The industry had large, national companies (e.g., Pollara Strategic Insights, Environics
Analytics, and Harris/Decima), smaller niche firms specializing in specific content areas (e.g., health care
or agriculture), and individual practitioners. Customers of market research services included financial
institutions, major retailers, insurance companies, telecommunications firms, and manufacturers.
MacPhie was a member of the Market Research and Intelligence Association of Canada. As a member of
this industry association, the company was bound by a code of conduct and best practices guidelines. The
code covered issues related to the ethical treatment of research participants, complying with privacy
requirements, and appropriate management of client information.8
COMPETITIVE LANDSCAPE
It was difficult to define MacPhie’s competitive environment given the diversity of engagements and the
multi-dimensional skill set that the MacPhie team possessed. Firms included as its competitors fell into
three categories:



Larger firms who had a national or international scope and a broad spectrum of services (e.g., public
affairs/public relations agencies, and consulting firms)
Industry-focused providers (e.g., hospital strategic planning firms)
Individuals with industry, agency, or government expertise working as sole proprietors or working loosely
with others who had completely different skill sets (e.g., media training or public relations firms)
As the founder of a small firm that employed both creative and analytical approaches, Hugh had a good idea of
the companies against which MacPhie competed for business. Principals at these firms were in his personal
network, and he considered many of them friends. However, it was unclear to him which one posed the strongest
threat, at that time and in the future. Hugh stated, “Moving forward, I want my company to be more focused, so
we have a more definitive competitive positioning. That focus includes truly being a boutique consultancy that
specializes in articulating organizations’ identities and helping to shape their future direction.”
7
Market Research and Intelligence Association of Canada, MRIA 2013 Annual Report, accessed March 1, 2015, http://mriaarim.ca/sites/default/uploads/files/MRIA-Annual-Report-ENG-2014-final.pdf.
8
Information related to the code of conduct can be found on the MRIA website at http://mria-arim.ca/aboutmria/standards/code-of-conduct-for-members.
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MACPHIE & COMPANY
Hugh MacPhie founded his company with the intent of being the McKinsey & Company of marketing and
communications. Hugh saw a gap in the marketing and communications field to provide high-end,
sophisticated strategic counsel, more along the lines of a management consulting model than the approach
of a public relations agency, advertising firm, or research house. Within the context of that initial idea,
Hugh set out to build his practice. Early on, that focus produced four kinds of engagements: qualitative
research work; speech writing and developing communications content; planning communications; and
provision of strategic counsel. In its first year, MacPhie achieved gross revenues of over $382,000—nearly
double Hugh’s mid-range projection. The company quickly grew to five employees but was reduced to a
single employee working with Hugh after the impact of the global recession in 2008. Revenue numbers had
grown marginally over time. Paul Tambeau, a former MacPhie senior associate noted, “When I worked
there, the company struggled to get beyond the adolescence phase. It was bigger than a single consultant
who has hung out his or her shingle, but not a full-fledged consulting firm.”
Organizational Structure
MacPhie started out as a virtual organization in 2004, with all employees working from their homes. After
2009, MacPhie moved in and out of various physical office spaces in downtown Toronto, eventually sharing
such an office with a larger public relations agency.
In March 2015, MacPhie consisted of four employees: Hugh, two associates, and one analyst (see Exhibit
1). An associate was technically a more senior position than an analyst. In practice, however, MacPhie was
a flat organization where all staff worked collaboratively on engagements.
Typically, Hugh was the client-facing lead on projects. In the past, senior associates had also served as
client-facing leads for accounts, and were responsible for assisting with business development. No longer
having senior associates meant that the company lacked the leadership it needed to replicate offices in
different markets. It also meant that Hugh spent a great deal of time with existing clients, which limited his
time for developing new business.
Hugh had experimented with various organizational structures. Over the years, Hugh had worked with a
number of external consultants to satisfy workflow requirements and specific client needs. None of these
consultants had become full-time employees of MacPhie. In early 2014, Peter Nelson, a senior-level
executive with marketing and advertising expertise, joined MacPhie as an equity partner. Over the course
of that year, Nelson and Hugh determined that they did not have the same vision of where the firm should
be focused, so Nelson left the company.
Human Resources
MacPhie never had more than five employees, and no employee (other than Hugh) had been with the
company longer than five years. Some employees were not a good fit with the company, so they did not
stay long. Others were smart and successful but were mainly interested in building their resumes with entrylevel consulting work experience before moving into sectors that truly interested them—like financial
services—or moving to larger, more global consultancies.
MacPhie hired well-rounded junior employees who were able to facilitate focus groups, conduct market
research, write well, and demonstrate strong social skills. The company had created a detailed process
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through which new employees were hired to ensure a strong cultural fit, as well as a formal on-boarding
process for these new employees; while they were working as junior analysts, they were taught the
company’s approaches, methodologies, and the subtleties of engaging clients once they were on board.
With MacPhie’s diverse range of clients and projects, it took staff several years to develop the varied skills
required. Once fully trained, a junior employee became an analyst.
MacPhie’s compensation policy had always been informal. There was no clear explanation of how one
could receive a raise or promotion; these were typically awarded at Hugh’s discretion. The company’s
guidelines stated that analysts started at a salary of $50,000, and could receive bonuses of 10 to 15 per cent
of their salary for meeting expectations set by Hugh. These bonuses were awarded during the performance
appraisals that were held twice a year. Associates (one level above analysts) received a salary of $70,000
to $80,000 with a similar bonus structure. Principals received $150,000 plus an undetermined semi-annual
bonus, largely based on the company’s current cash flow and the robustness of the existing business
pipeline. Salaries varied over the years depending on the experience and skill set of the hired individuals.
All employees received formal health benefits and three weeks of paid vacation, but there was no employee
pension plan. The company was generous with additional days or half-days (it had no set number of sick
days, for example), and the office typically closed for at least a week over the Christmas holidays.
Staff tracked their time using standard, web-based consultant time-tracking software. The use of the timetracking software allowed Hugh to tell at a glance whether projects were on budget, the number of hours
staff were spending on billable versus non-billable time, and how efficiently each project was running.
Employee reviews were formally held twice a year, but informal feedback was an ongoing process, given
Hugh’s desire for continual improvement in every facet of the business. This review process applied to
Hugh to a lesser degree. He was open to feedback from staff, and accountability on this front was more
evident with a second partner. However, without any direct mentor for Hugh, there was a limit to his
potential for skill development through internal means.
Corporate Governance
MacPhie was a privately held business with ownership retained by Hugh and members of his family. The
company had a voluntary advisory board that consisted of members of Hugh’s professional network and
former clients; they were often senior leaders with significant business expertise. The board met annually,
but Hugh sought advice from individual board members as needed and consulted with them often to gain
their advice on how to grow the company. Hugh was completely transparent with them in terms of
MacPhie’s financial and management performance.
Organizational Culture
Over the years, Hugh had created and honed MacPhie’s philosophy so that it reflected the culture he wanted
to foster in his company (see Exhibit 2). Hugh commented, “We preach the importance of culture as a
source of sustainable competitive advantage for our clients, so we take our own culture seriously as well.”
Given the service-based nature of his business, he felt that the existing, positive corporate culture was
critical to the current and future success of his company. Hugh stated, “I work hard to ensure open
communication and a positive working relationship between all employees. I am completely open with all
the staff about the financial performance of the company. This has to continue as we grow larger.” There
was a strong management preference for low risk, both financially (e.g., low levels of debt) and in terms of
corporate reputation.
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The MacPhie Way: Plan, Learn, Think, Talk, and Celebrate.
Hugh strongly believed that there needed to be consistency in terms of the company’s approach to client
engagements, an approach that he called “the MacPhie Way.” He felt that this served as a differentiator
from other smaller companies. MacPhie was able to demonstrate to prospective and current clients that
there was a methodological rigour to its approach to client projects. The MacPhie Way also offered a
template for staff to follow when managing projects.
The MacPhie Way consisted of five phases: Plan, Learn, Think, Talk, and Celebrate.
Plan: The Plan phase was the first part of any engagement where Hugh and assigned members of the team
sat down with the client to discuss in more detail both the objectives of the project and the process that
would be used. This allowed MacPhie to ensure alignment across the entire team. Generally, the Plan phase
involved one or two meetings to clarify the objectives and, in order for the company to report back with a
more detailed project plan, each project was separately scoped and budgeted. Clients signed a letter of
agreement at the beginning of the project that outlined the parameters of the project, the deliverables, a
project timeline, and a budget. Expenses were usually outside the original budget but had to be approved
by the client prior to booking. Administrative costs to run each project were usually built into program
budgets, rather than appearing as a separate line item.
Learn: The Learn phase occurred once the client signed off on the Plan phase. MacPhie gathered
information from both the client and external sources in order to gain a broader understanding and
awareness of the client’s environment from an objective point of view. This stage could include data
gathering from facilitated focus groups and from interviews with employees, partners, and key stakeholders,
as well as from data analysis. The process sometimes uncovered issues that had not been originally
presented (or contemplated) by the client, which were then incorporated into the plan.
Think: The Think phase involved MacPhie team members taking the information gathered through the
Learn phase and thinking, as a team, about the best possible solution(s) to achieve the objectives as set out
in the Plan phase. This phase included analyzing potential alternative strategies to develop solutions that
were creative but realistic. The Think stage was iterative, often involving significant back-and-forth
interaction with the client.
Talk: The Talk phase occurred when the company presented its findings to the client. This phase often
included a written report that was customized to the needs of each specific client.
Celebrate: The Celebrate phase allowed MacPhie to go back to the client at the end of (or a short time
after) the project to measure the impact and effectiveness of the work that had been completed. This phase
was important because it provided an opportunity for MacPhie to maintain client relationships and for future
business, based on recommended next steps. The company had often struggled to conduct the measurement
aspect of this phase, given the subjective nature of deliverables.
The MacPhie Way had proven to be a useful template for the company from a project planning perspective,
both internally and as a method for describing the engagement process to clients. It was unclear how many
competitor firms used a similar approach.
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THE MACPHIE BUSINESS MODEL
Core Activities
MacPhie’s core activities had evolved significantly from 2004 to 2015. At the onset, the company offered
speech writing, corporate communications, and market research, which reflected Hugh’s personal skill
strengths and experiences. As MacPhie became more mature, it expanded its offering based on the skill sets
of its employees. New services included report writing, business planning, training programs (in areas
including customer service, persuasive communications, and change management), grant writing, group
facilitation, and brand definition. If clients approached MacPhie with service requests, the company tried
to accommodate them, even if they were not part of the traditional offering. Although this brought in
additional revenue, it sometimes resulted in narrow profit margins, given the time required by the employee
to master the delivery of services that might be tangential to existing offerings.
By 2015, MacPhie focused on four main areas, as described by Hugh:
First, we offer strategic planning. Our process helps organizations to articulate their mission, vision,
and values, and establish clear priorities and strategic directions. Second, we offer market research. Our
focus groups, stakeholder audits, and online research methodologies seek deeper insight by asking better
questions, and capture the thoughts, feelings, values, and personal identity of target audiences. Third,
we offer brand and culture definition. Our most successful engagements have involved helping
organizations, products, or people to determine how they want to live in the minds of their target
audiences. We also help organizations achieve competitive advantages by articulating their aspirational
cultures—and bringing that culture alive.
MacPhie also concentrated on communications counsel, planning, and execution due to Hugh’s background
in communications and speech writing. This offering formed a major portion of revenues.
The company’s small staff and minimal administrative overhead allowed MacPhie to be competitive in its
pricing, but it did not attempt to be the lowest-cost provider. Hugh stated, “I feel that our offering is unique
through an ability to deeply understand the client’s needs and the MacPhie Way.” Although there was some
opportunity for economies of scale in multiple engagements from a single client, or in similar projects,
MacPhie delivered customized approaches for each client, rather than offering a one-size-fits-all solution.
Clients
In considering MacPhie’s list of clients, Hugh noted, “Our approach works anywhere with any sector,
although the majority of our work has been in the health care and financial services sectors.” While MacPhie
did most of its business within the public and non-profit sectors, its client list had included major retailers,
post-secondary institutions, telecommunication firms, health care organizations, technology companies,
financial service providers (including banks and insurance companies), industry associations, and large
national charities. Typically, the direct clients who engaged MacPhie comprised senior executives or heads
of divisions within their organizations.
Prior to 2015, MacPhie had focused on strategic planning and communications, with a growing emphasis on
strategy engagements (see Exhibit 3). Project budgets ranged from under $10,000 to over $100,000. Hugh
tried not to accept new client projects below $5,000, given the amount of time required to become familiar
with the file, although the company would often conduct several projects in this budget range every year.
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Business Development
Although business development was largely driven by Hugh, employees at all levels of MacPhie received
10 per cent of the profits of any business they brought in to the company. MacPhie largely sourced its
business through two major channels: Hugh’s network and word of mouth. Having worked at Procter &
Gamble Co. and in government agencies, as well as having been an active member of a number of
professional networks, Hugh had an extensive list of contacts, many of whom were senior leaders in the
public and non-profit sectors. These contacts were either approached by Hugh directly with project
suggestions, or contacted Hugh themselves for help with their organizational challenges. When companies
sourced MacPhie through these channels, they were really hiring Hugh. As such, clients expected
significant face time with Hugh. During the first engagement, clients gained exposure to the associates,
who then took over the client relationship for subsequent projects. Once MacPhie completed a project for
an organization, the company was often hired back.
The second channel was through word of mouth or client referrals. These referrals tended to lead to “warm
requests for proposals,” where a member of the proposal award committee invited MacPhie to bid, as well
as sole-source lower-budget work, such as one-off facilitated retreats. Word-of-mouth referrals drove some
traffic to MacPhie’s website (www.macphie.ca), where potential clients familiarized themselves with the
company’s offerings and then contacted MacPhie via the general email address provided on the website.
Recently, the company had received a number of unsolicited calls from potential new clients who had heard
about MacPhie and were interested in retaining the firm for projects across the spectrum of MacPhie’s
offerings. These new clients were comfortable working with associate members of the MacPhie team; they
were not specifically looking for Hugh to lead the project.
In addition, analysts at MacPhie were responsible for monitoring websites like MERX and Biddingo, where
organizations posted official requests for proposals (RFPs). Given the highly competitive process, it was
very rare for MacPhie to win business through this channel, particularly when it did not have a previous
relationship with the company or a warm contact. In fact, MacPhie had not won a single project through a
formal RFP process in the past three years, unless there had been a direct invitation to bid. The company
had been told that the value it brought to clients was not as evident in its written proposals as it was in
person. Responses to RFPs also took a significant amount of staff time to prepare, given the extremely
exacting requirements that were often stipulated by the company for the proposal.
Marketing
MacPhie used no paid advertising to promote the company. The company’s website had been optimized
for computer searches, but MacPhie did not advertise online. Its main promotional activity was an annual
party held at Hugh’s home, to which past clients were invited. It was well attended (and appreciated) by the
company’s clients. MacPhie also sent holiday baskets at Christmas to existing clients and selected former
clients. Uniquely designed, thematic holiday cards were sent to a much broader list of contacts. The cards
were signed by all of the consultants and were not personalized for each recipient.
In late 2009, Hugh self-published a book titled Don’t Forget Your Cape! What Preschoolers Teach Us
About Leadership & Life.9 The book generated additional publicity for the company and provided a platform
for Hugh’s keynote speaking work, both for individual clients and through the National Speakers’ Bureau,
where Hugh was on the speakers’ roster. Hugh commented, “I think publishing the book really helped build
9
Hugh D. MacPhie, Don’t Forget Your Cape! What Preschoolers Teach Us About Leadership & Life (Bloomington, IN:
Authorhouse, 2009).
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my reputation as a thought leader. It was also something that really stimulated me intellectually. I want to
publish more books, but am so busy with client work right now that it is hard to find the time.” In addition
to the book, all staff at MacPhie wrote articles and thought pieces related to communications, marketing,
and brand issues, which were posted on the MacPhie website. All individuals on the company’s email list
were notified when a new article was posted, to help MacPhie remain fresh in the minds of current and
former clients. Hugh stated, “Whenever we post a new article and let our e-mail list know, I get a handful
of emails letting me know how much they enjoy them. I don’t think it drives a lot of new business, but it is
a cheap and easy way for us to remind people about MacPhie.”
Financial Performance
MacPhie had been profitable every year of its history. In 2014, revenues were close to $1 million, with a
net income of $278,000; this was a significant improvement in terms of financial performance over 2013,
as reflected in MacPhie’s balance sheets, income statements, and cash flow statements for 2013 and 2014
(see Exhibits 4, 5, and 6).
THE PATH FORWARD
After leading MacPhie for 10 years, Hugh said:
Clients are pleased with the work we do and we are making a good margin on that work. But I am
frustrated with our apparent inability to grow, given that success. We haven’t been able to consistently
break through the annual $1 million revenue barrier. What we need is an aggressive plan that will grow
the business. My vision is a company with at least 20 consultants by 2020. The challenge is to come up
with a plan that we can follow to achieve that target. If we can’t plan our own growth, we shouldn’t be
advising clients on how they can do it. The plan will need to consider all aspects of growth: strategic,
organizational, and financial. Once we have that plan, we will need to figure out how to implement it in
order to achieve my vision.
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EXHIBIT 1: MACPHIE & COMPANY ORGANIZATIONAL ROLES AND RESPONSIBILITIES AT
DIFFERENT LEVELS OF SENIORITY
Level
Principals
Senior Associates
(Strategic Practice
Leads)
Associates
(Insight Developers)
Analysts
(Critical Thinkers)
Description of Primary Responsibilities
Elected to this level by the existing principals
Have equity in the firm
Provide senior counsel to clients
Play a major role in business development
Act as a mentor to others in the organization
Ensure the brand and reputation are being managed according to plan
Act as principals-in-training
Manage their own client accounts
Play a large role in business development
Act as a mentor to others in the organization
Practice leads in sectors (health care, financial sector, etc.) and specialties
(strategic planning, brand definition)

Should achieve principal status within 3 to 5 years, depending on performance

Continue corporate administrative responsibilities

Expect to lead the thinking on key components of client engagements, especially
research and analysis in the learning phase

Bring advanced analytical and idea synthesis skills

Manage client file management, especially on smaller engagements

Have a strong ability to develop and edit exceptional client products

Help identify and respond to requests for proposals for business opportunities

Depending on performance, expect to be promoted to strategic practice lead in 18
months to 3 years
Core operations and lead responsibilities

Manage corporate administration—accounting, tax, supplier relationships

Organize project logistics and project administration

Manage client projects, including developing and managing critical paths and workbacks, contact reports after client meetings, proactive client interface, etc.











Consulting responsibilities

Be proficient in analysis, including hypothesis development

Conduct secondary research and information gathering to identify key concepts and
facts

Organize data and information into logical categories

Develop client-facing products, including reports and presentations

Expect to be able to participate in client briefings and offer details and specifics that
lead to broader conclusions
Firm-building responsibilities

Help identify and respond to requests for proposals for business opportunities

Enhance and support the firm proactively to help deliver on overall goals

Depending on performance, expect to be promoted to insight developer in 1 to 2 years
Source: Company documents.
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EXHIBIT 2: MACPHIE & COMPANY PHILOSOPHY
We believe in passion. All great artists pour their hearts and souls into their work. You can tell when a
team has passion for their work because it shows. And the results are seen in the target audience’s
response.
We believe in science first, and art second. Gather information and plan first. Then creativity can take over.
We believe that defining and shaping your brand is central to any great strategy. Everything—from
people to products and services to trade associations—has a brand. If you don’t influence and shape the
way your target audience perceives your brand, other people will.
We believe in the power of insights into key audiences. A clear, detailed knowledge of your target
audience can be a source of competitive advantage. Define your target clearly, knowing not only their
demographics, but also their habits, beliefs, and aspirations. Think about them day and night. Watch them.
And anticipate what they will do next.
We believe in sweating the details. No creative detail should be left to chance or unplanned. Semiotics—
which is a science of symbolism—tells us that there is meaning in everything. Every aspect of a work
product—from colour, to font, to the placement of design elements—influences your audience’s net takeaway. Never let anyone tell you that a detail doesn’t matter. If they made it green, why green? Why not
orange? If they can’t answer, they probably haven’t sweated the details properly.
We believe in stories. For thousands of years, these are the tools people have used to communicate.
Paint pictures in the mind. Use parables. Tell stories. They work.
We believe that emotion trumps cognition. If you can get your audience to pay attention to you, and to
like you, then it is much easier to get them to believe your facts. Put differently: lead with the heart, and the
head will follow.
Source: Company documents.
EXHIBIT 3: MACPHIE & COMPANY 2014 PROJECTS BY SIZE, CLIENT, AND PROJECT TYPE
Number
of
Projects
Sectors
Tier 1 ($100,000 +)
1
Tier 2 ($40,000–99,999)
10
Tier 3 ($10,000–39,000)
10
Tier 4 (< $10,000)
17
Health Technology
Advertising; Mental Health; Health
(Hospital); Post-Secondary Education;
Retail; Health (Industry Association)
Manufacturing; Mental Health;
Government; Post-Secondary
Education; Health (Hospital);
International Non-Profit
Health (Technology); Financial
Services; Social Work; Beverages;
Government; Food Processing;
Health (Hospital); Law; PostSecondary Education; Industry
Association; Environment
Average
Revenue
(in CA$)
$101,718
Tier
Percentage
of Income
(%)
11
$53,751
57
$21,347
25
$4,282
7
Source: Company documents.
This document is authorized for use only in James Anderson's BUSS6000 Sem 1 2020 at University of Sydney from Mar 2020 to Jun 2020.
Page 12
9B16M133
EXHIBIT 4: MACPHIE & COMPANY 2013 AND 2014 BALANCE SHEETS (UNAUDITED) (IN CA$)
2014
ASSETS
Current Assets
Cash
Accounts Receivable
Deposits Paid
Undeposited Funds
Total Current Assets
Fixed Assets
Equipment—Accumulated Amortization
Equipment—Cost
Furniture and Fixtures Original Cost
Furniture and Fixtures Accumulated
Depreciation
Computer Equipment Accumulated
Amortization
Computer Equipment
Total Fixed Assets
Other Assets
Incorporation Accumulated Amortization
Incorporation Costs
Total Other Assets
TOTAL ASSETS
LIABILITIES and EQUITY
Liabilities
Current Liabilities
Credit Cards
3100 ∑ Focus Group Incentive HOLDING
Payroll Liabilities
Federal Income Tax Payable
Accrued Liabilities
Due to Shareholder
GST/HST Payable
Income Tax Payable
Total Current Liabilities
Total Liabilities
Equity
Dividends
Equity
Share Capital
Total Equity
Retained Earnings
Net Income
Total Equity
TOTAL LIABILITIES and EQUITY
2013
Change ($)
Change (%)
$58,372
331,465
4,092
678
$394,607
$133,492
168,073
4,092
0
$305,657
($75,120)
163,392
0
678
$88,950
−56.30
97.20
0.00
100.00
29.10
(2,032)
2,340
9,668
(2,032)
2,341
8,085
0
0
1,583
0.00
0.00
19.60
(5,157)
(5,157)
0
0.00
(16,042)
(16,042)
0
0.00
19,760
8,537
17,705
4,900
2,055
3,638
11.60
74.30
(922)
1,142
220
$403,364
(922)
1,142
220
$310,777
0
0
0
$92,588
0.00
0.00
0.00
29.80
$9,347
8,700
15,143
0
2,250
10,697
40,647
(40,885)
$45,899
$45,899
$8,607
8,700
9,045
37,246
2,250
20,761
28,110
$114,720
$114,720
$740
0
6,097
(37,246)
0
(10,064)
12,536
(40,885)
($68,822)
($68,822)
8.60
0.00
67.40
−100.00
0.00
−48.50
44.60
−100.00
-60.00
-60.00
($116,701)
($120,000)
$3,299
2.80
200
200
195,856
278,111
$357,465
$403,364
200
200
141,376
174,479
$196,057
$310,777
0
0
54,480
103,631
$161,410
$92,588
0.00
0.00
38.50
59.40
82.30
29.80
Note: GST/HST = Goods and Services Tax/Harmonized Sales Tax.
Source: Company files.
This document is authorized for use only in James Anderson's BUSS6000 Sem 1 2020 at University of Sydney from Mar 2020 to Jun 2020.
Page 13
9B16M133
EXHIBIT 5: MACPHIE & COMPANY 2013 AND 2014 INCOME STATEMENTS (UNAUDITED) (IN CA$)
2014
INCOME
Rebates, Refunds, or Credits
Income (Operating)
Speaking Fees
Book Sales
Consulting Fees
Interest Income
Income—Other
Total Income
EXPENSES
Charitable Contributions
Penalties and Interest
Intangible Amortization
Amortization
Expenses (operating)
Bank Charges
Computer Expenses
Donation
Insurance
Office Rent
Office Expenses
Postage and Courier
Professional Services (legal,
accountant, etc.)
Software
Telephone
Meals and Entertainment
Meals Non-Eligible HST
Internal Strategy Sessions
Membership Fees
Printing
Travel and Accommodation
Business Development—Other
Benefits—Premiums
Associates
Payroll Expenses
Professional Development and Training
Wages
Marketing and Promotions
Expenses—Other
Expenses Total (Operating)
Total Expenses
Net Ordinary Income
Income Tax Provision
Net Income
2013
Change ($)
Change (%)
0
1,250
(1,250)
−100.00
3,000
0
911,382
0
350
$914,732
0
998
603,828
120
0
$606,195
3,000
(998)
307,555
(120)
350
$308,537
100.00
−100.00
50.90
−100.00
100.00
50.90
0
958
0
0
400
1,449
114
1,421
(400)
(491)
(114)
(1,421)
−100.00
−33.90
−100.00
−100.00
600
3,850
640
3,488
35,543
7,632
37
14,619
741
495
0
4,747
26,433
4,175
0
41,008
(141)
3,354
640
(1,259)
9,110
3,456
37
(26,389)
−19.10
677.60
100.00
−26.50
34.50
82.80
100.00
−64.40
542
5,757
8,646
685
0
2,412
178
14,999
695
14,685
38,787
12,261
2,230
472,267
7,274
(12,159)
635,664
636,622
$278,111
0
$278,111
508
6,196
9,464
644
41
3,095
77
16,749
837
9,822
0
8,744
0
250,201
3,996
2,627
390,601
393,985
$212,211
37,731
$174,480
34
(439
(819
40
( 41)
(684)
101
(1,751)
(142
4,863
38,787
3,517
2,230
222,066
3,279
(14,787
245,063
242,637
$65,900
−(37,731)
$103,631
6.80
−7.10
−8.70
6.30
−100.00
−22.10
131.00
−10.50
−17.00
49.50
100.00
40.20
100.00
88.80
82.10
−562.80
62.70
61.60
31.10
−100.00
59.40
Note: HST = Harmonized Sales Tax.
Source: Company documents.
This document is authorized for use only in James Anderson's BUSS6000 Sem 1 2020 at University of Sydney from Mar 2020 to Jun 2020.
Page 14
9B16M133
EXHIBIT 6: MACPHIE & COMPANY 2013 AND 2014 CASH FLOW STATEMENTS (UNAUDITED) (IN CA$)
2014
2013
Change ($)
OPERATING ACTIVITIES
Net Income
$278,111
$174,480
$103,631.04
Adjustments to Reconcile Net Income to Net Cash Provided by Operations:
Accounts Receivable
($163,392)
$10,796
($174,189)
Deposits Paid
0
(1,138)
1,138
Accounts Payable
0
(27,221)
27,221
Credit Card 1
163
0
163
Credit Card 2
577
2,789
(2,212)
Focus Group Incentive HOLDING
0
(700)
700
Payroll Liabilities
6,097
1,895
4,203
Federal Income Tax Payable
(37,246)
8,662
(45,908)
Accrued Liabilities
0
750
(750)
Due to Shareholder
(10,064)
12,557
(22,621)
GST/HST Payable
12,536
32,281
(19,746)
Income Tax Payable
(40,885)
0
(40,885)
Net Cash Provided by Operating
$45,897
$215,151
($169,254)
Activities
INVESTING ACTIVITIES
Equipment—Accumulated Amortization
Furniture and Fixtures Original Cost
Furniture and Fixtures Accumulated
Depreciation
Computer Equipment Accumulated
Amortization
Computer Equipment
Incorporation Accumulated Amortization
Net Cash Provided by Investing
Activities
FINANCING ACTIVITIES
Dividends
Retained Earnings
Net Cash Provided by Financing
Activities
Net Cash Increase for Period
Cash at Beginning of Period
Cash at End of Period
Change
(%)
59.40
−1,613.40
100.00
100.00
100.00
−79.30
100.00
221.80
−530.00
−100.00
−180.20
−61.20
−100.00
−78.70
$0
(1,583)
$132
(1,469)
($132)
(114)
−100.00
−7.80
0
548
(548)
−100.00
0
740
(740)
−100.00
(2,055)
0
(1,851)
114
(205)
(114)
−11.10
−100.00
($3,638)
($1,785)
−$1,853
−103.80
$3,299
(120,000)
$35,200
(142,840)
($31,901)
22,840
−90.60
16.00
($116,701)
($107,640)
($9,061)
−8.40
($74,442)
133,492
59,050
$105,726
27,766
133,492
($180,168)
105,726
(74,442)
−170.40
380.80
−55.80
Note: GST/HST = Goods and Services Tax/Harmonized Sales Tax.
Source: Company documents.
This document is authorized for use only in James Anderson's BUSS6000 Sem 1 2020 at University of Sydney from Mar 2020 to Jun 2020.