Business Environment Analysis and Risk Management

BUSINESS ENVIRONMENT
ANALYSIS AND RISK
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION................................................................................................................................3
TASK 1.................................................................................................................................................3
Internal environment analysis using SWOT analysis model and VRIO framework........................3
TASK 2.................................................................................................................................................6
External environment analysis using PESTEL and Porter's Five Forces analysis...........................6
TASK 3.................................................................................................................................................9
Business risk assessment and Action plan management..................................................................9
CONCLUSION...................................................................................................................................11
REFERENCES...................................................................................................................................12
Books and Journals.........................................................................................................................12

INTRODUCTION
Business environment analysis refers to a professional framework of identifying and
analyzing the strategic requirements of business organizations. Every business firm comes across
risk laden situations that need to be countered and managed. The following report will cover these
areas of environment analyses, its associated risks and ways to manage it (Maksimov and et.al.,
2020).
The chosen organization for this research study is McKinsey & Company – a global
management consultancy firm that was founded by James O. McKinsey in 1926. The firm provides
quick and efficient management counsels to numerous business institutions. The following report
will analyze McKinsey's business environment by carrying out its internal and external analysis
with suitable models. The report will also conduct a risk assessment with its management action
plan.
TASK 1
Internal environment analysis using SWOT analysis model and VRIO framework
SWOT ANALYSIS
SWOT is an acronym which stands for Strengths, Weaknesses, Opportunities, and Threats
and is used as an evaluative framework of a company's strategic position.
Strengths
The major strengths of McKinsey lie in its sustainable approach towards using its capital
and human resources. The firm has a diverse set of service portfolio that targets a wide range of
industrial sectors and segments. With its London offices set in motion, the management consulting
firm is gloablly renowned for its reputation as an operational consultant in more than 65 countries
(Dias and et.al., 2020). It has a large employee base with several expert solution providers. The
company has a client focused approach in all its business activities that fetches a substantial amount
of customer satisfaction.
Weaknesses
Lack of communication skills in conjunction with a sloppy and bad coordination among its
teams pose a tough competition for McKinsey & Company. This has led to steady increase in its

employee attritionand turnover rate which has negatively impacted the business organization. The
major source of its revenue capital is the consultancy service department that casts a shadow over
its other service sectors making them less profitable. Another of its weaknesses include the firm's
inability in creating innovative work techniques which has unfortunately resulted in an average
performance of its business functions and operations (Benzaghta and et.al., 2021). The McKinsey
organization seems to have been lagging behind its major industrial rivals in terms of its poor
investment rate in the research and development sector.
Opportunities
The major opportunities for the management consultany firm consist of focusing on its
recent acquisition of 'IncepTech' which is Budapest based digital firm. This merger seems promising
for the company as it will significantly help in its global establishment thereby gaining a good
amount of market share. This will provide a clear view of the demand and supply forces which the
consultancy group can use in the procurement and provision of its services. The automation of
technological devices and inputs can also prove beneficial and will help in a cost efficient revenue
generation (Teoli and et.al., 2019). Moreover the Big 3 Management label will solidify its
international growth.
Threats
There are some huge threats challenging the development potential of McKinsey &
Company. These include the widespread competitive presence of its big rival companies such as
Boston Consultancy, Accenture, Endava, etc. which are highly resourceful in enhancing their
business strategies as per the target market. Other pertinent threats comprise the frequent fluctuation
of the fiscal and government policies that hinder its project objectives therefore affecting the
smooth working of its business functions.
VRIO FRAMEWORK ANALYSIS
VRIO is an acronym that stands for Value, Rarity, Imitability, and Organization. It is used
for an internal assessment of an organization's sustainable resources and capabilities such as can be
seen in the context of McKinsey & Company.
VALUE
The McKinsey consultancy group has set up a long term leadership visionin order to
encounter any future challenges. This adds value to its business in the industrial segments and helps
in attracing a lot of potential consumers. In case the company strategizes the diversification of its