Analysis of McKinsey's 7 S Model and its Application in British Airways

The report explores the use of McKinsey's 7S model in analyzing the internal organizational environment and its application in implementing a CRM system at British Airways. It discusses how the model helps to identify and address potential conflicts and disputes within the organization, ultimately enhancing the implementation of the CRM system. The case study highlights the importance of strategic management tools like McKinsey's 7S model in ensuring the effective alignment of organizational elements and achieving desired objectives.

STRATEGIC
MANAGEMENT

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
MAIN REPORT...............................................................................................................................1
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

EXECUTIVE SUMMARY
Strategic management involves setting objectives, analysing the competitive
environment, assessing internal and external environment of the organisation and evaluating
strategies that ensures the management able to accomplish the desired aims and objectives
effectively and efficiently. In the following study, McKinsey 7S model of strategic management
has been discussed and evaluated. Articles and journals jotted by senior researchers in the subject
matter has been critically analysed in section 1 of report. The concepts of model, its history and
people who have developed the model has been discussed in section 1. In section 2 of the study,
with the help of case study of British Airways, how the model has been applied and assist the
organisation to sustain in the competitive environment will be assessed in this assignment.
MAIN REPORT
Section 1
McKinsey 7S Model
There are various strategic model has been used by the organisation and management in
order compete in the market environment of United Kingdom. Porter Five Force model and core
competencies model, McKinsey 7 S model, etc. are used by the management in order to enhance
their performance and increase the sustainability of the business. CSR stands for corporate social
responsibility in which management of organisations contributes towards the protection of
environment and sustainability of resources. It is considered as the strategic plan through which
organisation able to attracts clients and consumer towards their organisational products and
services by conducting events such as marathon for environment protection, developing
infrastructural facilities in rural areas, etc.
Organising resources of organisation in the right and precise manner so that the goals and
objectives of corporations can be achieved is known as strategic management. The present era is
characterised by competition due to increase in globalisation practices and implementation of
emerging technologies in the premises (Mitchell, Fredendall and Cantrell, 2015). Thus,
management of companies are developing specific strategies by using numerous methods,
models and tools of strategic management in order to sustain in the competitive environment.
These are formulated by strategic thinker and analytical decision makers of the organisation.
McKinsey 7S model was developed and proposed by renowned business consultants
Robert H. Waterman, Jr. and Tom Peters in 1980. According to Ravanfar, (2015) the strategic
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management tool was developed with the purpose to assess and monitor the internal situations
and environment of an organisation. The model is based on the theory that, the seven elements
which are Strategy, Structure, Systems, Staff, Style Skills and Shared Values needs to be aligned
and mutually reinforcing, so that organisation can perform well and efficient. In 1977, the
director of McKinsey Ron Daniel has launched two project simultaneously (Szeto, 2017). First
project was major one which was known as Business Strategy Project which was designated to
top authorities and consultant of the organisation headed by Frederick Gluck.
Despite of promises, the first project fails to stand on the commitments to effectively
implement new strategies. The second project was regarding the issue of implementation of
organisational effectiveness which was under supervision of James Bernnet. Founding member
of the model Tom Peters enunciated that after gaining aspirations and motivations from strategic
model developed by Boston Consulting Group, the idea of designing tool was ignited (Naipinit
and et.al., 2014). The director of McKinsey, Daniel told Peter to look at 'organization
effectiveness' and 'implementation issues' in an inconsequential offshoot project nested in
McKinsey's rather offbeat San Francisco office. Perter further connotes that motivation theory
'Theory X and Theory Y' which was developed by Douglas McGregor, was directly influential
for the strategic concept (Gallo and et.al., 2017). In 1980, Waterman teams up with Peter in the
project and the model was finally completed and proposed to the organisation.
Awino, Njeru and Adwet, (2017) enunciates the objectives of the McKinsey 7S model.
They said that the model main objective is to analyse the internal position of the organisation.
Another objective is to improve the performance of the company. Its objective is to examine the
likely effects of future changes within the company. The strategic model align departments and
process during a merger or acquisition. It determines how best to implement the proposed
strategy.
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Dezdar and Haghighi, (2014) defines McKinsey's 7S model as a tool that helps in
analysing the internal position of the corporations which includes staff, skills, style., structure,
system, strategies and shared values in order to identify the precise alignment of these elements.
With the help of Richard Pascale and Anthony G. Athos, the model was developed in 1980 by
Robert Waterman and Tom Peters. After the introduction of model, many big and small
organisations and strategic planners used it in order to robust the internal position of the
organisation (Jurevicius, 2013). The main focus of the model is to ensure that each element are
properly aligned and interconnected with each other so that change can be made and applied
effectively and efficiently.
According to Swartz and Bentley, (2016) McKinsey's 7S model helps in identifying the
inconsistencies and gaps between various elements that directly or indirectly impacts on the
internal position of the organisation. It further assists in developing plan of action so that
organisation can make improvements to strolls towards desired state. The alignment between
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Illustration 1: McKinsey 7s Model
(Source: Jurevicius, 2013 )

each element can be assessed by paying attention to assessing the shared value and assessing the
soft elements as well as hard elements.
Hard Elements
Hard elements are easy to diagnosed and management can lay direct influence on them.
Hard elements includes strategy statements, organisation charts and reporting line. The hard
elements proposed by McKinsey's 7 S model is described below: Strategy: According to Gökdeniz, Kartal and Kömürcü, (2017) strategy is the plan which
is developed by the firm in order to sustain in the competitive environment and enhances
its level of productivity and profitability. Strategy has been put in hard element because if
strategy is not aligned with other elements precisely, then organisation will never able to
gain competitive advantages effectively and efficiently. A sound strategy helps in
sustaining in long term and helps in accomplishing competitive advantages which is
reinforced by strong vision, mission and values. The motive of strategy in 7S model is
not formulate specific strategies, but the motive is to align those strategies in appropriate
manner so that organisation will able to attain its desired goals and objectives and will
also able to gain competitive advantages (Yeandle and et.al., 2015). For example, a short
term strategy is usually a poor choice for company, but if it is aligned appropriately with
other 6 elements, than it may provide strong results for the organisation. Structure: Structure represents the division of the organisation in different units and
departments. In simple terms, it demonstrates the organisational chart. As there are
different departments of the organisation which includes Human Resource, Production,
Marketing, etc. it is important for the management to maintain precise organisational
structure within the company (van der Hoeven, Maltes and Rogers, 2016). It also
represents the reporting pattern in the company. Structure play crucial role in order to
attain the desired aim and objectives of the company. It must be properly aligned with
other elements so that management will able to attain the desired goals and objectives
effectively and efficiently. It is also one of the most visible and easy to change elements
of the framework (Khan, 2015). In the model, structure is considered as hard element
because organisational structure is very important and crucial for the growth and
development. In order to sustain in the competitive environment, it is very important for
the management and organisation to align its structure appropriately and efficiently.
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 System: Systems represents the rules, regulations, policies and procedures which are
followed in the organisation that reveal business day to day operations and the process of
decision making (Guenzi and Storbacka, 2015). Systems are the sectors that defines how
the business is done and where the managers should focus while managing change and
transformations within the organisation. In order sustain in the competitive environment,
the management of organisation needs to focus on the policies and procedures and
aligned them with the other internal elements of the model. In this way, they will be able
to attain the common goals and objectives. The top management of the company is
responsible for formulate the policies and procedures which are meant to be follow by
each department and employees so that goals and objectives of the company can be
achieved (Garcia, 2016).
Soft Elements
Soft elements are opposite from hard elements. They are influenced by culture and are
less tangible and it is difficult for the management to describe them efficiently. The soft elements
of 7 S model is described below: Skills: Skills represents the abilities and competencies that employees posses while
working in the organisation. In order to achieve the set goals and objectives, it is
important for the employees and employers to have precise skills and abilities (Zentner,
2015). Whenever, new strategy formulated, the question has been asked by the analytical
thinkers about the skills that the organisation required in order to cope up with the desired
changes. Skills can be evolved with the help of training and development. Skills comes
under soft element as it cannot be easily identified. Effective monitoring is required by
the supervisor to acquire the skills posses by the employees in the organisation. Thus, in
order to sustain in the competitive environment, it is very important for the organisation
to hire employees according to right skills and competencies. Staff: Staff represents the workforce or manpower of the organisation. Staff is most
crucial element of the organisation as without them, the organisation will not be able to
accomplish desired goals and objectives effectively and efficiently. Staff element is
concerned with the type and number of employees employed in the organisation.
According to Mitchell, Fredendall and Cantrell, (2015) in McKinsey's 7 S model, staff
element is concerned with the process of recruiting employees, providing them training,
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motivation and rewards. This helps the organisation to make effective strategies which
assists them to sustain in the competitive environment. In order to gain competitive
advantages, the management must align staff with other 6 elements precisely so that the
desired goals and objectives can be achieved effectively (Szeto, 2017). Style: The way organisation is managed and controlled by the top managers is
represented under style element. Every organisation follows different style of doing
business (Naipinit and et.al., 2014). Some follows the style in which there is no
hierarchy, where employees have right to participate in decision making process and have
free rein leadership style while some follows formal style where there is hierarchy
between floor level employees to top level employees. Style demonstrates the flow of
communication between management and employees, what action the organisation
follow and how management comprehend the symbolic value of employees (Gallo and
et.al., 2017). It is the soft element as it is difficult to assess. It is the leadership style that
followed in the organisation in order to influence the employees so that they can work
with higher motivation and satisfaction level.
 Shared Value: Shared values are core of McKinsey's 7 S model. These are norms,
standards, code of conduct and ethics that influence the behaviour of employees and
action of the company and thus are the foundation of every organisation (Awino, Njeru
and Adwet, 2017). These are considered as superordinate goals which get reflected within
the organisational culture. In order to attain the desired objectives and aim of the
organisation, the management needs to ensure that all the elements are precisely aligned
with the shared values. If these are aligned appropriately, than the organisation will able
to sustain in the long run and thus able to accomplish the desired goals and objectives.
According to Waterman and Peters, the model can be applied in five steps: The first step is
regarding determination of those elements which are not aligned appropriately. This is done in
order to assess those areas which are not aligned properly and which impacts on the overall
productivity and profitability of the company. If the organisation desires to launch a new product
but the matrix structure with conflicting relationships hinders the implementation of strategies
(Dezdar and Haghighi, 2014). Thus, management needs to align the structure of the company
appropriately so that strategy can be implemented successfully.
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The second step is regarding optimal organisational design. Intensive research has to be
conducted by the managers in order to develop optimal organisational design. Here, they need to
research other organisation strategies to cope up with the change (Swartz and Bentley, 2016). It
is not as straightforward as first step as managers needs to find the best optimal alignment for
implementation of the strategies. In this way, the management will able to develop optimal
organisational design which will be effective and efficient enough to provide support to the
company and management so that they can sustain in the competitive environment.
The third step involves deciding the course of actions or the changes which are required
to be implemented. This is the action plan which describes the details of the area where changes
are required to be implemented (Gökdeniz, Kartal and Kömürcü, 2017). For example, if the
manager found that the structure and style elements are not aligned with the company core
values, then specific strategies will be formulated by the managers so that realignment can be
made effectively and efficiently. Managers plays crucial role in realignment of the elements that
were not able to coordinate with each other (Ravanfar, 2015). From management perspective it is
an essential step where the managers have to brainstorm strategies that will perfectly align with
other elements. This will ultimately help the management to gain competitive advantages by
strengthening the internal position of the organisation.
The fourth step is the actual implementation of the change. This is the most important and
crucial step where the managers finally implement the strategy into action. The managers need to
find the best suitable candidates in the company so that changes can be implemented efficiently
in the organisation (Yeandle and et.al., 2015). After aligning each element of the model
precisely, the managers has to implement them in pragmatic practices of the company and
monitor the affects of changes. Further, if any mistakes or issues identified has to be eliminated
by them. In this way, they will be able to accomplish the desired aim and objectives of the
company.
The final stage or the fifth stage is the final review of the 7S framework. This is the last
step, where managers review and monitor that all the elements of the model has been aligned
perfectly or not. The seven elements of the concept are dynamic and changes constantly (Szeto,
2017). A manager needs to ensure that a change in one element affects all the six elements. Thus,
it is important for the manager of organisation to make changes accordingly in all elements and
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align them appropriately so that set goals and objectives of the company can be achieved
effectively and efficiently.
van der Hoeven, Maltes and Rogers, (2016) argues that several limitations were found
using the model in practical conditions. Firstly it ignores the importance to external environment
and concentrates on the internal elements and factors that lies within the organisation. Secondly,
it does not explicitly explain the concept of organisational effectiveness or performance.
Researchers have criticised the model for having lack of factual evidences to support their
explanation. McKinsey's 7S model is considered as static kind of model that cannot be change
time to time or according to situation. Lastly, it is difficult to assess the degree of accuracy by
using this model.
According to Khan, (2015) organising resources of organisation in the right and precise
manner so that the goals and objectives of corporations can be achieved is known as strategic
management. The present era is characterised by competition due to increase in globalisation
practices and implementation of emerging technologies in the premises. Thus, management of
companies are developing specific strategies by using numerous methods, models and tools of
strategic management in order to sustain in the competitive environment. These are formulated
by strategic thinker and analytical decision makers of the organisation. Guenzi and Storbacka,
(2015) enunciated that Strategic management involves setting objectives, analysing the
competitive environment, assessing internal and external environment of the organisation and
evaluating strategies that ensures the management able to accomplish the desired aims and
objectives effectively and efficiently.
Garcia, (2016) state that McKinsey 7 S model is the powerful tool that helps in assessing
and analysing the internal position of the organisation. It is supported by seven key elements
which helps in determining the success of the organisation. In order to sustain in the competitive
environment all the seven elements must be aligned in precise and appropriate manner. Zentner,
2015 said McKinsey's 7 S model is considered as one of the best and efficient tool that helps in
analysing the internal situation of the organisation. With the help of this strategic management
tool, the management can formulate specific strategies and make necessary transformations in
the organisation to accomplish desired goals and objectives of the company. Mitchell, Fredendall
and Cantrell, (2015) argued that despite of having that much effectiveness of using the tool, it
lacks certain things which impacts on the strategies of the organisation. It excludes the external
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environment and has very limited applicability in the organisation. Furthermore, it misses out the
complex areas in which the actual gaps in conceptualisation and execution of strategy may arise.
In order to retain in global competitive environment, the management of organisations
needs to focus on both within and outside environment of the organisation. Each and every
element that impacts on the productivity and profitability of the company is important. By using
McKinsey's 7 S strategic management tool, the managers can easily identify the key elements
and their impacts on the organisation performance. They will further able to formulate precise
strategies that helps them to coordinate with each and every element within the organisation
effectively. Alignment of each element within the company is necessary which determines
whether the company will able to sustain in long run or not.
Furthermore, the McKinsey 7 S model can be implemented to elements of teams or a
project as well. The concept remain the same and managers can applied them in organisational
context in order to attain the common goals and objectives of the company. The model helps the
organisation to deal with future uncertainties and through this, the management can formulate
effective and efficient strategies that assist them to achieve their aim and objectives.
Section 2
This section will help in elaborating the concept of McKinsey's 7 S model by showing its
applicability in British Airways. British Airways is one of the leading airline organisation
incorporating in United Kingdom. The management in past has faced many issues and conflicts
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within the organisation. BA pursues service differentiation strategies in order to sustain in the
competitive environment. Furthermore, they provide and innovate different service package
according to trends and demands. Since, the implementation of new Customer Relationship
Management system in the company, the management has been facing several issues within the
organisation (British Airways CRM Case Study, 2017). Frequent conflicts can be observed within
the company that disturbs the internal structure greatly. British Airways uses Porter Generic
Strategy model in order to provide different services to the customers and gain the competitive
advantages through it. Blue ocean strategy proposed by W. Chan Kin and Renee Mauborgne
helps the management to create product differentiation and low cost which aid in creating a leap
in value for both buyers and the company. In CSR context, the management focuses on three
core areas which are climate action, noise and air quality and resource management. In order to
increase the sustainability, the management of organisation continuously working for protection
of environment and natural resources.
The McKinsey 7 S model has been implemented by the management in order to align
every internal element of the organisation. The case study will help in understanding how the
management implement the strategic management tool in order to overcome strategic issues
within the corporation. The profit of British Airways has been generated by providing airlines
and other services to the clients and customers. In order to gain competitive advantages the
management uses McKinsey's 7 S model, Blue Ocean Strategies, Porter Generic strategies has
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been used by the strategic thinkers and decision makers of the organisation. According to
Dudovskiy (2016), British Airways, implemented the strategies after using concept from
McKinsey's 7 S model in order to eliminate the issue from the organisation. They have divided
elements into hard elements and soft elements. The main motive of the organisation was to align
the elements precisely in order to attain the shared values or superordinate goals effectively and
efficiently. Hard elements are easy to identify and define. As British airways desired to reduce
the conflicts and disputes within the organisation, the management needs to focus on hard
elements and soft elements within the organisation. Strategy was considered as hard element.
British Airways, uses service differentiation strategy in order to sustain in the competitive
environment.
Furthermore, they have implemented new customer relationship management system
within the organisation in order to coordinate with the customers efficiently (Ford and Eisner,
2016). Albeit, the management has been facing issues as employees were not able to coordinate
and handle the information technology system adequately. The strategy was developed by the
management was to transform the structure of the company so that competent employee can be
selected for managing the CRM systems. In order to sustain in the competitive environment, it is
very important for the management to formulate and design new strategies (Ravanfar, 2015).
Structure is very important aspect of 7 S model. British Airways is owned by International
Airline Group (IAG), which is the largest airline organisation incorporating in Europe
(Landvogt, Gross and Lück, 2016). The company follows hierarchical organisational structure
which reflects the large size of business. Structure represents the division of the organisation in
different units and departments. In simple terms, it demonstrates the organisational chart. As
there are different departments of the organisation which includes Human Resource, Production,
Marketing, etc. it is important for the management to maintain precise organisational structure
within the company. It also represents the reporting pattern in the company. Structure play
crucial role in order to attain the desired aim and objectives of the company. It must be properly
aligned with other elements so that management will able to attain the desired goals and
objectives effectively and efficiently (Szeto, 2017). In order to eliminate the issue, the
management of British Airways, transformed the structure and shifts staff members of the
organisation to other departments.
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Competent and skilled staff were placed to manage the CRM systems. In this way, the
management able to align the structure and strategies efficiently. System is the hard element of 7
S model. Systems represents the rules, regulations, policies and procedures which are followed in
the organisation that reveal business day to day operations and the process of decision making.
Systems are the sectors that defines how the business is done and where the managers should
focus while managing change and transformations within the organisation. Industry specific
systems are maintained by the management of BA, where they focus on developing policies,
procedures, rules and regulations in order to attain maximum employee satisfaction.
In order sustain in the competitive environment, the management of organisation needs to
focus on the policies and procedures and aligned them with the other internal elements of the
model. In this way, they will be able to attain the common goals and objectives (Naipinit and
et.al., 2014). The top management of the company is responsible for formulate the policies and
procedures which are meant to be follow by each department and employees so that goals and
objectives of the company can be achieved. Thus, the management formulated specific policies
and procedures in order to manage CRM system in the organisation (Gallego, 2017). Soft
elements are opposite from hard elements. They are influenced by culture and are less tangible
and it is difficult for the management to describe them efficiently. Style refers to the leadership
style followed in the organisation. The leadership style follows in the organisation is democratic
leadership style where employees have right to participate in the decision making process.
Style demonstrates the flow of communication between management and employees,
what action the organisation follow and how management comprehend the symbolic value of
employees. It is the soft element as it is difficult to assess. It is the leadership style that followed
in the organisation in order to influence the employees so that they can work with higher
motivation and satisfaction level. Leaders plays crucial role in the organisation in order to
maintain positive corporate culture within the organisation, it is the responsibility of the leaders
to influence the team and employees in the right directions. Thus, management of British
Airways aligned the leadership style with the transformation in order to enhance the
effectiveness in handling the new CRM systems and reduces the dispute and conflicts within the
organisation (Srivastava, 2014).
Skills represents the abilities and competencies that employees posses while working in
the organisation. In order to achieve the set goals and objectives, it is important for the
12

employees and employers to have precise skills and abilities (Ravanfar, 2015). Whenever, new
strategy formulated, the question has been asked by the analytical thinkers about the skills that
the organisation required in order to cope up with the desired changes. Skills can be evolved with
the help of training and development. In order to manage the CRM systems efficiently, the
management of BA hired skilled and competent employees in the organisation and moreover,
they provide training to the existing staff members of the company (Ford and Eisner, 2016). In
this way, they were able to align skills with other elements of the model.
Staff represents the workforce or manpower of the organisation. Staff is most crucial
element of the organisation as without them, the organisation will not be able to accomplish
desired goals and objectives effectively and efficiently. Staff element is concerned with the type
and number of employees employed in the organisation. According to Mitchell, Fredendall and
Cantrell, 2015 in McKinsey's 7 S model, staff element is concerned with the process of recruiting
employees, providing them training, motivation and rewards. This helps the organisation to make
effective strategies which assists them to sustain in the competitive environment. As one of the
largest aviation organisation incorporating in United Kingdom, there are over 40000 employees
employed in the organisation. In order to handle and control the CRM system, competent
managerial staff has been employed by the organisation (Landvogt, Gross and Lück, 2016).
Thus, in this way, the management was able to align the staff with other elements and able to
reduce the conflicts and disputes within the organisation.
Shared values are core of McKinsey's 7 S model. These are norms, standards, code of
conduct and ethics that influence the behaviour of employees and action of the company and thus
are the foundation of every organisation. These are considered as superordinate goals which get
reflected within the organisational culture. In order to attain the desired objectives and aim of the
organisation, the management needs to ensure that all the elements are precisely aligned with the
shared values. The motive of analytical thinkers at BA was to align all the elements in order to
achieve the share value in the organisation (Gallego, 2017). In this aspect, they have formulated
precise strategies so that each and every element aligned with each other appropriately. In this
way, they were able to implement CRM system within the organisation able to reduce the
conflicts and disputes efficiently. Thus, from the above case study, it can be understood that the
applicability of strategic management tool, British Airways was successfully able to implement
the CRM system within the corporation.
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CONCLUSION
From the above report it can be concluded that strategic management is core aspect of the
organisation. It is the responsibility and duty of top management to formulate precise strategies
and decision so that organisation can tackle the uncertainties and risks. In this context, the
following report helps in understanding the strategic management tool developed by McKinsey's
corporation in 1980s which was McKinsey's 7 S model. The model is used for analysing the
internal organisational environment. The origin and use of model in organisation has been
assessed in this report. Furthermore, the applicability of the model in British Airways while
implementing CRM system in the organisation has been discussed with the help of case study.
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REFERENCES
Books and Journals
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Online
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