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Unit 4 Strategic Management

The document discusses the organizational life cycle and describes its five stages: birth, growth, maturity, decline, and death. It then provides more details about each stage, including dominant issues, popular strategies, and likely structures. The document also describes McKinsey's 7S framework, which identifies seven internal elements of an organization that must be aligned for success: strategy, structure, systems, shared values, style, staff, and skills. It explains each element and how the framework can be used to analyze an organization's current state and proposed future state.

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Madhu Shrivastav
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© © All Rights Reserved
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Download as PPT, PDF, TXT or read online on Scribd
212 views

Unit 4 Strategic Management

The document discusses the organizational life cycle and describes its five stages: birth, growth, maturity, decline, and death. It then provides more details about each stage, including dominant issues, popular strategies, and likely structures. The document also describes McKinsey's 7S framework, which identifies seven internal elements of an organization that must be aligned for success: strategy, structure, systems, shared values, style, staff, and skills. It explains each element and how the framework can be used to analyze an organization's current state and proposed future state.

Uploaded by

Madhu Shrivastav
Copyright
© © All Rights Reserved
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Organizational life cycle

The organizational life cycle is the life cycle of an

organization from its creation to its termination.


There are five level/stages in any organization.
Birth
Growth
Maturity
Decline
Death

Organizational Life Cycle


Stage I

Stage II

Stage III1

Stage IV

Stage V

Dominant Issue Birth

Growth

Maturity

Decline

Death

Popular
Strategies

Horizontal
and vertical
growth

Concentric and
conglomerate
diversification

Profit strategy
followed by
retrenchment

Liquidation or
bankruptcy

Functional

Decentralization

Structural

management
emphasized

into profit or
investment centers

surgery

Concentration
in a niche

Likely
EntrepreneurDismemberment
Structure
dominated

of structure

Note: 1. An organization may enter a Revival Phase either during the Maturity or Decline
Stages and thus extend the organizations life.

Description of the 7-S Frame work of MC


Kinsey

Description of the 7-S Frame work of MC Kinsey


The 7-S framework of McKinsey is a Value Based Management

(VBM) model. Together these factors determine the way in which a


corporation operates.

Shared Value: The interconnecting centre of McKinsey's model is:

Shared Values. What does the organization stands for and what it
believes in. These are Central beliefs and attitudes.

Strategy: Strategy is a Plan for the allocation of a firms scarce

resources, over a time to reach identified goals. Strategy considers


Environment, Competition and Customers.

Structure: The way the organization's units relate to each other:

centralized, functional divisions (top-down); decentralized (the


trend in larger organizations); matrix, network etc.
5

Contd
System:

The procedures, processes and routines that


characterize how important work are to be done: financial
systems; hiring, promotion and performance appraisal systems;
information systems.

Staff: Numbers and types of personnel within the organization.


Style: Cultural style of the organization and how key managers

behave in achieving the organizations goals.

Skill: Distinctive capabilities of personnel or of the

organization as a whole. (Core Competencies).

The McKinsey 7S Framework


Ensuring that all parts of your organization work in harmony
While some models of organizational effectiveness go in and out

of fashion, one that has persisted is the McKinsey 7S framework.


Developed in the early 1980s by Tom Peters and Robert
Waterman, two consultants working at the McKinsey & Company
consulting firm, the basic premise of the model is that there are
seven internal aspects of an organization that need to be aligned if
it is to be successful.

The McKinsey 7S model can be applied to elements of a team or

a project as well. The alignment issues apply, regardless of how


you decide to define the scope of the areas you study

Contd..
The 7S model can be used in a wide variety of situations where
an alignment perspective is useful, for example:
Improve the performance of a company;
Examine the likely effects of future changes within a company;
Align departments and processes during a merger or
acquisition;

The Seven Elements

Hard Elements

Soft Elements

Strategy
Structure
Systems

Shared Values
Skills
Style
Staff

"Hard" elements are easier to define or identify and


management can directly influence them: These are strategy
statements; organization charts and reporting lines; and formal
processes and IT systems.
"Soft" elements, on the other hand, can be more difficult to
describe, and are less tangible and more influenced by culture.
However, these soft elements are as important as the hard
elements if the organization is going to be successful.
9

Contd
The way the model is presented in Figure depicts the

interdependency of the elements and indicates how a change in


one affects all the others.

Placing Shared Values in the middle of the model emphasizes

that these values are central to the development of all the other
critical elements. The company's structure, strategy, systems,
style, staff and skills all stem from why the organization was
originally created, and what it stands for. The original vision of
the company was formed from the values of the creators. As
the values change, so do all the other elements
10

How to Use the Model


The model is based on the theory that, for an organization to

perform well, these seven elements need to be aligned and


mutually reinforcing. So, the model can be used to help
identify what needs to be realigned to improve performance, or
to maintain alignment (and performance) during other types of
change.

Whatever the type of change - restructuring, new processes,

organizational
so on - the
organizational
wider impact
consideration.

merger, new systems, change of leadership, and


model can be used to understand how the
elements are interrelated, and so ensure that the
of changes made in one area is taken into

11

Contd
You can use the 7S model to help analyze the current situation

(Point A), a proposed future situation (Point B) and to identify


gaps and inconsistencies between them. It's then a question of
adjusting and tuning the elements of the 7S model to ensure
that your organization works effectively and well once you
reach the desired endpoint.

7S Checklist Questions
Here are some of the questions that you'll need to explore to help

you understand your situation in terms of the 7S framework. Use


them to analyze your current (Point A) situation first, and then
repeat the exercise for your proposed situation (Point B).
Strategy:
What is our strategy?
How to we intend to achieve our objectives?
How do we deal with competitive pressure?
How are changes in customer demands dealt with?
How is strategy adjusted for environmental issues?
Structure:
How is the company/team divided?
What is the hierarchy?
How do the various departments coordinate activities?
How do the team members organize and align themselves?
Where are the lines of communication? Explicit and implicit? 13

Systems:
What are the main systems that run the organization? Consider

financial and HR systems as well as communications and


document storage.
Where are the controls and how are they monitored and
evaluated?
What internal rules and processes does the team use to keep on
track?
Shared Values:
What are the core values?
What is the corporate/team culture?
What are the fundamental values that the company/team was built
on?
Style:
How participative is the management/leadership style?
How effective is that leadership?
Do employees/team members tend to be competitive or
cooperative?
14

Staff:
What positions or specializations are represented within the

team?
What positions need to be filled?
Are there gaps in required competencies?
Skills:
What are the strongest skills represented within the
company/team?
Are there any skills gaps?
What is the company/team known for doing well?
Do the current employees/team members have the ability to do
the job?
How are skills monitored and assessed?
15

Management and control


A management control system is a means of

gathering and using information.


It guides the behavior of managers and
employees.
A management control systems (MCS) is a
system which gathers and uses information to
evaluate
the
performance
of
different
organizational resources like human, physical,
financial and also the organization as a whole
considering the organizational strategies.
MCS influences the behavior of organizational
resources to implement organizational strategies.

Contd.
The Management Control acts through the following

phases in sequence:
Planning-Where for any companys unit a set of
objectives must be defined, that is of specific expected
results, which need to be: understandable, agreed,
measurable in extent and time, reachable, consistent with
one another and with the available resources.
Programming-Where a programme is drawn up in order

to get the planned objectives, taking into account the


internal and external restraints to the company,

Contd.
Result checking, where it is measured whether each

companys unit has achieved or not the assigned


objectives,
Shifting analysis, where the possible shifting between
objectives and results is analyzed,
Corrective action implementation, in order to optimize
the units behavior against the planned objectives.

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