Business Strategy for McKinsey & Company: Analysing Competitive Advantage and Strategic Directions

This report analyses the internal and external environment of McKinsey & Company to determine the capabilities of the firm's resources. With the help of various models and theories, the competitive advantage and position of the firm will be analysed and justified to devise various strategies and objectives that could help the firm in achieving the overall business goals.

BUSINESS STRATEGY

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
1. Analysation of the company's pestle and swot analysis and evaluating the organization's
resources and capabilities in the context of the “McKinsey & company”:.................................3
2. Critically evaluating the competitive advantage of the firm using Porter's five forces model:
......................................................................................................................................................6
3. Identification and justification of organization's existing or potential competitive advantage:
......................................................................................................................................................7
4. Devising valid strategies and tactical objectives to achieve overall strategic objectives:.......8
PART B............................................................................................................................................8
1. Critically evaluating the different types of strategic directions available to the organization:
......................................................................................................................................................8
2. Justifying and recommending most appropriate growth strategies or platforms:..................10
3. Evaluating ways and means by which the chosen strategy can be monitored in order to
ensure success:..........................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
The term business strategy is used by the firm to evaluate and determine a course of
action and plans that will guide the business and its operational activities to compete in a market
with the help of its offerings in the form of products and services. In this report, an evaluation
and analysation of the internal and external environment of UK based management consultancy
firm McKinsey and Company will be done to determine the capabilities of the firm's resources.
With the help of various models and theories, the competitive advantage and position of
the firm will be analysed and justified to devise various strategies and objectives that could help
the firm in achieving the overall business goals. On the basis of above analysation, it will also be
included that what type of growth and strategic options are available to the firm that can ensure
them success in the long. McKinsey and Company being the largest consultancy firm, it is
essential to properly understand all the available resources and means to wisely choose an
effective business strategy.
PART A
1. Analysation of the company's pestle and swot analysis and evaluating the organization's
resources and capabilities in the context of the “McKinsey & company”:
Pestle analysis:
Political factors: political factors put a strong impact on the firm. The different political factors
influencing the company are political stability that provides the firm with stable business
environment (Alanzi, 2018). The other factor influencing the business is changing policies that
makes the business suffer by increasing the environmental uncertainty.
Economic factors: the understanding of the economic environment will help the firm in
estimating the growth trajectory. The factor influencing the organization is inflation rates as the
GDP growth rate will help the firm in determining the ability of the organization to pursue the
long term growth.
Social factors: the organization will derive a strong influence from societal norms. The social
factors that influences the business of the firm is demographic trends like age, migration trends
and socio-economic variables. Understanding this trends will help the business by letting it
choose the market segment with high growth rate potential.
Technological factors: the technological advancements helps in the businesses during the
strategic decision-making process. The factors that helps the business is social media marketing

it influences the business by adopting the innovative techniques to enhance the collaboration
with the customers in different ways. The shortened product life cycle is also get impacted in the
adoption of the new technologies.
Environmental factors: the growing environmental consciousness have become the important
part of the company's pestle analysis. The factors influencing the organization is recycling and
waste management and using of the renewable technologies the firm by investing in the
renewable technologies can help the firm in ensuring the long term sustainability (AKMAN,
2020).
Legal factors: in avoiding the serious troubles for the business company must study the legal
factors. The legal aspects that influence the organization is employees protection laws and
consumer protection laws. The other factor that will help the business is intellectual property
right.
Swot analysis:
Strengths of the firm:the strengths of the firm gives the competitive advantage to the firm and
works as the key aspect for the firm (Teoli, and et.al., 2019). The strengths for the company are:
 Strong legacy of the firm since 1926.
 Good brand awareness.
 Highly qualified employees from different streams.
 Wide geographic reach and presence across the globe.
 The best knowledge management system that helps in the gathering of the information.
 Company offers management consulting, research papers publication and environmental
consulting. Good relationship with the high levels of executives of different companies giving strong
brand loyalty.
Weaknesses of the firm: the weakness of the organization is that aspect for the firm that can be
improved to increase the position of the firm for the further enhancements. The weakness of the
company are:
 Having tough competition from the big industry consultants and from other consulting
agencies. As the global market holder, the business of the organization is impacted by the external
factors like governmental policies, currency fluctuation, and many more.

Opportunities of the firm:the opportunities for the business lies in the areas of the geographic
expansion, better communication, products and service improvements, etc (Vlados, 2019).
Opportunities for the company are:
 Diversification of the general strategy and venture in different areas of business.
 Increase the penetration in to the emerging economies. Acquisitions of the smaller firms can help in strengthening the market position of the
organization.
Threats of the firm: the threats to the business can impact the business in the negative ways. The
threats to the firm are:
 Expansion of the existing industry can reduce the business of the firm.
 Companies setting personal knowledge centres with the increase in IT.
 Economic recessions and strict government policies might reduce the business of the
organization.
Vrio analysis:
Value: this term demonstrates that the “organizational offerings add on the value to the
customers?”. It shows out that the firm is able to exploits the opportunities or neutralizing the
competition with its capabilities of performing in the fields of the consulting by providing the
customers with the best of the services by enhanced employees skills, different mindsets and
behaviours (LEE, 2022).
Rarity: this helps in knowing the controlling of the scarce resources or the capabilities present in
the firm. The term helps in knowing the if the organization owns something that is hard to find.
The company by offering the consulting services knows that their offerings have value but less
rarity than it may put the company in the competitive parity position in the market run and if the
value is identified the next hurdle becomes the imitability.
Imitability: under this term it lays the capabilities of duplicating the resources of the firm. The
things are hard to find the substitute of the firm's service. If the products and the services offered
by the company are of minimal value and have value too then the organization have the
temporary competitive advantage and if the things offered by the company haves the value, rare
and is not that easy to be copied then the next focus is on the organization.
Organization: this term focus on having the organized management systems structures,
processes and the culture inside the company to capitalize out the resources and the capabilities.

If the company does not have the internal support it will become hard for the authorities to
identify the potential and when the conditions arise that the company has achieved the ultimate
goal and comes with the sustained competitive advantage.
2. Critically evaluating the competitive advantage of the firm using Porter's five forces model:
1. Competitiveness:
 McKinsey and Company s known to be a leading business firm in the industry which
leads them into higher rate of competition.
 Each and every industry in competition strives hard to develop their products and
services in order to maintain their market share.
2. Threat of new entrants:
 In the consultancy firm market, it is not an easy task to enter the market because of
prevailing barriers that hinder their efficiency.
 Since the company has a very big network and the distribution of its activities takes place
globally, the firm enjoys well reputed image without any hindrance from the new
entrants.
3. Bargaining power of suppliers:
 McKinsey Company holds a large share of market by acquiring numerous supply chains
as the firm holds large share in the market. The share of suppliers is low.
 If the supplier execute large share in bargaining, then the firm will have to pay a large
amount to acquire the resources.
4. Bargaining power of the buyers:
 The main cause of the firm's success is the customers. Therefore, to keep them pleased,
the buyers have more bargaining power than the firm.
 As a result, the prices tend to go low and limits the area of success for the firm to attain
sustainable profits.
5. Threat of substitutes:
 There are numerous alternatives of the services provided by the firm making it easier for
the substitutes to enter the market.
 The investment made into various departments such as R&D can help the firm in taking
risks of technological and innovational advances.

The above analysis can be utilized by the firm to enhance their competitive advantage by
forming effective and strategic decision-making policies that can help them in achieving the
desired objectives (Kitsios. and Kamariotou. 2021). Main goal of the firm is to evaluate the
competitive environment in order to attract and stimulate more number of target consumers.
3. Identification and justification of organization's existing or potential competitive advantage:
McKinsey and Company is the leading management consultancy firm in the whole of
UK, having aspirers all over the globe (Agung. and Darma. 2019). As a result it is essential for
the firm to form its brand image and reputation in accordance with such activities that can
improvise their growth rates and help them satisfy customers. According to the firm inspiring
individuals is the most important term and advantage for them to achieve higher competitive
advantage pertaining to today's uncertain and dynamic environment. In such circumstances, the
firm strives to capture heights that can impact the culture, value and ability to innovate faster
with the help of their employees and external sources.
Apart from the above mentioned point, McKinsey is a company that even focuses on
interactions and connections with different aspect of people and their perspective to achieve
higher and prosperous results after making efforts. In order to solve complex and collaborative
problems effectively, it is important to involve the exchange of information, knowledge and
network building to enhance the work relations to develop the overall basic productivity levels to
ensure success. Today's high tech and advanced world will not allow to carry out success rates
and its approaches with simple solutions, it will rather require effective and bold, risk taking
strategies to leverage talents and technologies to maintain the economic sustainability.
Another most important competitive advantage the firm believes is of developing
leaders from each sector. Nowadays in the midst of increased competition, it is essential to
appoint a person or group of people to develop and enhance the skills, expertise, and knowledge
about various specific matters that will help in the execution of business activities (Njeru. and
Kariuki. 2019). In the marketing industry where customers and their demands and needs are the
top priorities of any business organization, it requires a set of activities that can evaluate the
success rates by satisfying the customers. In order to shape the existing talents and form future
leaders out of them, training and development programmes will be the best source of inspiration
for the coming generations.

4. Devising valid strategies and tactical objectives to achieve overall strategic objectives:
For the very first of all, a business needs to evaluate and determine what will be the
vision, mission, and objectives of the operational activities on the basis of which every big and
small activities will revolve around (Bismark. and et.al., 2018). Then the focus area of progress,
which means the main area of attention like what products and services the firm will deal in to be
utilized by the audiences. Then a decision-making policy should be made to discuss on the facts
as what are the required and unnecessary objectives to eliminate that might increase the overall
cost. With all these activities in progress, the aim will be to improvise the overall performance
rates to measure the success. These performance rates should be again evaluated as to consider
the starting point to the point and height of success.
The business firms, no matter what their offerings are need effective and valid strategies
to achieve overall strategic objectives with the view of managing the operational activities to
retain customers and attain impactful competitive advantage. McKinsey and Company follows
the strategy of building more blocks in order to create the advantageous business strategy that
will help them in the decreasing or increasing market forces for profit earning. The strategy of
economic profit should be adopted by the firm in order to reveal the financial stability and
position of the firm in the market so that these can be utilized in motivating potential audience to
connect with the firm.
Along with the economic stability, it is also very important for a management
consultancy firm to maintain the integration and sustainability of its competitive advantage
because for the formulation of effective business strategy, market opportunities can also be
considered for better optimization of the available resources (Yang. and Jiang. 2018). In relation
to this, the strategies should be viewed through four lenses such as the financial lens, market
lens, competitive advantage lens and the operating model lens. These lenses state that in order
to achieve the overall business objectives and success rates, it is advisable and worthy to look for
all the available opportunities whether financial or non financial.
PART B
1. Critically evaluating the different types of strategic directions available to the organization:
The idea behind framing different strategic directions is to formulate consistent strategies
over time to evaluate the success rates and increased competitive advantage (Zahorskyi. and
et.al., 2020). It helps the company to determine and analyse the available options to plan,

organize and accomplish the already desired overall objectives and goals that are useful for the
company to achieve. In order to achieve wide variety of goals, increase and enhance the overall
business operations, McKinsey and Company should abide by the following type of strategic
directions:
1. Mission:
This particular direction will lead the company to expand its area of operations by
spreading awareness about its own as well as its offerings' existence to meet the strategic
expectations and attain the ever demanding technical advancements that are attract more
audiences. The great strategy of determining the mission even helps the firm in hiring talents that
can establish challenging yet appraisable opportunities.
2. Culture:
The organizational culture refers to the environment and surroundings in which the
employees' attitudes and behaviour can get affected. It is important for the firm to highlight such
factors of appreciation and full of beliefs that will be able to motivate and assist employees in
increasing their productivity that can further result in shaping the strategic direction of firm's
activities. This advances towards improved customer services through the medium of culture
evaluation.
3. Values:
As the operational activities of McKinsey is to consult with different people on different
matters, company's principles and values play a great role in guiding the resources to interact and
work better having common interests and goals to achieve. With this, integrity, sustainability,
and accountability is established within the organization to achieve various needs and wants. The
actions of the company can be kept on track to ensure peace and harmony.
4. Ideologies:
The purpose of the company us defined by determining ideologies in order to present
company's real intention and work management in front of its employees. Not only the internal
environment but also the external sources get influenced by the effective formation and
optimization of various ideologies that aspire many with its efficient implementation of values
and beliefs.
After formulation and execution of such activities, it is now favourable and in demand
nowadays to measure the work performance and other activities that can impact the

competitiveness of the firm in the market, and collate reviews of the potential customers to
improvise the overall operational strategy formulation to meet the needs and objectives of the
firm.
2. Justifying and recommending most appropriate growth strategies or platforms:
Formation and evaluation of the most appropriate growth strategies is the need and
requirement of McKinsey and Company as it is the leading firm in consultancy industry and has
many competitors that might the hinder the efficiency of the firm in the global market (Kieltyka.
and et.al., 2022). Therefore, in order to strive for the competitive advantage and profitable
growth rates, it is essential for the firm to evaluate and consider the need of growing strategies
for increasing success rates.
The McKinsey growth pyramid identifies and takes a step further for the evaluation of
the opportunities the firm can face if they continue to develop their growth strategies. It is based
on four main choices:
1. Operational skills:
This identifies that what all are the inner core competencies of the firm that can enhance
the customer's experience with the firm. Each and every activity can prove out to be either
valuable or hindrance to the company's growth development strategies, that is why it is advisable
to construct the inner environment properly as per their suitability.
2. Privileged assets:
These imply that the firm has possession over some assets or resources that cannot be
duplicated and that have a distinctive characteristic for it to differ from others. This can benefit
the firm in distinguishing itself from the competition and assist them in establishing their
offerings in the market.
3. Growth opportunities:
For achieving overall growth development, it is necessary to formulate strategies and
plans for better utilization of the existing resources and to optimize new advancements the tech
world is adopting. By opting for this strategy, it will be helpful for the firm to negotiate and
collaborate with various strengths and opportunities available.
4. Special relationships:
Maintaining notable relations with the internal as well as external sources, provide
privileged access to the marketing significance in order to evaluate and modify the list of

potential audiences. By doing this it will be helpful for the firm to give rise to better
opportunities and strengthening power in the industry by creating future growth rates and by
collaborating with the recognizable influential.
From the analysation of above pyramid for growth evaluation, it is now understood that
what could be the possible recommendations for the company to enhance growth opportunities
(Jelonek. and et.al., 2022). Furthermore, it can also be seen that the recommendation of Ansoff
matrix's product penetration and market development can be a useful approach for the firm
to achieve the overall organizational objectives. These imply the simple fundamental of customer
attraction and loyalty through the process of customer satisfaction. The marketing function can
be of significance in this area of operation.
3. Evaluating ways and means by which the chosen strategy can be monitored in order to
ensure success:
The process of strategy execution and implementation should be one such effective
measure to be undertaken to meet the strategic objectives and overall business operations. It is
very important for the firm to ensure these activities so that the right execution of right duties
and responsibilities can take place.
Key ways and means for successful strategy execution:
1. Committed strategic planning:
The strategic plan thus formed should be committed for the operational managers in order
to ensure effective decision-making policies in front of major stakeholders. For any company to
prove itself an efficient one demands a true picture of its stability, integration, and sustainability
reports in which it past and present position is displayed. This creates mutual relation between
the parties which prove out to be a great success.
2. Effective communication:
When the matter is about interacting with others for the formulation of strategies and
various other planning, the communication skills of people, how they speak, how they interact,
and their body gestures impact the growth strategies in an influential way. The stakeholders and
other concerned associates must be able to identify the reason and purpose behind the
formulation, its ideologies and beneficial aspects that will lead the firm to success peaks.

3. Measuring performance:
After executing the strategies, an important task of managing, measuring, and controlling
the work performance to determine the efficiency and effectiveness of the strategic plans
formulated. It should be manageable in qualitative and quantitative terms for a careful
analysation of all the optimized resources. With this it can also be determined that what are the
customer retention rates and trends through which advances can be made in order to meet the
overall operational objectives.
4. Reviewing of the activities:
Another effective way to ensure success in any organization is through continuously
keeping tracks and records of the activities that are taking place in the external and internal
sources. Once the strategies have been formulated and implemented, it is obvious for a firm to
set goals and determine practices that can properly evaluate the effectiveness of the strategic
plan. If there are any deviations found, then it will be easier to detect them with the help of
continuous review of the activities to avoid past mistakes.
Successful implementation of the strategies id often challenging and a difficult task, but
to succeed such challenges can lead a firm to achieve the desired goals, competitive advantage
and high success rates (Tohara. 2021). There should be involvement of building skills, and
required expertise to utilize the available resources and equipment so that the professionalism
and expertise can be maintained throughout the achievement of overall organisational objectives
to ensure success in the long run.
CONCLUSION
The report based on the business strategy of the firm McKinsey and company have concluded
about the detailed pestle and swot analysis of the company with the evaluation of the
organization's resources and capabilities by using the vrio analysis. Critical evaluation of the
competitive environment by using the porter's five force model is also done. The report have also
concluded about the identification and the justification of the organization's existing or the
potential competitive advantage. Report shows about the valid strategies and tactical objectives
required by the firm to achieve the overall strategic objective of the organization. Further, in the
report it shown about the critical evaluation of the different types of strategic directions available
for the organization. The report have also concluded about the recommendations of the
appropriate growth platforms and the strategies needed by the firm in the maintenance of its

smooth business operations. Later in the report the evaluation of the ways and means with the
help of the chosen strategies can be monitored in order to ensure the success of the firm.

REFERENCES
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Alanzi, S., 2018. PESTLE Analysis. Project Management.
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