BMP6002: Strategic Management Strategy Evaluation Report for McKinsey

This report provides a comprehensive strategic analysis of McKinsey & Company, a leading management consulting firm. It begins with an executive summary and table of contents, setting the stage for an in-depth evaluation. The report critically examines the value of clear purpose, vision, m...Read More

BSc (Hons) Business Management Top up
BMP6002
Strategic Management
Strategy Evaluation
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Executive Summary
This report helps to assess the strategy which are made by a retailer organization
McKinsey and company, by applying several strategic analyze tools which are suitable for
the strategic management of a company. Strategic management is very essential for each and
every company in order to manage the operations of the organization in a planned manner. It
helps to analyze the internal as well as external environment of the business which affects the
decision making in McKinsey and company.
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Table of Contents
Introduction................................................................................................................................3
Main Body..................................................................................................................................3
A critical evaluation of the value of clear purpose, vision, mission and objectives in setting
the strategic direction of organizations..................................................................................3
Assess the competitive advantage of McKinsey and Company, using the VRIO framework
................................................................................................................................................4
Using PESTLE framework analyzing the external environment of McKinsey and Company
................................................................................................................................................6
Application of the Porter’s Five Forces Model for McKinsey and Company.......................8
A review of the organization’s strategy of McKinsey and Company....................................9
Conclusion..................................................................................................................................9
References................................................................................................................................10
Books and Journals..............................................................................................................10
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Introduction
Strategic management refers to the continuous planning of operations, monitoring them and
analyzing them to assess all the requirements of an organization in order to meet the goals
and objectives (Dodgson, 2020). To become successful in the market, it is very essential for
an organization to assess the changes in the business environment and accept it in their
strategies. Mckinsey & company is a multinational organization which deals in Management
consulting. The company was founded in 1926 by the professor of University of Chicago
James O. McKinsey. This report contains the value of clear purpose, vision, mission and
objectives of an organization to set the strategic direction. It also contains the external
environment and competitive advantage which has gained by McKinsey and company in the
market. For the above Porter’s five Force model has been used to assess the external
environment of McKinsey and company. This report also reviews the business strategy of
McKinsey and company which helps the company to achieve great success.
Main Body
A critical evaluation of the value of clear purpose, vision, mission and objectives in
setting the strategic direction of organizations
Strategic management is a continuous process which helps in organization to meet its goals
and objectives. The strategy used by any business is the sole reason for the success of a
business in simple way it is the action which has been taken by an organization to achieve its
goals and influence each and every decision which has been made in a business in various
circumstances. In order to formulate a good business plan or a strategy it is essential that an
organization have a clear purpose or goal of setting up a business. This will help the
organization to formulate strategy in the direction. Organizational goals are those business
strategic objectives which defines the purpose of an organization. In case of McKinsey and
company, the organizational goals the strategic targets which the company wants to attain in
a period of time which is generally long term (Maijanen, 2020). These goals help the
McKinsey and company to direct the behavior of their employees as well as operations of the
business in short run of business. These goals are later divided in objective of organization.
These organizational objectives can be short to medium term target which are set by an
organization to attain largest letter g goals which are set earlier. The objective which are set
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by McKinsey and company are specific, measurable, attainable, realistic and timely in nature
these objectives of test you are important for them to shave a location of their resources
within the company as well as determining the schedules policies and process that are to be
implemented in McKinsey and company. Vision statement any company is a strategic plan
for its future which defines where the company wants to be in the near future. This vision
statement is the document which helps the company to identify their goals and facilitate its
managerial strategic as well as General decision making process. In order to be to have a
good vision statement it needs to be concise with encompassing description. In case of
McKinsey and company, they have a vision to provide highly valued services to their
customers, former communities in which they are operating and loyal and committed
colleagues which inspired them to earn trust and loyalty from their customers, colleagues and
communities. After this vision statement a mission statement has been formulated by a
company. It is a public document which provides details of the strategy and values of a
company mission statement of McKinsey and company helps to define the value and strategic
aim of McKinsey and company. Mission statement also helps to identify purpose of existence
of an organization highlighting the products and services offered by them. The main
components of mission statement are satisfaction of customers based on core competencies
(Fujiyama and Kuroki, 2020). A mission statement needs to be realistic and clear to everyone
and should have statement which motivate and inspire the employees and workforce of an
organization. It reflects the offering of a company and need to be very specific and sharp in
nature. The mission of McKinsey and company is to make what matters better together.
Assess the competitive advantage of McKinsey and Company, using the VRIO
framework
Competitive advantage refers to the several elements of a company which helps them to offer
more advantage to the customers. This competitive advantage can be anything such as
delivering better quality of products and services delivering it at cheap rates compared to its
competitors or providing better services to their customers. Long term competitive advantage
of any business can be assessed with the use of VRIO framework. It is a powerful tool which
is used to evaluate the internal strength of a company which helps them to retain its
attractiveness in the customers. VRIO stands for value, reality, inimitability and Organization
of products and services which are offered by company (Javakadze, 2020). In case of
McKinsey and company to assess the long-term competitive advantage company also use
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VRIO framework as a powerful tool. This framework on application of company telescope is
given below:
Value
In order to achieve competitive advantage in the market the product or service which has
been offered by a company needs to be valuable for customers. In case of McKinsey and
company, the company provides various services which are related to consultation to the
businesses. This basic need to their home adds value to the products offered by McKinsey
and company to their customers as well as business. That is the reason that the services and
products which are offered by McKinsey and company put a considerable value to the
organization.
Rarity
Rarity refers to the distinct identity of an organization in front of their competitors. In case of
McKinsey and company, although there are so many companies which are operating in same
ways but the company offers those services and advices which are not provided by any other
competitor (Panico and Cennamo, 2020). The services which are offered by the company to
their customers are so rare that customer wants to visit again and again to McKinsey and
company. It helps the company to makes itself rare for their customers and customer finds it
to be reliable as compare to it competitive businesses.
Inimitable
Inimitable refers to a situation in which resources are not capable of being imitated by the
competitors. It has been assessed that a real resource have competitive advantage in the
market as long as other forms do not have the possession of those resources or have a close
substitute of them. In case of McKinsey and company, the company offers consultancy
services in different countries. All the day offer products and services which can be imitated
by competitors but the service which has been provided by McKinsey and company through
its expansion and its availability and advices cannot be imitated by their competitors. It take a
lot of time to provide this service all over the world and that is the reason that McKinsey and
company is inimitable in nature.
Organized
Organized in case of an organization referred to the situation in which a firm is ready and
able to exploit their resources. In case of McKinsey and company the company has operating
through so many locations and also has Global presence with the help of website (Järvi and
Khoreva, 2020). It is easy to access the resources of the organization by their customers
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either physically or online. This ease of access eventually adds a competitive advantage to the
organization and helps McKinsey and company to survive in this competitive world.
Using PESTLE framework analyzing the external environment of McKinsey and
Company
Pestle analysis is a tool which is used by an organization to understand the dynamic
environment of a market which helps the business to improve it continuously. In case of
McKinsey and company being a large organization it is essential for the company pestle
analysis full stop the pestle analysis of McKinsey and company given below:
Political factors
McKinsey and company is the company which operates in many countries with their
headquarters in United Kingdom. The political factors of various countries for various types
of impacts on the business of McKinsey and company in order to successfully run the
business in different countries they need to have a stable political environment so that they
can have their trade to carry out successfully (Kasych, Suler and Rowland, 2020)(Pettit and
Crossan, 2020). Taking an example of Brexit, in the recent times it has put a negative impact
on the trade of McKinsey and company. The regulations which have changed due to Brexit
came up with increase or decrease in demand of the services of McKinsey and company.
Apart from that there are several issues which have affected the business of McKinsey and
company such as us China trade war. The all these factors affect the text policy and several
supply policies which effect the profitability of McKinsey and company.
Economic Factors
Economic factors affect to the factors which affect the economic situation of a company full
stop in case of McKinsey and company the company needs to have an eye on the economic
changes in the countries and which they are operating. As the company operates in various
countries and leads to consider economic condition of all the countries which affects the
revenue distribution sales and profits of the company. Although the companies operating in
several countries but its measure of the revenue is generated from United Kingdom's. Any
change in the economic policies of UK has put a major change in the delivery model of
McKinsey and company. Economic conditions of a country also put effect on the pricing of
the product which influence the sales of the organization. Such as in case when economics
under pressure then we need products must be priced accordingly (Authority, 2020).
Social Factors
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Social factors refer to the social life of customers which affects the trends in business and
ultimately affect the success of a business organization. In the present scenario customers
wants to buy everything in one time because of their first phase of life which is normally
termed as bulk buying. Taking in mind this need McKinsey and company has planned their
store to facilitate the bulk buying to their customers. This social factor influences the sales as
well as revenue of the organization. Similarly there is several social influence or societal
influence which affects the demand of customers regarding a product or service offered by
any organization. In case of McKinsey and company also there are various cultural factors
which affect the life of an individual and their demand for choice for a product.
Technological Factors:
In this dynamic environment it is very essential for any organization to be technologically
updated (Annie, 2020). It has been analyzed that technology is upgrading day by day and to
achieve success in the market and Organization needs to adopt the technology. In case of
McKinsey and company the company being and Retail Industry Company has achieved a
good amount of success in the market. They use several digital marketing techniques such as
online shopping promotion on social media and many more which affects their revenue by
influencing customers which is an example of Technical benefit to the organization. Single
large organization the company has taken a large benefit from the Trends of online shopping
and in recent time 43% of their customers’ shops through online shopping and at their
products get home delivered. McKinsey and company already wants to be technologically
updated to provide good and better services to their customers. They use a good technology
for their billing counters to provide their customers hassle-free willing and avoid long queues
to save their time
Environmental Factors
In order to sustain in a society an organization need to the affair of the environment in which
they are operating. It is the duty of any organization to provide environmental benefits to the
society as the society is giving them profits to operate their business. McKinsey and company
is a large organization to the society that it will reduce its footprint by 50% till 2020. In
addition to this McKinsey and company is also focus to minimize the waste which has been
produced in their stores by increasing social consign in their customers (Turkov, 2020).
Legislative Factors
There are various legal factors which of the performance of any organization. In case of
McKinsey and company there are several government policies and legislation which have
direct impact on the performance of the company. As the company operates in so many
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countries, they have to follow various legislations which are applicable in those countries. In
order to sustain in the market of a country it became essential for McKinsey and company to
follow the legislation which are issued by government of that country.
Application of the Porter’s Five Forces Model for McKinsey and Company.
Porter's five Force model is used to examine the impact of five forces on McKinsey
and company to operate in supermarket industry. These five forces which quotes and impact
on the business of McKinsey and company explained below:
Bargaining power of the buyers/customers of McKinsey and company
Buyers in UK are not so much organized which is better for the company McKinsey
and company. It makes the Retail Industry attractive for McKinsey and company full stop on
the other hand McKinsey and company serves millions of customers every week. According
to some experts the bargaining power of customers is high in UK because of competitors in
the market. It is because of them that the company McKinsey and company has to keep its
prices low in order to have good profit margin because these companies are comparatively
cheap as well.
Bargaining power of the suppliers of McKinsey and company
McKinsey and company operates in so many countries and has various suppliers all
over the world. According to a survey they have 2500 suppliers in UK and many more
thousands in abroad. Due to number of suppliers the bargaining power of suppliers is less for
McKinsey and company as McKinsey and company negotiate very hard with their suppliers
which help them to increase their profits. Even it also has been mentioned that is accused of
killing their suppliers over price cut (Mirbagheri, Roodbari and Kordestani, 2020).
Threat of new entrants affecting McKinsey and company
Threat of new entrants refers to the threat to an organization of competition due to
new entrants in the market. In supermarket industry of UK there is no chances of this threat
because of high requirement of capital. In case of McKinsey and company they do not need
to worry about the new entrants because it enjoys economy of scale and has its own copper
competencies. In order to compete with companies like McKinsey and company an
organization needs a lot of capital requirement to be established as a vast company
Threat of substitute products/services
Threat of substitute products or services is generally a relevant for the company like
McKinsey and company. McKinsey and company offers their customer so many product of
Retail Industry and includes substitute of those products also. Taking an example of butter
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the company offers butter and margarine both to their customers which are substitute to each
other. Therefore there is no question to argue about the threat of substitute products and
services for McKinsey and company.
Rivalry amongst McKinsey and company’s existing competitors
McKinsey and company faces images competition in the market of UK. The competitors of
McKinsey and company spent a lot on advertising and other marketing techniques which help
them to attract the customers of McKinsey and company. The company has to face several
price was which are launched by their competitors. The company McKinsey and Company
has trying to find out various suitable solutions in order to handle this intense competition in
the market of UK
A review of the organization’s strategy of McKinsey and Company
As there are so many competitors of McKinsey and company in the market McKinsey and
company needs to use an aggressive strategy to maintain its position in the market
(Mirbagheri, Roodbari and Kordestani, 2020). They can use Rapid techniques of market
growth such as market penetrations and market development strategies in order to sustain in
the competitive world.
Conclusion
From the above discussion it has been concluded that it is very essential to manage and
Organization strategies in order to achieve success. McKinsey and company has for goal
which helps them to achieve success and create their Vision and Mission statements and
objectives for the company. They use several Frameworks in order to assess the internal as
well as external market. McKinsey and company use drive to assess the competitive
advantage they get in the market and use pestle analysis to analyze the external environment
of various organization developed in various country. In order to examine the forces of
market they apply porter's five Force model for them. McKinsey and company use good
organization strategy which help them to achieve a great success for their company and gain
a brand image in the market.
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References
Books and Journals
Annie, R.P., 2020. 4 Strategic management practices in ready-made garments industry in
Bangladesh. The Economic Development of Bangladesh in the Asian Century:
Prospects and Perspectives, p.93.
Authority, G.B.R.M.P., 2020. Crown-of-thorns starfsh Strategic Management Framework.
Great Barrier Reef Marine Park Authority.
Dodgson, M., 2020. The Strategic Management of Technology and Innovation. In Oxford
Research Encyclopedia of Business and Management.
Fujiyama, K. and Kuroki, M., 2020. Strategic Management Forecasts and Accounting
Choices: A Case of Employee Downsizing in Japan. Journal of International
Accounting Research, 19(3), pp.91-109.
Järvi, K. and Khoreva, V., 2020. The role of talent management in strategic
renewal. Employee Relations: The International Journal.
Javakadze, D., 2020. Aspects of strategic management of business process in e-governance.
In World economy and international economic relations (Vol. 3, pp. 20-25).
Kasych, A., Suler, P. and Rowland, Z., 2020. Corporate Environmental Responsibility
through the Prism of Strategic Management. Sustainability, 12(22), p.9589.
Maijanen, P., 2020. Teaching the history of strategic management. In Teaching Strategic
Management. Edward Elgar Publishing.
Mirbagheri Roodbari, S.A. and Kordestani, G., 2020. Utilizing Strategic Management
Accounting Techniques in Iranian Firms. Environmental Energy and Economic
Research, 4(3), pp.197-214.
Panico, C. and Cennamo, C., 2020. User preferences and strategic interactions in platform
ecosystems. Strategic Management Journal.
Pettit, K.L. and Crossan, M.M., 2020. Strategic renewal: Beyond the functional resource role
of occupational members. Strategic Management Journal, 41(6), pp.1112-1138.
Turkov, S.L., 2020, July. Information support for strategic management processes’ in
geoecology and agriculture. In IOP Conference Series: Earth and Environmental
Science (Vol. 547, No. 1, p. 012042). IOP Publishing.
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