Strategic Management Report: Evaluating McKinsey & Company's Strategy

This report provides a comprehensive strategic analysis of McKinsey & Company, a leading management consulting firm. It begins with an overview of McKinsey's purpose, vision, mission, and objectives, highlighting its value-driven approach. The main body then delves into an assessment of the firm's competitive advantage using the VRIO framework, evaluating its resources and capabilities. The report further analyzes the external environment through a PESTLE analysis, considering political, economic, social, technological, environmental, and legal factors. Additionally, Porter's Five Forces model is applied to assess the competitive dynamics within the industry. The report concludes with a review of McKinsey's overall strategy, offering insights into its strengths and potential areas for improvement. The analysis utilizes various frameworks and models to provide a detailed understanding of McKinsey's strategic position and operational environment.

Strategic Management

TAB LE OF CONTENTS
Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Purpose, Vision, Mission and the Objectives of the Mckinsey & company...............................1
Assessing the Competitive advantage by evaluating the four attributes with the help of VRIO
framework....................................................................................................................................2
PESTLE framework to analysis the external environment of the Mckinsey & company..........5
Porters five force model for assessing the competitiveness of an organisation..........................6
Review the organisation strategy.................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic management is an ongoing management process of the organisation resources for
planning, monitoring, analysis and assessment to needs to achieve organisation goals and
objectives. It involves setting the objectives, analyse internal organisation, its competitive
advantage, evaluating the strategies and assure that the strategies will roll out in the management
of the organisation (Strategic Management, 2021). Mckinsey & company is a management
consulting firm founded in 1926 by James O. Mckinsey. Mckinsey is the placed as a third largest
company for the strategy consulting firm by revenue and also the oldest and the largest in the
“Big Three” management consultancy. In this report discussed about the vision, mission, purpose
and the objectives of the Mckinsey, assessing the competitive advantage of the firm with the help
of VRIO framework, analyse the external environment of the business with the help of PESTLE
Analysis, Porters five force model of the organisation is analysed and the organisation strategy is
reviewed.
MAIN BODY
Purpose, Vision, Mission and the Objectives of the Mckinsey & company.
Value
Mckinsey is a value driven organisation. Its values are updated in short ways to adapt the
changing times. Its value reflect the both their long term strategy and the way to serve the clients
on the daily basis.
Purpose
Purpose of the organisation is a reason of the organisation exists. It is easy to understand
and manage and helps the employees to understand the direction of the organisation. Purpose of
the Mckinsey is to create the positive impact and be long lasting in the ever changing world
(Haski-Leventhal, 2020). Company purpose is embed to deliver the values with the help of its 5
Ps set the organisation that is-
 Portfolio strategy and products
In this the products are redefined with by introducing or withdrawing the
products. Revising the pricing of the product to line the purpose and review the portfolio
and test all the assets that have purpose against common criteria.
 People and culture
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To enable the purpose the development process of the people, career pathways
and the recruitment is align. Define the key performance indicator for the employee’s
accountability and give incentives to meet the target (Jayne, 2018). Articulated the
desires in the mindsets and behaviours of the individual to link with the purpose.
 Process and system
To meet the purpose related target company adopts the operational processes. The
behaviours of the suppliers are align with the purpose.
 Performance metrics
According to the purpose the performance targets and metrics are align. For the
decisions that are in line with the purpose capital allocation metrics is introduced.
 Positions and engagement
To align the purpose the Mckinsey & company tailor the external engagement and
the communication and revise the external position of the company and align
affiliation like trade association membership.
Mission
Mission statement of the organization defines the reasons and exists of the organization.
It’s a precise statement of the company that gives the purpose to the people to excite about the
company and motivate them to become the part of the organization. The mission of the Mckinsey
is to help their clients and make different, everlasting and substantial improvement in the client’s
performance and helps to build the attractive, developing and the exciting firm that retains the
exceptional people.
Objective
Organizational objectives are set by the organization reach the strategic goals short or
medium goals are set. It helps to set the organizational policies and the allocation of the
resources. Mckinsey objectives are to create the best strategies that fit the organizational goals
and the clients feel positive towards the organization and help to achieve the short goals.
Assessing the Competitive advantage by evaluating the four attributes with the help of VRIO
framework.
VRIO framework is a strategic tool designed to helps the organisation to protect its
resources and capabilities that impacts on its long term competitive advantage (Murcia, 2020).
2

This framework should be analysed after the creation of the vision statement and before starting
the planning process of the strategies. VRIO stands for valuable, rare, inimitable and organised.
Resources Value Rare Imitation Organisation Competitive
Advantage
Financial
resources Yes
No Financial
instruments
and liquidity
of the market
are available
to the all the
nearest
competitiors (
Da., and
et.al., 2019)
Sustainable
financial
position Temporary
advantage
Sales force
management
and the channel
management
Yes No Can be
imitate by
competitors
Lot of
potential is
utilised for
the effective
sales force
Potentiality
is certain
can provide
competitive
advantage
Approach to
the cheap
capital
Yes No Imitated by
the
competitors
Capabilities
are not fully
utilised
Has
potential
In comparison
to the
competitors its
brand
positioning
Yes No Require big
marketing
budget to
imitate the
competitor
Depending
on the
consumer
behaviour it
positioned
sustainable
competitive
advantage
3

its brand
( Ariyani,
and
Daryanto,
2018)
Company
name and retail
strategy- its
position among
the retailers
and the
wholesalers
It build the
strong relations
with the retailers
and the
wholesalers
Company
has an
dedicated
channel
partner
Impossible to
imitate
Over the
year
company
use it
successfully
sustainable
competitive
advantage
Project
execution track
record
With the frequent
cost overrun it is
especially in a
industry
Yes,
especially
in the
segment in
the
Mckinsey
firm
operates
( Racz, and
et.al., 2018)
No
competitors
are imitate so
far in this
expertise
Company is
successful in
it
Strong
competitive
advantage
Using the
present IT
capabilities to
gain the
opportunities
in the E-
commerce
Firm is gaining
the opportunity
by growing
rapidly in the
ecommerce
space.
To enter the
space most
of the
competitors
investing in
the IT
It is difficult
to imitate the
AI and the in-
house
analytics.
It is an
starting
procedure
for the
organisation
In ling run
provide
sustainable
competitive
advantage
Effective
implementation
It is difficult to
compete without
No, because
of the firms
Can be
emulate by
It is the one
of the
Strong
competitive
4

of the digital
strategy
the
comprehensive
digital strategy
are
investing in
the digital
operations.
the
competitors
leading
player in the
industry
advantage
Marketing
expertise in the
firm
Based on the
differentiation in
the industry, firm
is competing
effectively.
No, as
many of the
competitors
have decent
marketing
to know
how
Pricing
strategy
sometimes
match with
the
competitors
In-house
expertise is
leveraging
by the firm
Competitive
advantage
is
temporary
Loyalty and the
network of the
customer
23 percent of the
customers
contribute more
than 84 percent
of the sales
revenue.
Firm
invested to
build strong
brand
loyalty
Tried by
many
competitors
but are in
vain
Company
holds its
customer
loyalty for
the goof
effect.
It provides
medium
term of the
competitive
advantage.
PESTLE framework to analysis the external environment of the Mckinsey & company.
PESTLE analysis is a concept of marketing principle which helps to determine the
external environment of the organisation that affects the operations of the organisation (Fozer,
and et.al., 2017). PESTLE analysis to understand the external factors of the Mckinsey is follow-
Political
Political factor has a strong influence on the organisation stability and the long run.. For
the smooth flow of the business it is necessary that the political factor of the country is to be
stable so that the growth rate of the market will enhance. As Mckinsey is a global brand and
there is various political chaos in various countries it seems difficult to sustain in that market.
Frequent changes in the policies by the government harm the performance of the business.
Economic
5

Social
Technological
Technology factor used by the company for the leads to increase the profitability of the
business enhances the operational efficiency with the use of new technology. Mckinsey start
doing the social media marketing with the new trend by adopting the digital technology in the
business to enhance the collaboration with the customers. For the effective cost structure in the
organisation with the innovation in the technology.
Environment
With the change in the climatic conditions leads to grow in the environmental
consciousness. To avoid the undesired circumstances in the organization company needs to take
care of the environmental factors. Company started the recycling and the waste management in
the organization, renewable technologies is adapted by the company.
Legal
Every country has its own legal system, the system of the every country is to be
determined to avoid from the troubles. Mckinsey & company treaty equal in the organization and
has given all the rights to their employee according to the act set by the government.
Porters five force model for assessing the competitiveness of an organisation.
Porters five force model is used to understand the competitiveness of the business
environment and understand the profitability of the potential strategies (Juliana, and Nyoman,
2019). This can be classified in the four parts that is threats of new entrants, bargaining power of
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These factors help to determine the economic performance that affects the organisation in the
long run. Mckinsey influenced by which the host country government spend on the
infrastructure development that helps to develop the growth potential of the company in the
respective country (Shtal, and et.al., 2018). Mckinsey focuses in the economic structure of
the market in the country before entering in the market.
Social trends in the market are determined with the different cultural trends, demographics,
societal norms etc. Company use all the information retrieved from the social
environmental analysis for targeting the consumer and increase the potential buyer for the
service. As Mckinsey I the London where there is big consumer market there are various
opportunities to sustain in the market by targeting the potential customer ( Bruijl, 2018).
The services provided by the company are suited to the multicultural people.

the supplier, bargaining power of the supplier, threats of substitute and rivalry among the
competitors. Mckinsey & Company five force model to assessing the competitiveness is-
Threats of new Entrants
It is difficult for the companies to achieve in the industry where the Mckinsey operates. It
is easier for those firms that have high capabilities of cost advantage. This leads the production
of the new entrants costlier. Mckinsey fight with the new entrants to take the advantage of the
economies from its cost advantage (Gürkan, and Tükeltürk, 2017). It focuses on the innovation
to differentiate from the competitor and build brand awareness from spending more on the
marketing.
Bargaining power of the suppliers
Comparisons to the buyers, suppliers are lot in number in the Mckinsey industry. Product
provide from the suppliers are standardised, less differentiate and the switching cost is low.
Mckinsey purchases the product from the suppliers whose costs are low. They can switch the
suppliers if the cost or product is not suitable because the switching costs are low. Company has
different suppliers for the different supply chain; this ensures the efficiency in its supply chain.
Bargaining power of the buyers
The number of the suppliers are more than that of the firms that producing the products.
This means buyers have no control on the prices as they have few firms to choose from. This
leads to weaker the bargaining power of the buyers. Company focuses to attract the buyer from
the innovation and differentiation. Customer wants the good quality and the differentiate
products and Mckinsey get success in this. Through the marketing efforts to build the brand
loyalty it attracts the large customer base.
Threat of substitutes
There are few substitutes in the industry where the Mckinsey operates. Few substitutes
that are available have low profit in the earning. Some substitutes that are available have high
quality ad are more expensive as compare to the Mckinsey who sell at reasonable price at good
quality. Mckinsey focuses on its differentiating the products that are unique so that buyers cant
shift to the substitutes.
Rivalry among the Existing firms
Competitors in the industry where the Mckinsey operates are few. Most of them are in a
large size and this leads to the firms don’t move without being noticed (Miranda, and Allen,
7

2017). It leads to weaker force in the rivalry among the existing firms. Fixed costs are always
high in the industry where Mckinsey operates. This lead the company to full to their full capacity
and reduce its prices during the time slackens time of the demand.
Review the organisation strategy.
To sustain and be competitive in the market the effective and the efficient strategies is
necessary. Mckinsey vision is to create the positive impact in the mind of the customers and
sustain in the ever changing environment, for that company make the effective strategy that helps
to be competitive in the market. Company uses the portfolio strategy to improve the performance
of the client by supporting the resource allocation, planning process and by building the
sustainable value. Company’s rigorous method and the proprietary tools gives positive impact on
the client plan and execute has a bold, agile and decisive portfolio moves (Haski-Leventhal,
2020). By analyze the right trend and make the big moves to the capitalize leads to the critical
success. Company improves the performance of their clients from their existing portfolio by
identifying the opportunities for the growth in the business areas and also identify the areas that
should be divested.
From the uncertainty occurs in every business because of the covid 19 when every
organisation is shut down no one can came to office, it’s an emergency for the organisation to
change their technology by adopting the digital technology in the regular operation. Mckinsey
also adopt the digital technology to interact with their suppliers and the customers. During the
pandemic, where the customers are moved to the online shopping, company also has to respond
to this turn. After the adaption of the digital technology company acted much faster than
expected. The remote working leads the respondents to move 40 times more effectively that
thought before the pandemic. With the adaption of the digital technology Mckinsey can attract
the large customer base which leads to increase the profit of the business and grow the market
share. From the use of the social media platforms it can helps the customer to know the current
situation or offering in the company and attract the customers with them, digital customer
evaluation customer experience is also done so that the customers are happier and be loyal with
the company (Jayne, 2018). With the alignment of the overall strategies and the strong leadership
leads to long success at the time of disruptions or the transformations by extent the technology
and differentiating the roles during the crises.
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CONCLUSION
From this report it inferred that strategic management process is an ongoing process of the
management used to allocate the resources by planning, assessing, analysing and interpretation to
achieve the organisational goals. The strategies made by the company in a way to achieve its
vision and mission statement and the purpose to deliver the values to the clients. From the VIRO
framework to assessing the competitive advantage of the company by the help of its different
resources that have value, rare, imitable and organises. To make the strategies it is necessary to
analyse the external factors of the company, so from the PESTLE analysis it is determined. With
the help of the porter five force model its competitive advantage is determined by analyse the
threats of the new entrants, bargaining power of the supplier, bargaining power of buyer, threats
of substitutes and the rivalry among the firm. Company uses the corporate strategy by analysing
the portfolio of the clients and also adapt the digital strategy in the operations.
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REFERENCES
Journals and books
Ariyani, W. and Daryanto, A., 2018. Operationalization of Internal Analysis Using the VRIO
Framework: Development of Scale for Resource and Capabilities Organization (Case
Study: XYZ Company Animal Feed Business Unit). Asian Business Research
Journal. 3. pp.9-14.
Bruijl, G.H.T., 2018. The relevance of Porter's five forces in today's innovative and changing
business environment. Available at SSRN 3192207.
da Costa, and et.al., 2019. VRIO: Static or Dynamic?.
Fozer, D., and et.al., 2017. Life cycle, PESTLE and multi-criteria decision analysis of CCS
process alternatives. Journal of cleaner production. 147. pp.75-85.
Gürkan, G.C. and Tükeltürk, Ş.A., 2017. Strategies for innovative organization structure:
Innovative culture and open innovation. In Global Business Strategies in Crisis (pp.
185-199). Springer, Cham.
Haski-Leventhal, D., 2020. On Purpose, Impact, Vision and Mission. In The Purpose-Driven
University. Emerald Publishing Limited.
Jayne, K., 2018. An Action Inquiry to Establish a Vision and Mission Statement as a Step
Towards Sustainable Organizational Change. Saint Mary's College of California.
Juliana, J.P.E. and Nyoman, Y.N., 2019. Factors Influencing Competitiveness of Small and
Medium Industry of Bali: Porter’s Five Forces Analysis. Russian Journal of
Agricultural and Socio-Economic Sciences. 89(5).
Miranda, G. and Allen, P., 2017. Strategies for leading a multi-generational organization. i-
Manager's Journal on Management. 12(2). p.14.
Murcia, N.N.S., 2020. Enhancing strategic management using a quantified VRIO: adding value
with the MCDA approach (Doctoral dissertation).
Racz, L., and et.al., 2018. Extensive comparison of biodiesel production alternatives with life
cycle, PESTLE and multi-criteria decision analyses. Clean Technologies and
Environmental Policy. 20(9). pp.2013-2024.
Shtal, T., and et.al., 2018. Methods of analysis of the external environment of business activities.
Online References
Strategic Management, 2021. [Online]. Available through <
https://corporatefinanceinstitute.com/resources/knowledge/strategy/strategic-
management/>. [Accessed on 5 May, 2021].
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