McKinsey's 7S

McKinsey 7S model

McKinsey 7S model is a useful framework to reviewing capabilities of an organisation from different viewpoints. The 7S model was designed by the consultants (like Robert Waterman, Jr. and Tom Peters) of ‘McKinsey’- an American consulting firm. It covers the key organisation capabilities needed to implement strategy successfully, whether for reviewing a business, marketing or digital strategy. It also works well in different types of business of all sectors and sizes, although it works best in medium and large businesses. The theory helps to change thinking of manager about how companies could be improved.

7S’s are- Strategy, Structure, Systems, Style, Staff, Skills, and Shared value.

They are divided into hard and soft elements.

7S’s  elements: Strategy, Structure, Systems, Style, Staff, Skills, and Shared value	Hard elements: Strategy, Structure and Systems
	Soft elements: Shared values, Skills, Style and Staff

Elements of 7S can be defined as follows:

Strategy: Strategy can be defined as the determination of a course of action to be followed in order to achieve a desired goal, position or vision.

Structure: An organisations structure is the interrelationship of process and human capital in order to fulfill the enterprise’s strategic objectives.

Systems: The organisations information systems and infrastructure.

Staff: Human resources management. The type of employees, remuneration packages and how they are attracted and retained.

Style: Corporate style is a synthesis of the leadership philosophy of executive management, the internal corporate culture generated, and the orientation an organisation adopts to its markets, customers, and competitors.

Skills: The unique or discinctive characteristics associated with an organisations human capital.

Shared Values: The concepts that an organisation utilizes to drive toward a common goal through common objectives and a common value set.

Use of 7S model:

-       Can be used to help analysing the current situation, a proposed future goal and then indentify gaps and inconsistencies between them.

-       Review the effectiveness of an organisation in its marketing operations.

-       Determine how to best realign an organisation to support a new strategic direction.

-       Assess the changes needed to support Transformation of an organisation.

***[N.B]***

Detailed questions to be asked to find out each elements of 7S’s are provided in the following-

Strategy-

-       What is our Strategy?

-       What are the objectives and how do we intend to achieve them?

-       What makes us competitive and how do you deal with competition?

-       What environmental factors affect the business and how do you keep track on the factors?

Systems-

-       What are the main systems that support and drive the business? e.g. Resource planning, financial recording and reporting, information management, HR systems, Communications, etc.

-       What controls are there in the orgaisation and how is status feedback?

Structure-

-       What hierarchical structure does the firm have?

-       What are the reporting mechanisms?

-       How is the organisation divided? e.g. Martix or Bureaucratic?

-       How do the departments and functions co-ordinate activities?

-       Is decision making centralized or decentralized??

Shared Values-

-       What are the corporate values of the organisation?

-       Do these values align with competitive pressure and strategy?

-       What is the ‘internal culture’ like in the work force?

-       Is the culture conductive to progressive improvements?

Style-

-       What is the general Leadership style of the organisation?

-       Is the Leadership participative or largely autocratic?

-       Are there participative teams or just merely groups of people?

-       Are people empowered and encouraged to proactively take risks and challenge the norm?

Skills-

-       In line with the strategy and vision, are there any skills gaps?

-       In line with operations at a team level, are there any skills gaps?

-       How is training and skills monitored and evaluated?

-       What are the strongest skills?

-       What are the core competencies or the organisation or team?

Staff-

-       What positions are vacant or need to be filled?

-       What competency gaps are needed to be filled?

-       What type of people and skills are needed to support the other 7 elements of the firm?

Bibliography:

Plant, R. T. (2000), eCommerce: Formulation of Strategy, NJ: Prentice-Hall, Inc.

Waterman, R.H., Peters, T.J. and Phillips, J.R. (1980) Structure is not organization. McKinsey Quarterly, in-house journal. McKinsey & Co., New York.

Differences between Marketing Strategy and Marketing Planning

Differences between Marketing Strategy and Marketing Planning:

Marketing Strategy: It is the explanation of the goal an organisation needs to achieve with its marketing efforts. Marketing strategy is shaped by organisational goal.

Marketing Planning: Marketing planning is the way an organisation is going to achieve marketing goals.

Overall it can be said that strategy is explanation (thinking) and planning is doing (how strategy can be implemented).

Example:

Objective: To gain broader market adoption.

Marketing Strategy: Introducing into new market segments

Marketing Plan: Developing marketing campaign that reaches out, identifies with and focuses on that specific segment.

Marketing Planning-1

Marketing Planning

The overall purpose of marketing planning and its principal focus is the identification and creation of sustainable competitive advantage.

Implementing the marketing plan is probably one of the most challenging and often fraught areas of business strategy. Marketing planning can be a key contributor to effectively and efficiently managing the business.

How do marketing plans accommodate the future?

A decision made today about allocating resources is dependent upon an interpretation of a known set of variables covering some or all of existing and potential future-

-          Customers

-          Products

-          Prices

-          Costs

-          Production

-          Technology

-          Distribution

-          Competition

-          Regulations

Managers must have an awareness of these variables, even if they do not have complete information. However, today’s know variables become tomorrow’s unknowns, and the only thing certain about tomorrow is that it will be different from today. Thus the marketing planning process must also consider the possible shape and nature of these variables in the future. This is generally sufficient to make good decisions about the optimal allocation of resources to generate today’s business and make us equally competitive for tomorrow’s business.

Benefits of planning:

A good marketing plan will-

-          Help to identify and develop the new skills and procedures that will be required in the future

-          Prepare the company for change so that it can take a commanding lead over those companies that merely react

-          Provide a vehicle for communicating the changes and their effects in an open and non-threatening manner

-          Evaluate and reduce the available options to achieve the best chance of success and the least chance of error.

-          Provide a method for handling complexity

-          Identify the role of reach department and offers the means to co-ordinate their activities

-          Ensure that the company is proactive in its approach to acquiring the capabilities it needs.

Marketing planning process:

Marketing planning process consist of four basic questions-

-          Where are we now?

-          Where do we want to go to?

-          How will we get there?

-          How will we know when we have arrived?

Figure: Marketing planning process

Fish Bone Model/ Cause-Effect analysis

Cause and Effect Analysis/ Fish-Bone Model

Cause and Effect Analysis gives a person a useful way of doing problem analysis. This diagram-based technique, pushes a person to consider all possible causes of a problem, rather than just the ones that are most obvious.

Cause and Effect Analysis was devised by professor Kaoru Ishikawa, a pioneer of quality management, in the 1960s. The technique was then published in his 1990 book, "Introduction to Quality Control." The diagrams that you create with Cause and Effect Analysis are known as Ishikawa Diagrams or Fishbone Diagrams (because a completed diagram can look like the skeleton of a fish). Cause and Effect Analysis was originally developed as a quality control tool, but you can use the technique just as well in other ways.

For instance, one can use it to:

-          Discover the root cause of a problem.

-          Uncover bottleneck in the processes.

-          Identify where and why a process isn't working.

There are four steps to using Cause and Effect Analysis.

-          Identify the problem.

-          Work out the major factors involved.

-          Identify possible causes.

-          Analyze your diagram.

Steps to solve a problem with Cause and Effect Analysis/ Fish-Bone model:

Step 1: Identify the Problem

-          First, write down the exact problem one is facing. Where appropriate, identify who is involved, what the problem is, and when and where it occurs.

-          Then, write the problem in a box on the left-hand side of a large sheet of paper, and draw a line across the paper horizontally from the box. This arrangement, looking like the head and spine of a fish, gives space to develop ideas.

Example:

In this simple example, a manager is having problems with an uncooperative branch office.

Figure 1 – Cause and Effect Analysis Example Step 1

Figure-1

Tip 1: Some people prefer to write the problem on the right-hand side of the piece of paper, and develop ideas in the space to the left. Use whichever approach you feel most comfortable with.

Tip 2: It's important to define the problem correctly. Look at the problem from the perspective of Customers, Actors in the process, the Transformation process, the overall World view, the process Owner, and Environmental constraints.

By considering all of these, one can develop a comprehensive understanding of the problem.

Step 2: Work Out the Major Factors Involved

Next, identify the factors that may be part of the problem. These may be systems, equipment, materials, external forces, people involved with the problem, and so on.

Example:

The manager identifies the following factors, and adds these to his diagram:

-          Site.

-          Task.

-          People.

-          Equipment.

-          Control.

Figure 2 – Cause and Effect Analysis Example Step 2

Step 3: Identify Possible Causes

Now, for each of the factors one considered in step 2, brainstorm possible causes of the problem that may be related to the factor.

Example:

For each of the factors he identified in step 2, the manager brainstorms possible causes of the problem, and adds these to his diagram, as shown in figure 3.

Figure 3 – Cause and Effect Analysis Example Step 3

Step 4: Analyzing Diagram

By this stage one should have a diagram showing all of the possible causes of the problem that you can think of.

Depending on the complexity and importance of the problem, one can now investigate the most likely causes further. This may involve setting up investigations, carrying out surveys, and so on. These will be designed to test which of these possible causes is actually contributing to the problem.

Example:

The manager has now finished his Cause and Effect Analysis. If he hadn't looked at the problem this way, he might have dealt with it by assuming that people in the branch office were "being difficult."

Instead he thinks that the best approach is to arrange a meeting with the Branch Manager. This would allow him to brief the manager fully on the new strategy, and talk through any problems that she may be experiencing.

Branding

Branding

Global Brands

A global brand is branding products with a single brand worldwide. A firm may look at launching the products worldwide with a single brand logo, slogan. In the practice, we see some brands such as Coca Cola, Apple etc. are familiar to us irrespective of the cultural differences and the geographical boundaries we deal with in day to day life. This is where the global branding has come out in action. However a firm needs to carefully analyse the conditions that favour using a same brand name worldwide.

Global brands will have same product attributes, product formulas core benefits, values, same product positioning across the globe. Firm may enjoy high economies of scales through maintaining global brands and the brand awareness effort is less to a firm in the case of global branding. Global brands add prestige and image to the firm in across the globe, and this helps in gaining the market leadership position in both home and foreign countries.

Local Branding

Some firms go by the basis of local branding to mitigate with the cultural barriers, language differences, etc.. For an example, if the local industry is using a similar brand name, then its disadvantageous for the company to go on the global branding, therefore a localised version needs to come up as local branding.

This will help the firm to create a customer mindset, that they are purchasing a local brand that will help them to capture the market.

Whether to use global branding or local branding is a tricky question that needs to be answered by a firm carefully. Maintaining and acquiring well known local brands are a mode of generating access to the local channels, distribution network and established staff. It is more advisable to maintain a local brand by a company after an acquisition as this will help a firm to establish the product in the foreign market more successfully.

Private – Label Branding

This is in increasing threat to most of the large MNCs. They are high frightening competitors who provide the retailer with high margins to gain preferential shelf spare and strong in store promotion. Most of these brands are quality products with low prices, that will get immediate consumer attention, rather than the manufacturer brands that are premium priced.  Therefore, the MNCs will need to compete with these private brands in the international marketing platform.

Brand Name Changeover strategies:

Fade-in/ Fade-out: This is where the new global brand will be tied up to a local brand which is existing in the host market. Once the transition is done, the old name will be dropped out.

Combining the local brand with the name of the new partner. This is another branding strategy used to achieve successful change over of the brands in international markets.

Transparent forewarning- this alert the customers about the brand name change through communications, in-store displays, using the product packing.

Summary Axing: The old brand name will be dropped overnight and the new brand name / global brand will come to use. Suitable for situations where the market competition is high and the competitors are gaining the market share through the development of global brands.

Co – Branding: Co branding will be carried out by linking two products to obtain advantage of the equity of each brand.

Example:  Unilever Ice cream company co-branding together with Mars in the USA.

Umbrella Branding: A single banner brand will be used across the globe, with the support of a sub brand name for the total product portfolio of the company. The company name goes with the whole product portfolio. The brand name will be reflected through each and every product.

Companies with a positive brand name will benefit through umbrella branding in international marketing context as the customers will have a trust on the umbrella brand and therefore the product offered to foreign markets will too be highly accepted.

Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR)

Corporate Social Responsibility is concerned with treating the stakeholders of the firm ethically or in a responsible manner. Ethically or responsible means treating stakeholders in a manner deemed acceptable in civilized societies. Social includes economic and environmental responsibility. Stakeholders exist both within a firm and outside. The wider aim of social responsibility is to create higher and higher standards of living, while preserving the profitability of the corporation, for peoples both within and outside the corporation. (Hopkins, 2007)

How CSR is relevant in today’s world?

Corporate Social Responsibility has become an element of strategy and increasingly important for today/s businesses. Due to its effectiveness in 21^st century importance of CSR is  growing day by day as competitive advantage among the business rivals.

            There are five identifiable trends that are continuing to grow their importance, they are-

                        Growing affluence,

                        Ecological sustainability,

                        Globalisation,

                        Free flow of information,

                        Brands. (Wertner and Chandler, 2011)

Value-Chain Analysis

Value-Chain Analysis

Value-Chain Analysis is identifying and exploiting internal and external linkage with the objective of strengthening a firm’s strategic position. The exploitation of linkages relies on analysing how costs and other non-financial factors vary as different bundles of activities are considered. Also, managing organizational and operational cost drivers to create long term cost reduction outcomes is an important input in value-chain analysis when cost leadership is emphasized.

Why value chains?

Value chain analysis provides researchers with a tool to ask important questions about the distribution of power and value across the chain and is therefore eminently capable of addressing the agency of workers and small producers. This analysis can identify the scope for improving incorporation into the market- increasing returns and reducing risks.

The value chain is supported by four activities as follows:

1.      Procurement: This is the function of acquiring the inputs used in the value chain and applies to inputs used at any stage. In other words, procurement is not only connected with the inbound raw materials or components, it is also concerned with anything used in the course of providing marketing inputs, sercicing inputs, or materials used for outbound logistics.

2.      Human resource management: This is the function of recruiting, training and rewarding staff members in the organization.

3.      Technology development: This includes know-how, research and development, product design and process improvement work.

4.      Infrastructure: This includes the working spaces (factories, offices, mines, etc.) the organizational structure of the firm, the financial and operational control systems and the feedback systems used by management.

Primary activities

1.      Inbound logistics: It is the study of movement of factors of production. For example, a manufacturer of outbound motors needs to ensure that stocks of component parts are always on hand. A failure to have sufficient carburetors in stock means that production would cease, even if pistons, propellers, cylinder blocks, gears and everything else needed where ready at hand.

2.      Operations: These are the processes which convert inputs into finish products. For the outboard motor manufacturer, this would mean machining raw castings, manufacturing engine covers, painting, assembling motors, testing the finished motors, packaging the products.

3.      Outbound logistics: It is concerned with the movement of finished products. It involves the shipping of products in a timely manner to customers in order to meet their needs: in the case of the outboard motor company, this means ensuring that boat builders are supplied on time, since they are in turn unable to complete the boat unless they have the motors. It also means ensuring that boat chandlers and repair yards have suppliers of replacement motor as necessary.

4.      Marketing and sales: These activities ensure that customers are aware of the products and favor them over competitors’ products. For the manufacturer this falls into two phases: firstly, the company needs to persuade boat builders, repair yards and the like that their motors are best, but also they need to persuade the final consumer, the boat owner, of the same thing in a sense this is part of the same process: boat builders are unlikely to specify a motor that boat owners have never heard of or distrust.

5.      Service: After-sales activities for an outboard motor manufacturer would include supplying spare parts as necessary (and preferably promptly), warranty work on failed motors, training of service engineers at boat repair yards and helplines for boat owners.