Strategy Evaluation

This document discusses the importance of clear purpose, vision, mission, and objectives in setting the strategic direction of an organization. It also evaluates the competitive advantage through VRIO analysis and analyzes the external environment using the PESTLE framework. The document focuses on McKinsey and Company as a case study.

Strategy Evaluation

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
Evaluate the value of clear purpose, vision, mission and objectives in setting strategic
direction of organization and explain with examples and views from the selected organization
.....................................................................................................................................................4
Assess the competitive advantage through vrio analysis of company. ......................................5
Using PESTLE framework analyse external environment of business. ....................................7
Porter's five forces model of organization..................................................................................9
Based on the analysis review the organization strategy. ..........................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategy evaluation refers to the whole management process which is done to evaluate
complete strategic plan and assess our performance that how well we have performed in
achieving our objectives through our strategies. There are two levels in which it operates;
strategic level and operational level. Through strategic evaluation process the whole management
ensures that each strategy is adopted properly and goals are achieved. All managers chose the
best strategy among all strategies that will help them in achieving their goals. The below report
includes evaluation of value of clear pupose, vision, mission and objectives for setting strategic
direction of organizations, accessing the competitive advantage by using vrio analysis, pestle
analysis, porter five forces model and review of whole organization strategy on the analysis. The
below is about McKinsey and company. It is a top american management consultancy firm
which was founded in 1926 by chicago professor James O. McKinsey. (Punt and et.al, 2016)
MAIN BODY
Evaluate the value of clear purpose, vision, mission and objectives in setting strategic direction
of organization and explain with examples and views from the selected organization
For an organization proper strategic direction is very much important. Strategic
management can be assessed properly if organization pupose, vision, mission and goals are clear
to whole management team.
 Vision:- It refers to the concept of what the organiztaion wants to achieve in
future. Every organization have a clear vision so that managemnt team also perform well
to achieve those future goals. The strategic direction can only lead to success if vision is
clear in mangement. There should not be two or more visions. In an organization
management team should have a clear vision and it should be only one. (Carruthers and
Hordyk, 2019) When a company has a clear vision; clear motivation is there for all
employees and commitment is made by each employee because they are clear about what
they want to achieve. When a company forms certain strategies; sometimes a difficult
situation occurs regarding to make a decision to chose best strategy so in case of that if
vision is clear then it will be easy for them also to chose best one. In case of McKinsey
company, identifying clear value played an important role for management team.

According to a research, the first role of organization was to create a value of what they
want to achieve and what qualities will be required to achieve that goal. According to
company, their initial role was to set value and match the talent which will relate to that
particular goal.
 Purpose:- It refers to the concept of how an organization will provide impact to
customers. A business should have a clear purpose so that management can focus on
what they are doing, what plans and strategies they make for better future of organization
and when a clear purpose is there in from of team then their targets are also clear and
proper strategies are made. In case of McKinsey company, they defined their purpose in a
clear manner. They considered five elements to establish a clear purpose of their
organization; People and culture, Portfolio strategy and products, process and system,
position and engagement and performance metrics. In case of people and culture, the
company chose clear talent in context with clear purpose. If a organization has clear
purpose but they don't have a specific talented individuals then their pupose would not be
completed.(Thorpe and De Oliveira, 2019) So, McKinseycompany made sure that
people and culture should be matched with each other. In case of Portfolio and strategy,
the company defined how to set clear purpose and where it should be applied. In case of
process and systems, as the company set their clear purpose so they ensured that to
accomplish that purpose they followed a proper process. In case of performance metrics,
by defining clear purpose, they measured their firm performance also. In case of position
and engagement, they revised tehir external positions in context with their clear purpose.
 Mission:- It refers to the concept of what the business wants to achieve and
existing state of organization regarding what they are doing and how they are doing.
When a company defines a clear purpose they need to develop their clear mission also.
Every organization has some specific goals so it should be clear as it is very important for
the organization because clear mission leads to success of company as all individuals
working in company focus on that particular mission only. In case of McKinsey
company, they set their mission and due to that they were the leading consulting firms

among all other firms. They were clear about their mission regarding accepting
challenges which matters most to their clients and also built leadership skills and they did
this to get support on internal basis and lead the work in a positive manner. Due to their
clear mission, maximum no of employees were staying at their organization. (Yin,
Kiliccote and Piette, 2016)
 Goals:- It refers to the concept of what is the ultimate objective of any
organization. The overall work which is done by the organization is for its ultimate goal.
It is evaluated that setting a clear goal for an organization is difficult and they spent lot of
time in analysing it but in case of McKinsey company, it was seen that they set their
goals in a clear manner and in effective manner. While setting their goals they involved
employees also and through this all people were inspired that how they should perform
and feel motivated. The company update their targets if any change in the organiztaion
occurs unexpectedly and through this their performance got improved. (Dutra and et.al,
2015)
Assess the competitive advantage through vrio analysis of company.
Competitive advantage means factors that helps a company to offer products of better
quality, cheap prices and provides good services in comparison to their competitors. There are
four attributes which are considered in vrio analysis ; value, rarity, imitability and organization.
Value means all resources which organization is using should be valuable enough that they are
able to defend all threats and are incresing value of customers. In an organization changes can
happen at any time in context with their internal as well as external conditions so that resources
don't reach to the stage of useless. Rarity means that resources which are used by few companies
only. There are some resources which has value but are used by many companies so they should
not be ignored because they are helpful for organization in staying in the competiton. Imitability
can occure by two ways; by directly duplicating resource or using a comparable product. A
organization should be managemnt properly to achieve competitive advantage. All the process,
structure should be fully managed so that the value of resources remain in organization. The vrio
analysis of McKinsey company is explained as below:-

 Valuable:- The resources of McKinsey company are valuable because they were helping
organization to invest into external opportunities which helps them to defend tehir
threats. It was analysed that employees working in organization are considered valuable
for them because they were trained enough due to which positive output is formulated.
(Harford and et.al , 2016) The employees are also loyal which led to high value of their
products. The company was able to reach many customers as there distribution network
was valuable and successful. The analysis also shows that concept of research and
development was not as successful in comparison to their other resources because of their
cost and according to their cost they were providing less benefits. So, it became a
disadvantage for them and company was given a review that costs should be decreased
for research process. Rare:- According to analysis, the financial resources of company were rare as strong
resources are not used by every company. It was also seen that the food products which
they identified were not rare as it was easily available by other firms. The workers of
company were rare because they were trained at a high level and employees of other
firms were not much trained. The patents of organization are considered as a rare
resource because competitors were no using such patents. It was also analysed that
distribution network of company is also rare because company invested high amount as
well as spent lot of time in creating such distribution network and other consulting firms
will have to spent lot of time to reach at position where McKinsey is. (Hasnine, Weiss
and Nurul Habib,2016) Imitable:- According to analysis, the food products which McKinsey was providing were
easily imitable by other consulting firms as they are not too costly. The employees of
company can also be imitated by other consulting firms because every firm can provide
training at a good level. The distribution network of company is rare as well as imitable
too. No competitor can reach to such level frequently so they had to invest high amount
as well as had to spent lot of time.
 Organization:- According to analysis of McKinsey company, the patents are not
organised because they were not used in a proper manner due to which company was not
having competitive advantage. The distribution network of company is organized because
they were able to reach maximum number of customers and provided their products at

every outlet which increased their competitive advantage. McKinsey used their
opportunities very well, invested right amount which was needed and is able to defend
their threats. (Tsai and Lin, 2016)
Using PESTLE framework analyse external environment of business. Political factors:- The growth of McKinsey company is highly dependent on political
factors. There are some factors that lead to its growth that are political stability, changing
policies and corruption. According to political stability, high stability leads to a friendly
environment which leads to growth of the market. In case of McKinsey, they are
operating in different countries and have their own political chaos. Due to these
instabilities, the growth of gold industry got affected and opportunities also decreased
which was available to company. The performance of business is also affected when
policy chnages frequently and due to which uncertainty occurs. So, it was important
managers to understand current trends as it affects industries because government
priorities may change at any time. Corruption in countries affects business in a negative
way. If company would enter a corrupted market then tehir competitive advantage will be
affected. , Economic factors:- There are some economic factors that company must focus on like
interest rate, inflation, foreign exchange and so on because it indicates whole economic
environment of country. In case of McKinsey company, various economic factors were
influencing them like economic stage, inflation or exchange rates, economic structure and
financial market efficiency. A country economic development determines performance of
organization. When economy is increasing , the growth of organization also increases. It
is analysed that it is more difficult to enter into mature industries rather than the
industries which are leading growth. The growth strategies of company is also affected by
GDP rate which determine whether they will use that particular strategy or not. If interest
rate is high then growth of company increases. Company's profits are also influenced by
exchange rate fluctuation and it is also a serious matter for company if local currency is
affected by high fluctuations. It is also analysed that ocmpany is affected by economic
structure also. (Dawson and et.al, 2016) Social factors:- The culture of a company is influenced by social norms, values. If a
company is able to understand all demographic trends, power structures and all beliefs

then they will be able to accomplish all objectives. There are certain social factors that
affects McKinsey company like demographic trends, gender roles, online shopping. In
case of demographic trends, there may be many changes that can occur like migration
trends, certain social variables which is important for company. So, it is important that all
demographic characterstics should be thoroughly understood so that right market segment
can be selected.(Baker,Collier and Jayaraman, 2017) The company also need to
understand about the gender roles so that marketing can be properly assessed. In today's
world every customer prefers to do online shopping especially in case of young
generation so company should also understand the increase use of social sites so that they
marketing strategy can also develop. Technological factors:- For every organization understanding technological factor is
important because technologies are reaching at high level and are much advanced. It is an
advantage for company because it helps in increasing profits and efficiency also
improves. There are some technological factors which influences McKinsey company
like social media marketing and technological innovation. In today's world social media
is the most attractive technique because everyone is spending their time on social media;
they are engaged in online shopping. So, McKinsey company should also analyse that
opportunity so that they can reach to more customers and improve their performance. An
innovation in technology also bring chnages in industry and according to that success
process also chnages. (Tsai and Lin,2017) Environmental factors:- The changing climate conditions affects industry so they should
consider those changes and defend all obstacles that may arise. There are some
environmental factors that influence McKinsey company like waste management,
renewable technology, climatic conditions. Due to increase environmental pollution, it is
important for business to focus on recycling as well as waste management. So, company
should initiate waste management practice because it is very much important for
company. Every organization wants to achieve competitive advantage as well as remain
sustainable in market so McKinsey should also invest in renewable technologies so that
they also remain sustainable in market for a long period of time. Climatic conditions can
change at any time so company should focus on those climatic conditions because it
affects business efficiency. (Froehlich, Essington, and McDonald, 2017)

 Legal factors:- There are various legal factors that should be followed by every
organization because if they will not follow then the company may face certain problems.
There are different legal factors that influence McKinsey company like employee
protection law, consumer protection laws. In an organization labour safety is the most
important thing that every organization must focus on. So, it is the duty of company that
they are ensuring labour safety in their firm. Consumer data should always be protected
as it is private data regarding customers and if it will not be properly protected then
company may be in trouble.
Porter's five forces model of organization.
There are five forces which are used to analyse an industry that are threat of new entrants,
bargaining power of buyers, bargaining power of suppliers, threat of substiture products and
rivalry among existing firms. These are explained as below:- Threat of new entrants:- In case of McKinsey company, there are some factors through
which threat of new entrants is a weaker force but sometimes it is also a strong force
which leads to increase in threat of new companies. The products which firm is providing
are differentiated ones and are really strong in providing customer services so company
was not facing much threat regarding their differentiated products. McKinsey consulting
firm involve a large economy of scale which is not easy for every organization to invest
in so here also threat was a weaker source but distribution networks for new companies is
very easy as they can easily set up their channels due to which firm had to face threat
from new entrants. (Chang and Tsai, 2016) Bargaining power of suppliers:- In case of McKinsey consulting firm, there are lot of
suppliers but at the same time the buyers are less so they can't control prices due to which
bargaining power of suppliers becomes weak. The products which are offered are
completely different and there are no substitutes available so it leads to strong supplier
power. McKinsey firm is a necessary as well as important customer for their suppliers so
they cannot change their prices and can't charge high cost due to which they become a
weaker force. (Harford and Babcock, 2016) Bargaining power of buyers:- As in the case of McKinsey consulting firm there are lot
of suppliers as compared to firms so buyers has no choice and they will consult to that
particular firm only due to which theie power becomes weak and it is also analysed that

income of buyers is also low due to which they become price sensitive and their power
becomes weak. Threat of substitute products:- There are very less substitutes in the case of consulting
firms due to which they becomes a weaker force because the substitutes which are there;
they are also produced by low profit earning industries.
 Rivalry among existing firms:- As there are few competitors so every organization wants
to achieve a good position in the market so it becomes a strong force within consultancy
firm. In case of McKinsey firm, it is the top leading consultancy firm so it is analysed
that other firms are not taking competitive advantage and are not grown at high level.
Based on the analysis review the organization strategy.
According to above report, it is analysed that McKinsey consultancy firm is achieving
growth in its sector and is still at top position in comparison to other consultancy firms. By
analysing all strategies that were applied and by all the factors through which it got influenced,
they should use operating strategy because there are many competing consultancy firms which
are at good position so they should produce their products at low cost and st low budget for
them. There are many buyers who can't afford high prices and there are other firms also so they
should set their budget low so that they can offer products at low prices. It is also analysed that
company is getting sffected by social factors involving online shopping so it is recommended
that they should enhance their firms to the social level also. (Kosinova and et.al, 2016)
CONCLUSION
According to the above analysis it is concluded that, strategic direction is very much
important for an organization because a strategic plan leads to proper performance which
enhance growth among all other firms. There are many strategies that an organization makes so
they must chose the best one so that they are able to achieve goals. In an organization vision,
mission, objectives should be clear in front of whole management team so that they focus only
on particular objective rather than focusing on many goals.
REFERENCES
Books and Journals

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International Journal of Operational Research, 29(3), pp.295-316.
Carruthers, T.R. and Hordyk, A.R., 2019. Using management strategy evaluation to establish
indicators of changing fisheries. Canadian Journal of Fisheries and Aquatic Sciences,
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Fuzzy Multiple Criteria Analysis. Journal of Testing and Evaluation, 44(5), pp.2010-
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Dawson, H.A., and et.al, 2016. Management strategy evaluation of pheromone‐baited trapping
techniques to improve management of invasive sea lamprey. Natural resource modeling,
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Dutra, L., and et.al, 2015. Key issues and drivers affecting coastal and marine resource
decisions: Participatory management strategy evaluation to support adaptive
management. Ocean & Coastal Management, 116, pp.382-395.
Froehlich, H.E., Essington, T.E. and McDonald, P.S., 2017. When does hypoxia affect
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Harford, W.J. and Babcock, E.A., 2016. Aligning monitoring design with fishery decision-
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Aquatic Living Resources, 29(2), p.205.
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Hasnine, M.S., Weiss, A. and Nurul Habib, K., 2016. Development of an employer-based
transportation demand management strategy evaluation tool with an advanced discrete
choice model in its core. Transportation Research Record, 2542(1), pp.65-74.
Kosinova, N.N., and et.al, 2016. Development of methodological approach to enterprise’s
financial strategy based on comprehensive evaluation of its strategic potential.
Punt, A.E., and et.al, 2016. Management strategy evaluation: best practices. Fish and Fisheries,
17(2), pp.303-334.
Thorpe, R.B. and De Oliveira, J.A., 2019. Comparing conceptual frameworks for a fish
community MSY (FCMSY) using management strategy evaluation—an example from
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Tsai, P.H. and Lin, C.F., 2017. Creating a management strategy evaluation model for taipei city
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Tsai, P.H. and Lin, C.T., 2016. Creating a business strategy evaluation model for national
museums based on the views of curators. Curator: The Museum Journal, 59(3), pp.287-
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Yin, R., Kiliccote, S. and Piette, M.A., 2016. Linking measurements and models in commercial
buildings: A case study for model calibration and demand response strategy evaluation.
Energy and Buildings, 124, pp.222-235.