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McKinsey 7 S Model

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Published in: Business Studies
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This ppt explains about organization capabalities and mckinsey 7s model.

Roshin S / Sharjah

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  1. Organization's capabilities The activities or abilities that enable an organization to achieve specific goals or objectives. An organization's capabilities are multidimensional, made up of its people, processes and technologies, but also its insights, its mission, and integrated decision making
  2. What are the lines of authority and Accountability? Clear lines of authority are when the roles and responsibilities of each person in the organization are defined. All staff members know who is responsible for what in the organization. The organization must establish authority lines that facilitate the work and maintain authority structure to ease operations. Accountability means responsibility to answer for the work Marager Yan eer Sales Officer Sies Office IFabriatfcoi create.}
  3. Capacity assessment Capacity Assessment is a structured and analytical process that identifies what key capacities already exist and what additional capacities may be required to achieve the goals and objectives. A capacity assessment (CA) aims to provide a clear picture of a sector's capacity in terms of strengths, weaknesses and available assets.
  4. Strategic intent Strategic intent is the term used to describe the aspirational plans, overarching purpose or intended direction of travel needed to reach an organizational vision. Strategic intent gives a picture about what an organization must get into immediately in order to achieve the company's vision. It motivates the people. It clarifies the vision of the company. Strategic intent helps management to emphasize and concentrate on the priorities. For example, an energy company with a vision of serving global energy needs with zero environmental impact.
  5. McKinsey 7-S Model The model was developed in the late 1970s by Tom Peters and Robert Waterman, former consultants at McKinsey & Company. They identified seven internal elements of an organization that need to align for it to be successful. The McKinsey 7S Model is an organizational tool that assesses the well-being and future success of a company. It looks to seven internal factors of an organization as a means of determining whether a company has the structural support to be successful.
  6. The McKinsey Model Strategy Skills St ructure Shared Val u e s •.R.Whatfix Syste s Styl
  7. The Elements of the McKinsey 7-S Framework There are seven shared values that make up the McKinsey 7-S Model, which include: Structure Strategy System Shared Values Skill Style Staff The McKinsey 7-S Framework then categorizes these seven elements into two categories: hard elements and soft elements. Hard elements that are easily identifiable and measurable by leadership and management. Soft elements are not easily identifiable and culture driven.
  8. McKinsey 7-S Framework Hard Elements Strategy Structure Systems Soft Elements Shared Values Style Staff e Skills
  9. 1. strateg strategy refers to the approach that a company uses to gain a competitive advantage and reach its long-term goals. A great strategy is one that is reinforced by a clear vision and mission as well as strong values. 2. Structure how your company is organized and who reports to whom 3. Systems procedures, processes, and routines Of staff that characterize how the job is done 4. Shared Values These are the core values governing an organization's health. the core values that are reflected in the corporate culture and individual work ethic 5. style This element refers to the management sty e prevalent in a company that decides the level of employee productivity and satisfaction. Typical behavior patterns of groups such as managers and other professionals 6. staff This element represents the talent pool required, the size of the existing workforce, and their motivations. It also considers how they are trained and rewarded within the organization. your company's employees and their genera capabilities. 7. Skills Skills refer to the abilities of employees to complete tasks. A study suggests that 45% of respondents reported that a skill gap caused a loss in productivity. Skills gaps overburden experienced employees who have to pick up the slack for their coworkers' inexperience. It's essential to identify the skill gaps and create relevant employee training programs to bridge these gaps
  10. Example: McDonald's Here's how the fast-food chain leverages McKinsey's 7-S model for driving organizational change: Strateßr. McDonald's gained a significant market share through its cost-leadership approach. Additionally, it sets clear SMART goals to achieve the long-term and short-term vision. Structure: Unlike other multinational co-porations (MNCs) with complex hierarchical structures, McDonald's has a flat structure where a store manager manages its employees. Employees work as a close-knit team and have easy access to the senior management if required. Systems: McDonald's is known for constantly innovating to reduce the wait time and make its entire production and supply chain more efficient - such as its new McDonalds app and self• ordering kiosks.
  11. Shared Values: McDonald's aims to have a high level of integrity, serve a wide range of customers, hire employees from different backgrounds, encourage teamwork, and finally, give some profits back to the community with its core values. Style: McDonald's leverages a participative leadership style where seniors engage with employees at different levels to seek their feedback to improve operations and resolve conflicts. Staff: With over 210,000 employees, McDonald's is one of the largest employers in the world. It believes in the concept of diversity and works towards employee satisfaction. Skills: McDonald's regularly trains its employees to provide an unparalleled customer experience and handle objections.
  12. Market Positioning Market Positioning refers to the ability to influence consumer perception regarding a brand or product relative to competitors. The objective of market positioning is to establish the image or identity of a brand or product so that consumers perceive it in a certain way. Market positioning is a key factor that determines the sustainability of a company. Positioning also is important for any company wishing to increase its market share, because it guides your attempts to approach other market segments and possibly other markets altogether. Examples: Starbucks positions itself as a trusted source of upscale quality coffee and beverage. McDonald's positions itself as a place to get quick and cheap meals. Microsoft and Apple position themselves as a tech company that offers innovative and user-friendly
  13. Opportunity recognition Opportunity recognition is the process of identifying a feasible niche in the market for the business. It involves continuous brainstorming for new and better ideas. It is used in continuous process improvement to make the already available goods and services better. There are two ways to recognize opportunities. You can discover them or create them yourself. Entrepreneurs discover opportunities when they search for them in the existing markets. This means that they observe technological, economic, or social trends. Opportunity recognition by Observing trends, solving a problem, and finding gaps in the marketplace. It could be a brand new business idea or even new products or services that fulfill customers' needs and expectations. You've probably had a thought at some point and considered, "Hey, I bet I could make money doing this!" That's an example of opportunity recognition
  14. Organizational change Organizational change is the process by which a business alters key components of its strategy or operations. This may involve changes to company culture, essential technologies, organizational structure, or major initiatives and goals. Company acquisitions and mergers. Change in management personnel or style. Adapting to market changes. Reaching new markets. Rebranding. Launching new products.
  15. 8 steps to implement organizational change Identify the change and perform an assessment. Develop a plan. Communicate the change to employees.. • Provide reasons for the change. Seek employee feedback. Launch the change . Monitor the change. Evaluate the change.
  16. Five Forces Model Who Created the Five Forces Model? The tool was created by Harvard Business School professor Michael Porter. Since its publication in 1979, it has become one of the most popular and highly regarded business strategy tools. Porter recognized that organizations like to keep a close watch on their rivals, but, in his Harvard Business Review article, 'How Competitive Forces Shape Strategy,' he encouraged business leaders to look beyond the actions of their competitors and examine the forces at work in their wider business environment.
  17. Entrants threat in Industry Competition in the industry Porter's 5 Forces Threat of existing substitutes Power of Suppliers Power of Customers WallStreetMoJ0
  18. I. Competitive Rivalry The first of Porter's Five Forces looks at the number and strength of your competitors. Consider how many rivals you have, who they are, and how the quality of their product compares with yours. In an industry where rivalry is intense, companies attract customers by cutting prices aggressively and launching high-impact marketing campaigns. This can make it easy for suppliers and buyers to go elsewhere if they feel that they're not getting a good deal from you. On the other hand, where competitive rivalry is minimal, and no one else is doing what you do, then you'll likely have tremendous competitor power, as well as healthy profits. Example If you were setting up a haulage business, you'd likely be entering a crowded market. You'd have to consider many potential rivals, how much they charged, and whether they were able to discount deeply. You'd also need to think about their resources: you might be setting up to compete with international companies, as well as local competitors Remember that at this point the analysis should focus on your potential rivals. Only start thinking about your own offer when you've got your data together on the competition.
  19. 2. Supplier Power Suppliers gain power if they can increase their prices easily, or reduce the quality of their product. If your suppliers are the only ones who can supply a particular service, then they have considerable supplier power. Even if you can switch suppliers, you need to consider how expensive it would be to do so. The more suppliers you have to choose from, the easier it will be to switch to a cheaper alternative. But if there are fewer suppliers, and you rely heavily on them, the stronger their position - and their ability to charge you more. This can impact your profitability, for example, if you're forced into expensive contracts. Example Let's say your business idea was to manufacture electronic devices. You'd have to assess your supply options for a range of specialist components. If one supplier dominated the components market, then they could raise their prices without worrying about their own competitors. This might affect the viability of your product.
  20. 3. Buyer Power If the number of buyers is low compared to the number of suppliers in an industry, then they have what's known as "buyer power." This means they may find it easy to switch to new, cheaper competitors, which can ultimately drive down prices. Think about how many buyers you have (that is, people who buy products or services from you). Consider the size of their orders, and how much it would cost them to switch to a rival. When you deal with only a few savvy customers, they have more power. But if you have many customers and little competition, buyer power decreases. Example Buyer power is a significant factor in food retail. Think of large supermarkets that operate in a crowded, highly competitive market. This market has changed dramatically with the arrival of cheap food discounters. Shoppers have strong buyer power here. That's why supermarkets have coupon schemes, loyalty cards, and aggressive discounting - to capture the largest share of buyers. These organizations in turn have strong buyer power with their own suppliers, using their influence to drive down the cost of food at the manufacturing level.
  21. • 4. Threat of Substitution This refers to the likelihood of your customers finding a different way of doing what you do. It could be cheaper, or better, or both. The threat of substitution rises when customers find it easy to switch to another product, or when a new and desirable product enters the market unexpectedly. Example • Tea and Coffee Pepsi-Cola is a substitute good for Coca-Cola
  22. • 5. Threat of New Entry Your position can be affected by potential rivals' ability to enter your market. If it takes little money and effort to enter your market and compete effectively, or if you have little protection for your key technologies, then rivals can quickly enter your market and weaken your position. However, if you have strong barriers to entry, then you can preserve a favorable position and take fair advantage of it. These barriers can include complex distribution networks, high starting capital costs, and difficulties in finding suppliers who are not already committed to competitors. Existing large organizations may be able to use economies of scale to drive their costs down, and maintain competitive advantage over newcomers. If it costs customers too much to switch between one supplier and another, this can also be a significant barrier to entry.

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