Comprehensive Business Strategy Report: McKinsey & Company Case

This report provides an analysis of McKinsey & Company's business strategy, utilizing frameworks such as PESTLE, SWOT, Porter's Five Forces, and VRIO to evaluate the firm's external and internal environments, competitive forces, and competitive advantages. The PESTLE analysis examines political, economic, social, technological, environmental, and legal factors impacting the firm. SWOT analysis identifies strengths, weaknesses, opportunities, and threats. Porter's Five Forces model assesses competitive rivalry, the threat of new entrants, the bargaining power of suppliers and buyers, and the threat of substitutes. VRIO analysis determines the firm's competitive advantage based on value, rarity, imitability, and organization. The report concludes with recommendations for the organization and methods for monitoring the chosen strategies to ensure success. Desklib provides access to similar solved assignments and past papers for students.

Unit 32 Business Strategy

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
Pestle analysis for determining external environment:................................................................3
Swot analysis for determining internal environment:..................................................................5
Porter's five forces model analysis:.............................................................................................6
VRIO analysis for identifying the firm's competitive advantage:...............................................8
Valid strategies and tactical objectives to achieve overall strategic objectives:........................10
PART B..........................................................................................................................................10
Evaluating the strategic directions available to company:.........................................................10
Recommendations to organization.............................................................................................12
Ways and means by which the chosen strategies can be monitored in order to ensure success12
CONCLUSION..............................................................................................................................13
REFERENCES .............................................................................................................................14

INTRODUCTION
Business strategy as understood is a set of rules and regulations a company follows to
attain the different strategic plans for the achievement of organizational goals. The management
of a company utilizes the plan in order to carry out its operational activities smoothly in the
range of its competitors' course of actions and to satisfy the end consumers by establishing
themselves in the market industry.
In this particular brief, the business strategy and the strategic management plan of a
London based company named McKinsey & Company will be studied. The referred company
has always been the most trusted option in the field of management planning and consultancy for
its potential customers and it invests in developing their skills and strives to be the growth
indicator of the clients. The report will also include how the external environment affects a firm's
business operations and strategic management decisions. Further, there will be a critique
analyses of environmental and competitive nature in the context of objectives and tactical actions
of the firm by applying relevant theories and business models.
PART A
Pestle analysis for determining external environment:
1. Political Factors:
The influence of the recognized statuaries and their support resulted in the growth and
expansion of the firm in the global market and they also enjoy the government stabilization in
their overall operations (Kumar. and et.al. 2021.).
Considering the trade relations of the firm, it relishes the fact that the government and the
legal factors are always in its favour and amidst these, the firm can negotiate freely in the global
market.
2. Economic factors:
The firm has the benefit of a moderate inflation rates which help them to grow their
business operations and attracts more consumers by pleasing them in their most productive way.

As a result it benefits the firm in financial aspect such as in borrowing from any financial
institution and with the growing profitability and the recognition, this can increase the economy
of the nation (PESTLE ANALYSIS. 2022).
3. Social Factors:
The social factors affect the firm in many ways such as education, demographics, etc.
The firm has to take extra acre of these factors as it depend on the consumers and can determine
their profitability and survival in the long run.
It is already a known fact that for a large target population to be influenced, the firm has
to operate its activities in accordance with their standard of living.
4. Technological Factors:
The technology and innovation (Herman. Hady. and Arafah 2018.) in London is
magnificent due to their continental advantage. In such a case, it becomes essential for a firm to
adopt various measures that can help them differentiate from its competitors and can highlight
their competitive advantage.
High network connectivity with the global market is a perk for the firm in order to market
and promote the business activities undertaken.
5. Environmental Factors:
Nowadays, there is an increased and growing concern on the environmental factors and
for the firm to mark its hard own reputation in the market it has to operate according to the
norms of the environment.
Since the consumers are getting more aware of the recycling process and other factors
included, it becomes essential to opt for several measures which can assure an environment
friendly operations.
6. Legal Factors:
For any human life, the safety and security is the foremost in any context. So is for the
consumers of McKinsey & Company. The firm therefore understands the importance of business
regulations and legal factors of the employment. The human resource department makes relevant
policies for the workforce which further helps in gaining end consumers.

To ensure that there are no discrimination in the operational activities, the firm has
adopted various measures to maintain peaceful environmental culture.
From the above study of external factors of the firm, it has been seen that the external
relations and factors of the firm are reliable and that the firm does not have much fear of loosing
its marketing position. To be fully pre cautious about a situation and uncertainties, it should be
kept in mind that proper care of various legal and other concerned factors is mandatory to be
taken for the smooth operations of firm in the dynamic environment (Pospisil. and Zavodna.
2022).
Swot analysis for determining internal environment:
1. Strengths:
The biggest advantage is the resources and an area of sustainable development which
ensures the long life span of the firm in the marketing industry. The recognition gained assists
the firm in maintaining strong portfolio to attract traffic for their services that helps them reach
customer satisfaction.
The firm believes in customer focused approach, which benefits them in the form of
customer loyalty and employee retention rates.
2. Weaknesses:
Even if the firm enjoys a lot of perks, it faces the weaknesses as well. There are many
areas which are prone to threats either from the external sources or other factors. This basically
affects the organization's activities because of the origin hindered, the whole process gets
affected.
In the view of the organizational structure, financial planning is the most affected area
and that has to be taken care of.
3. Opportunities:
Various opportunities like increasing trends, technology and innovation and platforms of
connectivity with globalization can prove out to be an effective opportunity for the firm to grow
more in the industry by opening up new markets by applying cost effective techniques.

By complying with various laws, rules and regulations of the external environment, the
firm can increase its area of operations.
4. Threats:
McKinsey & Company is an area of business service where there is competition(Agung
and Darma. 2019.) with threat of uncertainty like others. Having extensive competition in the
market, the firm should identify the areas of amendments and examination.
It should also be kept in mind the fact that the fame and recognition can even bring a fear
of negative publicity that can affect the firm's overall operations.
After conducting the SWOT analysis, it has been observed that McKinsey & Company
enjoys an impressive opportunities and strengths in the light of its activities in the market. With
the growing trends and dynamics of the world it can even create more ways to grow its potential
and expand in the near future. The existing threats and weaknesses might have an impact on the
firm's operations, but it can still manage to pave its way out of these hindrances with full
effectiveness.
Porter's five forces model analysis:
1. Competitor analysis:
The competition faced by the firm is very intense in terms of managing resources and
increased knowledge. With the view of expanding the operations, McKinsey & Company has to
deal with many factors like the customers, pricing policy, various approaches to be carried out,
etc. The rate of rivalry increases with every movement made, so it is very important to formulate
the strategies from time to time and keep evaluating them for better understanding.
Creativity is hard to imitate, making it the rarest factor in terms of competitors.
Therefore, the firm must take measures to safeguard these ideas for better utilization of the
resources.
2. Threats of new entrants:
No one can depict the future, and this is the most beneficial factor for the new entrants to
enter the market as and when they please. This has great impact on the economy concerning
market the firm is operating in.

The product differentiation strategy here plays a significant role because the products and
services are the main cause of a business operations and differ from one company to the other.
Customers are attracted towards different products and services and demand change, which is
necessary for a firm to operate in. Therefore, it is advisable to manage the strategies formed and
implement the same.
3. Bargaining power of the suppliers:
The bargaining power of the suppliers is at low position, since there are more number of
them. It is understood that the suppliers now have less or no control over the prices since their
intensity is not that great.
The reason behind such analysis is that the products provided by them are less
standardized and differentiated making it less appealing to the consumers. When the consumers
don't get satisfied, the firm can choose to switch their suppliers and can operate with those who
can suit themselves within the policies of the firm.
4. Bargaining power of the buyers:
Customers are always treated as the king, and this is the major hit for the firm in the
context of bargaining powers. They always demand high quality products and services with their
knowledge in the tech world. This becomes the main task of the firm to adapt to the new
challenges and win their attraction by satisfying their needs and wants through the means of
effective strategies.
McKinsey & Company always tries its best in adopting such methods and procedures that
can result in high profitability with low input cost and does not get hindered by the buyers
power.
5. Threats of substitutes:
The threats of substitutes is present always affect the firm at a significant extent. If the
rate of threat is high and there are no possible measures available, the firm should always put its
focus on creativity and the innovative techniques it possesses and is the only unique factor on the
basis of which a firm ca be differentiated along with the financial activities.
In the case of McKinsey & Company, it should either invest in the favourable industries
or should take measures to avoid the risk of any imitation from its external sources.
From the porter's analysis of the competitive forces of a firm, it can be determined that
the firm McKinsey & Company has a moderate rivalry and its efforts in analysing the

competitive situation can help the firm in maintaining their renowned fame and reputation in
front of its customers by always applying the customer oriented approaches which can be
beneficial for the profitability and sustainability in the long run (Höse. Süß. and Götze. 2022).
The firm needs to have a unique aspect of operating the strategies (Suoniemi. and et.al.
2020) which is not easily imitable to stand out of the crowd. It can adopt various factors such as
motivation of the employees, connectivity access with the globe, inventing effective customer
approach techniques, etc.
VRIO analysis for identifying the firm's competitive advantage:
As the abbreviations denote, the term VRIO analysis is a process useful for the
identification and modification of the firm's competitive advantage and seeks attention towards
the strategy for effective business operations. It helps a firm to build a sustainable and reliable
competitive picture that can stimulate a wide range of target audience which can play a
significant role in the overall organizational objectives (Roz. 2021).
For McKinsey & Company, the assumption that the strategic resources are key to success
is fully relevant because of the area of operations the firm deals in. Having strong and rare
resources to operate in the industry can prove out to be a great competitive advantage for the
firm in this ever changing business environment.
Areas of
operation
V
Value
R
Rare
I
Imitable
O
Organized
Competitive
advantages
Digitisation Yes, of
extreme
importance
No Sometimes,
depends on the
ongoing
situation of the
firm
Yes, at a great
force
On the
adoption of
digital
advantage
techniques, the
firm can face
similarity in
operations
Flexibility in
supply task
Yes Yes,
immediate
Yes, the
competitors'
Yes Not much
impact on the

substitutes
can't be
defined
strategy might
comply with
the firm's
techniques.
operational
activities
Customer
satisfaction
Yes, a
significant
approach for
profitability
Yes, an
impressive
rate of
customer
possession
No, not
possible to
imitate the
organizational
culture and
ethics
It changes
with the
dynamics of
the working
environment.
Strong
competitive
advantage.
Recognition/
acknowledge
ment
Yes, a very
important
element
Yes No The firm has
an organized
recognition in
the market due
to its effective
business
strategy.
Influential
competitive
advantage
Opportunities Yes,
opportunities
in the area of
technology
and creativity
is strong
enough
No No, the
opportunities
cannot be
similar for
every business
firm
Needs to focus
proper on the
organization's
opportunities
for future
endeavours
Effective
competitive
advantage for
survival in the
long run.
The statements of above analysis imply that the firm McKinsey & Company has a very
strong and influential competitive advantage because of its overall business strategies formulated
in the right time for the right execution. The firm's organizational competence and capabilities
are of an importance since they have the power to determine the kind of resources a firm
optimizes and what are its pros and cons and how do they affect a firm's business strategies.

There is often a negative statement in the organizational strategies namely exploitation
which is highly dependent on the firm's execution plans and strategies and adversely affects a
firm's internal environment. This can be a plus point for the competitors to step ahead in the
competitive advantage by utilizing the firm's weaknesses and can even pose a threat to the
company's effective market position (Yutao. and Mengran. 2019).
Valid strategies and tactical objectives to achieve overall strategic objectives:
In order to attain the overall strategic objectives in the business operations, a firm needs
to follow a series of steps which can help them in achieving the same.
With many factors and opportunities coming in way of the firm, establishment of
effective vision, mission and the purpose of marketing services have to be simplified and
modified for the better understanding and utilization of the resources. This strategy is often
useful and has assisted the firm in the deep analysis of its operational objectives and suggested
an implementation method to carry out the same for the customer retention rates.
It will also be easy and influential for the firm to measure and keep a track of all the
progress they have made up to the date and can even formulate more expressive techniques and
tactics for the achievement of the overall strategic objectives.
PART B
Evaluating the strategic directions available to company:
Strategies directions are the plans that are needed to be implemented by the company in
order to fulfil the goals (Peachey. and et.al. 2018.). This helps the company to have the proper
management by having the proper communication with the employees to achieve the business
objectives. The strategic directions available to the organization is as described below:
Bowman's clock strategy: this is the comprehensive and easy strategy that can be used by
the company in order to have better positioning in the market (Echchakoui, 2018). This basically
consist of eight strategic positions that is described as below:
1. Low price and low value added: In this strategy it is ll about the selling of
quantity. The product and services used to have low value and the prices of the
product is also less.

2. Low prices: Low price itself suggest the name as the company used to sell its
products at the lower rate. In this strategy the company used to have low margins
in order to have better efficiency in cost reduction.
3. Hybrid: This is the combination of low price and differentiation, as in this the
company used to sell the differentiated products at the lower rates.
4. Differentiation: This is one of the best strategy that the business used to focus on
in order to provide the best products and services. This is all about ensuring the
different and diverse d products and services.
5. Focused differentiation: The focused differentiation strategy is about providing
the products and services at the high price. If it gets successful, then this strategy
used to provide good profits to the company. In this the higher margins are get
through the marketing, distribution and promotion of the products and service.
6. Risky high margins: This strategy used to focus on the risky areas and have high
prices of the product and services (Weston and Nnadi, 2021). By opting this it
helps the company to have the goodwill in the market if it gets success. This is
considered as the short-term strategy as company do not work in the risky areas.
7. Monopoly Pricing: In this the single used to have control on the selling and
rendering of products and services. As there are no competitors so it helps the
company to have better growth in the market. This is applicable in those market in
which there is no availability of the substitutes and competitors.
8. Loss of market share: This considered to be the worst situation for the company as
it makes the company to be in loss (Kim, 2020). In this the company must have
focus on the profitability in the market.
Porters generic strategies: This strategy helps the company to set the strategic directions and
determines the profitability as well. It includes the two variants that is cost focus or
differentiation focus. These are described as below:
1. Cost leadership: In this strategy the company is the low cost producer and used to
sell its products at the lower rate (Abdolshah, Moghimi and Khatibi, 2018). If the
company has achieved the cost leadership it helps them to become the average
performer in the market.

2. Differentiation: In this generic strategic direction the company used to focus on
the differentiated products and rendering the different types of services to the
customers. It helps the company to have more buyers and makes the company to
have uniqueness with the premium prices.
3. Focus: This used to focus on the groups that helps them to achieve good profits in
the market. This is the mixture of both above stated strategy as it has low cost and
have unique products as well.
Recommendations to organization
As the company is the consultancy firm it must provide the best services to the customers
in order to grow in the market. McKinsey & company can opt the differentiation strategy as this
makes them to provide the unique services to the customers.
Differentiation strategy is the best option choose by the consultancy firm as it used to
select the uniqueness in the market (Islami, Mustafa and Topuzovska Latkovikj, 2020). This
attracts the customers to avail the unique and better services in the market. The company by
opting this option rewarded in the competitive market and helps them to grow more as well. This
is all about ensuring the different and diverse d products and services. The goal of company is to
provide the bast and maximum services to the customers. The unique value of the services
rendered by the company used to have the target customers in the market. The quality of the
services and goodwill of the company used to play a crucial role in this differentiation strategy.
It is also recommended to the company that they can cost leadership as provide the best
services t the lower rate as compare to competitors. This makes the company to have more target
market and makes them know about the market as well. As the result it makes the company to
have increase in customers and provide the sensitive and high quality of services to them. This
helps the company to have better growth in the competitive market.
Ways and means by which the chosen strategies can be monitored in order to ensure success
For any firm operating in the industry requires choosing and formulate strategies to
ensure success rates. The authentic objective is to identify the primary business goals that are the
actual reason behind a firm's existence. Setting of reliable and relevant goals in accordance with
the overall business priorities, the outcomes should be on the basis of both formal and informal
relations.

With the help of Key Performance Indicator (HIKMAH. RATNAWATI. and
DARMANTO. 2021), the firms can ensure success by applying its elements in their business
strategies. The elements state that the ways of forming strategies should be easily understood and
in the alignment of the customer's knowledge about a product and services. This effective
planning tool can determine the insights of the problems and will give a clear view of the
amendments needed in the strategies formed and also how can the team's performance be
increased eventually.
The above benchmarking analysis has already identified the areas of business which are
weak and strong and where the firm should take appropriate measures to carefully adapt to the
required changes. With this method it can be determined that how influential the firm's internal
factors are against their competitors and which effective strategies can be taken into account for
the best customer experience in the name of the firm.
CONCLUSION
From the above report it is concluded about the business strategy of the McKinsey
company, that helps them to grow in the market. This report has evaluated about the PESTLE
and SWOT analysis of the company. Further this report has described about the competitive
forces by using porter's five forces model. There is also inclusion of the justification of potential
and existing competitive advantage. Moreover, this report has described about the different
strategic option that are available to the organization that supports them to grow. It has suggested
about the best options and strategies that can be adopted by the company in order to compete in
the market. As the company has opted differentiation strategy so it helps them to provide the
best and unique services to the customers. At last this report has described about the strategic
management plan by stating the objectives and tactical action for the company.

REFERENCES
Books and journals
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improving competitive advantage. International Journal of Innovative Science and
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Echchakoui, S., 2018. An analytical model that links customer-perceived value and competitive
strategies. Journal of Marketing Analytics. 6(4). pp.138-149.
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innovation on the competitive advantage and its implication toward Small and Medium
Enterprises (UKM) performance. International Journal of Science and Engineering
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HIKMAH, H., RATNAWATI, A. T. and DARMANTO, S., 2021. Factors affecting business
performance: An empirical study of the creative industry in Semarang, Indonesia. The
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Kim, S. K., 2020. Advanced Mathematical Business Strategy Formulation Design. Mathematics.
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Kumar. and et.al. 2021. What do we know about business strategy and environmental research?
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Peachey. and et.al. 2018. Challenges and strategies of building and sustaining inter-
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Pospisil, J. Z. and Zavodna, L. S., 2022. An Insight to the World of Female Entrepreneurship:
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Finance & Investment. pp.1-17.
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Online

PESTLE ANALYSIS. 2022. [Online]. Available through:
<https://www.247caseanalysis.com/essay/Mckinsey-13851-Pestel-Analysis>
SWOT ANALYSIS. 2022. [Online]. Available through: <https://iide.co/case-studies/swot-
analysis-of-mckinsey/>