FOCUS 4

Consulting Tools
SWOT Analysis
Overview — SWOT Analysis
SWOT is a great tool to capture the current state of your organisation; it helps set objectives for
strategic planning and identify the rm's core competencies. It analyses whether or not to
embark on a strategy.

W Internal Strengths Weaknesses

S
External Opportunities Threats

T
Helpful Harmful
O

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Tips and Tricks (1/2)

Strengths Weaknesses

1. What is our competitive advantage? 1. Where can we improve?

2. What resources do we have? 2. What products are underperforming?
3. What products are performing well? 3. Where are we lacking resources?

Opportunities Threats

1. What technology can we use to improve

1. What new regulations can threaten the
operations?
operations?
2. Can we expand our core operations?
2. What do our competitors do well?
3. What new market segments can we
3. What consumer trends threaten business?
explore?

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Tips and Tricks (2/2)

Internal Factors Weaknesses

1. Aspects of the company which it does/ 1. Market scenario and the relevance of the
does not do well at. product being sold .
2. Qualities that make the company better/ 2. Press/Media coverage of the brand.
worse than its competitors. 3. Customer satisfaction/dissatisfaction
3. Assets/liabilities that the company holds 4. Changing trends and customer behaviour.
(including nancial, physical and human).
4. A USP.

Practice Problem

Perform a SWOT Analysis on Apple, Inc. Refer to the solved example given on the next page.

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Solved Example — SWOT Analysis on Unilever

Strengths Weaknesses

1. High brand awareness 1. Most products are imitable i.e. no clear

2. Caters to a diverse set of users USP.
3. A wide range of products 2. Stagnation of businesses due to marketing
4. A strong 4-tier distribution system myopia*

Opportunities Threats

1. Competition from companies with speci c

1. Venturing into health conscious and
products
ayurvedic products whose demand is
2. Increasing FDI in retail resulting in
increasing
increased competition from international
2. Strengthening the brand using M&A
brands

* This refers to a lack of foresightedness in marketing strategies and overemphasising sales.

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PESTEL Analysis
 Overview — PESTEL Analysis

Factors such as government Factors like digital transformation,

policy, political stability, tax policy, POLITICAL TECHNOLOGICAL automation, R&D, innovation, and
labour law, foreign trade policy. technological awareness.

Factors like economic Include climate change,

growth, interest rates, recycling procedures,
in ation, exchange rates, ECONOMIC ENVIRONMENTAL carbon footprint, waste
employment rates, and disposal, sustainability
purchasing power. and net-zero targets.

Factors such as employment

Factors like demographics,
legislation, consumer laws, health
culture, lifestyle, age distribution, SOCIAL LEGAL
and safety, trade regulations,
and career attitudes.
copyrights and patents

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What is PESTEL Analysis?
PESTEL Analysis is a tool that analyses the external environment of an organisation or business.

When is it best of use?

- It is useful when entering a new market or starting a new business.
- PESTEL Analysis helps us identify the EXTERNAL factors that affect a company or
organisation.
- These factors affect your business and operations, but the effect cannot be seen the other
way round. These are generally climate, industry trends, in ation, etc.
- The company has no say on these factors. But conducting a PESTEL Analysis on them gives us
a better insight into the industry.

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Solved Example — PESTEL Analysis on DELL

Political Factors Social Factors

1. Has to follow tax 1. Increasing popularity of

regulations and trade tariff. gaming and esports in
2. Have to consider political major markets.
stability and relations 2. Pandemic increased the
between countries as to not Economic Factors demand for laptops.
to impact the supply of raw 3. Decreasing popularity for
materials and semi nished 1. Products are generally the brand among younger
goods carried for assembly. expensive. age groups.
2. Have to consider import
rates, exercise duty and
exchange rates as they can
spike up the cost of
products.

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 Environmental Factors

1. Need to recycle e-waste

properly
2. Increasing pressure to
Technological Factors adopt greener technology Legal Factors
3. Leaving Carbon footprints
1. Technology is continuously is a concern 1. Need to follow labor and
developing, requiring employee safety laws.
companies to release 2. DELL needs to follow
products frequently. taxation laws in the
2. Strong competition from operating markets to avoid
brands offering cheaper penalties.
prices.

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Porter's Five Forces
Analysis
 Overview — Porter's Five Forces
Bargaining
The Five Forces determine the competitive Power of Buyers
structure of an industry and its pro tability.
Bargaining
Industry structure and a company's relative
Power of Suppliers
position within the industry are the two
Threat
fundamental drivers of pro tability.
of New Entrants
1. Understand your industry of interest.
Threat
2. Identify attractive vs less attractive of Substitutes
industries/markets.
3. Identify opportunities and risks. Rivalry among
4. How pro ts within an industry will be established
competitors
distributed
5. Extrapolate industry trends & anticipate
changing trends.

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Porter's Five Forces — Explained

Bargaining Power of Buyers Threat of Substitutes

Price sensitivity, Number of Customers, Number of substitutes, Buyer propensity
Buyer’s ability to substitute, Size of each to substitute, Relative price performance of
customer order, Buyer’s information, substitute, Perceived level of product
Difference between competitors. differentiation, Switching costs

Bargaining Power of Suppliers

Number and size of suppliers, Uniqueness of each supplier’s product, Ability to substitute

Rivalry among competitors Threat of New Entrants

Industry growth, Quality differences, Switching costs, Barriers to entry, Capital
Brand loyalty, Barriers to exit, Number of requirements, Cumulative experience,
competitors, Diversity of competitors Access to distribution channels.

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Tips and Tricks

1. Use this model where there are at least three competitors in the market.
2. Consider the impact that government has or may have on the industry.
3. Consider the industry lifecycle stage-earlier stages will be more turbulent.
4. Consider the dynamic/changing characteristics of the industry.
5. Avoid using this model for an individual rm; it is designed for use on an industry basis.

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BCG Growth-Share
Matrix
 Overview — BCG Growth-Share Matrix
The BCG Growth-Share Matrix is a portfolio Market Share
management framework developed by the
Boston Consulting Group (BCG) to assist a High Low
company and show where to invest its
capital to bene t the most.
?

High
Star Question Mark
The four quadrant matrix has two axes —

Growth
Growth and Relative Market Share. In
simpler terms, growth is the increase or

Low
decrease of demand in the market, and
relative market share is how well the product Cash Cow Dog/ Pet
is doing in the market compared to the
highest competitor. Now, high or low
Growth/Relative Market Share can be
classi ed into four categories: Star, Question
Mark, Cash Cow, and Pet/Dog.

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BCG Growth-Share Matrix — Explained
- High Market Growth and High Market Share products are known as Stars, meaning the
product is excelling and has much demand in the market, so it is worth continuing to invest
capital in this product.
- Low Market Growth and High Market Share products are known as Cash Cows, meaning the
demand is low, but the product is performing well, i.e., for less capital, there is higher pro t.
- High Market Growth and Low Market Share products are known as Question Marks, which
means the product is not performing well, but the product's demand is increasing in the
market, and then the product needs to be improved because it has good potential.
- Low Market Growth and Low Market Share products are known as Pets or Dogs, which means
the product is not performing well and demand for the product in the market is declining, so
it is better to avoid investing more capital in this product.
- In conclusion, pro t can be milked from Cash Cows and invested back on Stars or Question
Marks to maximise the success of the company's products.

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 Solved Example 1 — Growth-Share Matrix of Air India
The airline industry is booming. However, all services of Air India except its cargo ight service
have shrunk to a minor portion of the market. Hence, the cargo services of Air India can be
considered a star, while others will fall under question marks.

Solved Example 2 — Growth-Share Matrix of Amul

Stars: Amul Ice creams, Lassi and Amul Kool are well known and have a growing market.
Cash Cows: Amul Milk is one of the most popular milk brands. Amul Ghee and Butter have
signi cant market share but low market growth.
Question Marks: Amul bread is a new product with a huge possible market. Amul Pizza Base
also has a growing demand.
Dogs: Amul Frozen Pizza is not a much-desired product due to better alternatives. Amul
Cookies is also another such product.

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 GE-McKinsey
Nine-Box Matrix
Overview — GE-McKinsey Nine-Box Matrix
The GE-McKinsey nine-box matrix is a
Invest/ strategic tool used by multi-business
High
Grow corporations to prioritise investments
among their business units. McKinsey
Industry Attractiveness

developed it in the early 1970s, and it is

Selectivity/ conceptually similar to BCG's Growth-
Medium
Earnings
Share Matrix — but more complicated.

The business units (BUs) are evaluated

Harvest/
Low
Divest and assigned a position on the matrix
following a quantitative assessment of —
High Medium Low (vi) the industry attractiveness, and
(vii) the competitive strength of the
Competitive strength of business unit business unit.

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Industry Attractiveness
Industry attractiveness measures the ease of doing business in a market and generating pro ts
in the long run. It is determined by factors such as:
1. Market growth rate (both short-term and long-term)
2. Size of the industry
3. Industry Structure (using Structure-Conduct-Performance Model)
4. Industry Pro tability (using Porter's Five Forces Analysis)
5. Macro-environmental factors (using PESTEL)

Competitive Strength of Business Unit

Factors used to determine business unit strength or sustainable competitive advantage include:
1. Market share and growth in market share
2. Brand Equity
3. Production capacity, Resources, Capabilities (using VRIO)
4. Value Chain Strength (using Value Chain Analysis and Benchmarking)

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 After assigning the weight (indicating importance) to each factor, the industry attractiveness
score and business unit strength score are calculated using the formula given below:

∑
= ×
=
The scores are then categorised as high, medium or low, and the business unit is plotted on the
matrix. Recommendations can be made to grow, hold, or harvest a unit as discussed below:

Invest/ Grow Selectivity/ Earnings Harvest/ Divest

Applicable to BUs operating in a These BUs have low to moderate Applicable to BUs having low
moderate to highly attractive competitive position in an competitive advantage,
industry with a medium to a high attractive industry or very high operating in an unattractive
competitive advantage. competitive position in a less industry or a combination of
attractive industry. both.

Provide as much resources as the Invest only if there is money left Invest just enough to keep the
business unit needs regardless of over investments in invest/grow units operational or divest the
whether it can generate itself or business units or if they can units by selling it to a
not. generate cash in future. prospective buyer.
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Balanced Scorecard
Overview — Balanced Scorecard
A balanced scorecard identi es and
improves various internal business
functions and their resulting external Learning & Growth
outcomes. Perspective

The balanced scorecard puts vision and

strategy at the centre and isolates four Financial Vision and Customer
aspects of an organisation for analysing Perspective Strategy Perspective
— Learning and Growth, Finance,
Internal Processes, and Customer.

Internal Business
Vital information is gathered from four
Perspective
business areas — strategic objectives,
KPIs, targets and initiatives/practices.

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Four Perspectives of a Balanced Scorecard — Explained

1. Learning and Growth

Determines the company’s ability to improve and adapt to change
Perspective

Analyses the company’s ability to pay dividends, manage risks involved

2. Financial Perspective
and better appeal to shareholders.

Determines the level of customer satisfaction with the company’s products

3. Customer Perspective
and services and how it provides value to its customers

4. Internal Business Perspective Evaluates the company’s products and services and how well it runs.

Some books also mention the Learning and Growth Perspective as the Organisational
Capacity Perspective.

The third-generation balanced scorecard features a strategic linkage model connecting the dots
between the objectives and a vision statement representing the result of implementing the
initiatives listed in the scorecard. [click here]

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Solved Example — Balanced Scorecard of JCPenney

✍ Note that the targets mentioned here are representative in nature. Actual values may vary.

Objectives KPIs Targets Initiatives

1. Optimise Supply 1. Supply Chain 1. Achieve 95% 1. Sign long-term

Chain Efficiency Index efficiency agreements
1. Learning and
2. Reduce Employee 2. Turnover Rate 2. Reduce by 5% 2. Increase job
Growth
Turnover Rate rotation
Perspective
3. Improve Employee 3. Training Index 3. Achieve 85% 3. Start upskilling
Skills efficiency programmes

1. Increase Return on 1. ROI 1. Increase by 8% 1. Bulk purchases

Investment over two years to achieve EoS
2. Financial 2. Reduce Operating 2. Operating 2. Reduce by 3% 2. New billing
Perspective Costs Costs per year system
3. Increase Revenue 3. Revenue 3. Increase by 3. Competitive
15% per year Pricing Options

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 Objectives KPIs Targets Initiatives

1. Improve Customer 1. CSAT Score 1. Achieve 85% 1. Provide more

Satisfaction CSAT Score choices at stores
3. Customer 2. Reduce Waiting 2. Average 2. Reduce by 15% 2. Improved billing
Perspective Times Waiting Time system
3. Increase Customer 3. New Visitors 3. Increase by 6% 3. Offer incentives
Size (Monthly) every quarter and coupons

1. Improve Cost 1. Cost Efficiency 1. Achieve 92% 1. Buy raw

Control Index efficiency materials in bulk
4. Internal
2. Reduce Process 2. Average Cycle 2. Reduce by 15% 2. Increase
Business
Cycle Times Time automation
Perspective
3. Ensure supply- 3. Fill rate 3. Achieve 98% 3. Use AI-enabled
demand balance efficiency WMS and IMS

Practice Problem

Create a balanced scorecard of the Starbucks Corporation.

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Value Chain Analysis
 What is a value chain?
A value chain refers to all the business activities a rm undertakes to create a product from start
to nish (e.g., design, production, distribution, and so on).

What do you mean by a value chain analysis?

Value chain analysis is a strategic process where a rm evaluates its internal activities to identify
how each contributes to the rm's competitive, cost and differentiation advantage. Its primary
objective is to give businesses a visual model of these activities, allowing them to determine
where they can reduce costs.

Porter's model is most commonly used for this purpose, considering several primary and
support activities. The overall process is completed in ve steps.

We'll now give you an overview of Porter's Value Chain Model.

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Overview —- Porter's Value Chain

Firm Infrastructure
Activities
Support

Ma
Human Resource Management

rgin
Technology

Procurement

M a
Inbound Outbound Marketing

rgin
Operations Service
Logistics Logistics and Sales

Primary Activities

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Primary Activities vs Support Activities

Primary Activities Support Activities

Inbound Logistics Firm Infrastructure

Getting raw materials from suppliers The management, financial and legal systems
incorporated in the business
Operations
Human Resource Management
Manufacturing of the product
Managing employees and fresh recruitments
Outbound Logistics
Involves storage and movement of
products to the end user Technology
Innovation through R&D to enhance
Marketing & Sales
efficiency and profit
Strategies to enhance visibility of
product among the target audience
Procurement
Service Sourcing from suppliers for the best
Customer support for the product, quality possible
warranty etc.

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Steps of Value Chain Analysis

1. Determining the business' The primary and support activities include each action required in
primary and support activities developing a product or service, from raw material to nal product.

This involves identifying how each activity provides value to customers

2. Analysing the value and cost of
and the business as a whole, including checking for the competitive
the activities
advantage (based on cost leadership or differentiation).

3. Referring to competitors' value Use relevant metrics to compare your company to competitors. This
chains practice is called competitive benchmarking.

Conducting customer surveys, digging into any qualitative or

4. Understanding a rm’s customer
quantitative data that can be pieced together, etc., to understand
base's perception of value
what its target market thinks of it.

Undertaking minor changes at the beginning that provides high-

5. Identifying opportunities to gain
impact results. After the easy wins are identi ed and actioned, the
a competitive advantage
more signi cant challenges hindering ef ciency must be tacked.

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Solved Example 1 — Value Chain Analysis of Samsung

Primary Activities Support Activities

Inbound Logistics Firm Infrastructure

579 suppliers globally. Owns several logistics firms Well executed financial support system and
as its subsidiaries.
corporate governance.
Operations
Human Resource Management
Corporate business model. In-house manufacturing.
Regular training and critical resources to
Outbound Logistics employees. Competitive salaries and added
benefits
Integrated logistics subsidiaries, SELC & Samsung
SDC transport and distribute finished products. Technology
Heavy investment in R&D (more than 20
Marketing & Sales
trillion KRW)
Print and media advertising, public relations
programs. 53 international sales bases.
Procurement
Service 2400+ suppliers globally. International
Regular customer satisfaction surveys, Samsung Procurement Centre manages supplier
Direct Support. relationships

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Solved Example 2 — Value Chain Analysis of Nike

Primary Activities Support Activities

Inbound Logistics Firm Infrastructure

Supply chain based on outsourcing and High focus on quality management, efficient
diversification. legal matter handling, state-of-the-art offices,
procurement facilities and distribution outlets.
Operations
600 factories and 1048 retail stores worldwide. Human Resource Management
Promotes a work culture based on diversity
Outbound Logistics and inclusion.
Selling products to wholesalers, D2C sales through
retail outlets and own website. Technology
Integration of AR technology into stores,
Marketing & Sales
Reuse of wastes generated in Nike
Print and media advertising, promo events and factories.
promotion through celebrities.
Procurement
Service A global procurement team manages the
Excellent pre-sale and after sales services, special procurement process to ensure supply of high
store hours, store-to-door services. quality raw materials.

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Benchmarking
 Overview — Benchmarking
Benchmarking involves comparing a 1. Determine the
company's metrics with that of focus areas

ad st
t
industry competitors (often industry

ap
e

2. com
an
s a nt b

Ide
d
leaders) or to those of innovative

e
nd

nti etito
cti em
companies in related industries.

fy
pra Impl

p
KP rs
ce

Is
6.
This strategic tool aims to identify Benchmarking
the industry's best practices and
Processes

5.
incorporate similar activities into

l d al
Fin mpro

rna ern
ata
of
other companies.

do

nte t ext
i
pp eme

an ollec
ort nt
v
In some cases, comparisons can be

un

C
di
made internally between operations

itie

3.
4. Compare data and

s
of businesses owned by the same
analyse differences
rm.

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 Benchmarking Processes — Explained

In the rst step, the problem areas are identi ed. Usually, these are
1. Determining the focus areas
business operations with scope for improvement.

The next step is to decide on the performance metrics for benchmarking.

2. Identifying KPIs and
Companies operating within the industry or internal areas with better
competitors to compare data
performance rates are chosen to compare data.

Now, data is collected on performance and company practices. In most

3. Collecting external and
cases, the data collected includes revenues, pro t margins, production
internal data
costs, process cycle times, etc.

4. Comparing data and The two sets of metrics are compared side-by-side and the gaps are
analysing differences identi ed. The relevance of these differences is analysed.

5. Finding opportunities of The competitor’s best practices are identi ed, and an action plan is
improvement formulated.

Finally, companies can incorporate these best practices after tweaking

6. Implement best practices and
them to their needs. Benchmarking should be repeated at regular
adapt
intervals to track metrics changes or adapt to other changes.

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 Solved Example on Benchmarking — Logistics Sector

Problem Statement

Attoship is a global logistics company that provides package delivery services. The company
saw attening revenue growth during H2-2021, while the worldwide market experienced growth
of 12% during the same time. Recommend a strategy to increase revenues by 15% in a year.

Approach

1. The primary step is to nd all operations/processes that add value to the supply chain
(warehousing, transportation, distribution, value-added services, packaging).
2. The next step is to identify the performance metrics — in this case, on-time performance,
package costs, employee turnover rate, customer satisfaction rate and storage cost per
product shipped.
3. A competitor, preferably the market leader (e.g. DHL), can now be chosen to compare data.
4. After relevant data is collected, the differences can be analysed, and an action plan can be
suggested.

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Task Environment
Overview — Task Environment

Business Environment

Internal Environment External Environment

Micro-environment/
Macro-environment
Task Environment

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 Business Environment: The aggregate of all the forces, factors and institutions which are
external to and beyond the control of an individual business enterprise but signi cantly
in uence the enterprise's functioning and growth.

Internal Environment: Several elements inside an organisation act as strengths and may also
become a reason for weaknesses of the organisation. These internal factors have an impact on
organisational decisions.

External Environment: This includes factors existing outside the business enterprise that offer
opportunities and create threats for the business. These include factors such as economic, socio-
cultural, legal, demographic etc. These factors are beyond the control of the company. There
are two types of external environments — macro and micro.

The macro-environment refers to the broader condition of an economy as opposed to speci c

markets. It consists of demographics, economic, natural, technological and political factors.

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The micro-environment includes many factors in the company's immediate environment and
has a bearing on the company's performance. These can be suppliers, customers, competitors
and labour.

The micro-environment is also referred to as the Task Environment.

Suppliers
Customers
Forces that affect an organisation Task Environment
Competitors
Labour in achieving its business goals.

The task environment of an organisation is the environment which directly affects the
organisation in attaining business goals. These can be analysed better using Porter's 5 Forces
Analysis.

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 Structure–Conduct–
Performance Paradigm
Overview — SCP Paradigm
The structure-conduct-performance (SCP) paradigm states that market structure would
determine rm conduct, which, in turn, would determine performance.

Measured by
- Pricing
- Tacit collusion
- Product Differentiation
Structure - Market Power Performance

Measured by Conduct Measured by

- Number of Competitors - Productive efficiency
- Heterogeneity of product - Profitability
- Supply-Demand Match - Product Quality
- Cost of Entry and Exit - Resource Allocation

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Use Cases
The structure-conduct-performance (SCP) paradigm can be used in the following scenarios:
- To analyse a non-changing industry.
- To justify consolidation in an industry.
- To investigate the effects of an external shock on one sector (like talent drain, shifting global
demand, pandemics, data attacks and changing consumer demand).
- It studies whether structure drives performance and also in uences conduct.
- To analyse the effects of a more attractive industry structure on the industry's performance.

The SCP paradigm cannot be used alone to generate relevant insights and is often used with
other consulting tools.

Practice Problem

Analyse the impact of adverse weather and natural disasters at the workplace on the
performance of Texas Instruments.

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3Cs Model
Overview — 3Cs Model

Customers Strategy
- Who are the key customers?
Strategy is the balance between
- What do they value?
what we offer, what the
- Why will they choose our
customers want and the threats
product? Customers from our competition.
- What do they think of our
product?

Competitors Company
Competitors Company
- What are they offering that - What are our strengths and
we can do better? weaknesses?
- How are they making - What is our unique selling
money/pro ts? point (USP)?
- What should we do to beat
them?

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 Customer Analysis
1. Customers are the most crucial of the three elements since a rm cannot exist without them,
or there would be no opportunity to achieve a competitive edge. The best strategies are
often found by putting oneself in the customer's shoes.
2. The best approach to determine how to appeal to your target market is to conduct thorough
consumer research.
3. Demographic information is crucial to this research. This information can be found through
surveys and interviews with the target market.
4. Understanding your target market and what they want can help you develop marketing
techniques more likely to succeed once implemented.

Competitor Analysis
1. After analysing the customers, a company needs to understand how it compares to its rivals.
2. The rst step would be nding out the main competitors in the industry.
3. Then one should nd their business model, revenue streams, go-to marketing strategy and
USP.

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4. One can do this by analysing their website using SEO tools, reading their newsletters and
reports, visiting their stores or online payment check-out and contacting them as a potential
customer.
5. Also, you should nd out the brand image and penetration of the competitors.

Company Analysis
1. Last but not least, one should analyse the client company.
2. You must focus on cost structure and cost-effectiveness in production and marketing. These
are key to ensuring more cash in your hands.
3. You should nd out what marketing tactics have previously been successful for them and
what hasn't. It would help if you approached this, once more, from the client's perspective.
4. We must now analyse our brand image and presence, compare it with the competitors, and
see ways to gain an advantage.

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Solved Example — 3Cs Model of Burger King

Customer Competitors Company

1. The average Burger King 1. As McDonald's is the 1. Burger King's mission is to

customer is a middle-high market leader, BK’s major offer reasonably priced
income male in the age strategy has been to attract quality food served quickly
bracket of 15-40 years. McD’s customers over to in attractive, clean
2. Its unique and innovative them. surroundings.
marketing strategies show 2. The one penny whooper 2. It's based on a franchisee
its focus on customers. played a very important model.
3. It offers one of the most role in this. They built their 3. It focuses on a cost
reasonably priced and brand image as one which leadership and
largest variety of products promotes fresh foods using differentiation business
which is loved by the the stale whooper model, thus catering to a
people. campaign against the more signi cant no. of
longevity of McDonald's people.
burgers.

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McKinsey 7S Model
 Overview — McKinsey 7S Model
The McKinsey 7S Framework is a management
STRUCTURE
model that identi es seven internal elements of
an organisation that must be aligned for success.

STRATEGY SYSTEMS
It is used to assess performance following a
merger or other restructuring to identify areas
that need improvement. The model suggests
SHARED
that the risk of resistance to change can be VALUES
signi cantly reduced by incorporating all seven
elements from the start.
SKILLS STYLES
This model ensures that an organisation's culture
is not negatively affected by implementing
necessary changes. STAFF

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 The Seven Interdependent Elements - Explained
Hard Elements

Organisation's The daily

plan for building activities and
How the
STRATEGY and maintaining STRUCTURE SYSTEMS procedures
company is
a competitive that staff use
organised.
advantage. to get the job
done.

Soft Elements

The
Includes demographic, Typical
SHARED These are the
competencies educational behaviour
core values of SKILLS STAFF STYLES
VALUES and distinctive patterns of key
the organisation. and attitudinal
capabilities. characteristics. groups.

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How to use the McKinsey 7S Model?

Start with your shared values: do they align with your organisational structure, strategy, and operations?
1
If not, what can be changed?

Then look at the hard elements — strategy, structure, and systems. How well do they align with each
2
other? Identify areas of improvement.

Next, consider the soft elements — shared values, skills, style, and staff. Are they consistent with the
3
hard elements? Do they align with one another? If not, what can be changed?

You'll need to employ an iterative (often time-consuming) approach of making adjustments and then re-
4
analysing how it in uences other elements and their alignment.

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Solved Example — McKinsey 7S Model of McDonald's
The company has a flat structure and
Cost leadership, High speed of customer
ST the manager of each outlet usually
services, aggressive international market RU
expansion, the universality of the taste E GY CT manages assistants and employees. All
RAT U employees work as a team and have
and cleanliness of restaurants. ST RE
easy access to senior leadership if
needed.
M c D o n a l d ’s p a y s s p e c i a l
attention to skills, training, SHARED The systems include but are
VALUES not limited to employee

SYSTEMS
and workshops are regularly
High level of integrity, recruitment and selection,

SKILLS
held to ensure that staff is
wide range of customers, transaction processing, team
able to provide flawless and employees from
service to customers. HR is development and orientation
different
one of its core competitive backgrounds. and customer relationship
advantages. management system.

McDonald’s employs over 200,000 people The leadership style at McDonald’s is

STA L E
worldwide and the hiring is done both FF STY participative. Seniors engage with
internally and externally. The team is an employees from different levels and
inclusive one that accepts, encourages ask them to share their feedback to
diversity, and works in synchronisation. improve strategy and operations.

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4 Ps of Marketing
Overview — 4Ps of Marketing
To market a product successfully, the 4 Ps are
essentially important. The 4 Ps are comprised of
four core elements:
1. Product Promotion Product
2. Price
3. Place
4. Promotion

The 4Ps are often referred to as marketing mix.

However, this tool got extended to the 7Ps with Place Price
the insertion of People, Process and Physical
evidence. The marketing mix strategy is not
static. One must adjust and re ne it based on
customer needs and product growth.

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 Product
Marketers rst have to analyse who needs the product and why. They have to de ne the quality
of the product in all areas like ease of availability, attractiveness, effect on the environment, etc.
Being rst in introducing a category can unexpectedly boost sales. For example, Apple was the
rst company to launch a touch-screen smartphone which could play music, browse, and make
phone calls. Its sales touched the two billion mark in the year 2021.

Price
Price is the amount the marketer sets up for the product and the customer is willing to pay.
Marketers must set the price, keeping production costs and pro t margin in mind. The price of a
product must be accurate and perceive its value. The supply costs, seasonal discounts,
competitor prices, and retail markup are the essential considerations for putting up the
product's price. Marketers also have an option to increase the price and create arti cial scarcity
to increase the demand for their products. Giving appropriate discounts at the time needed also
will draw customers, but it provides a look that the product is less desirable.

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Place
The place is where the product is kept for sale. It may either be online or of ine. The critical
consideration for of ine stores is to keep the product where it seems more people will buy.
Selecting luxurious malls and stores will give the product an expensive and better quality look.

Promotion
Promotion is the way to communicate and advertise the product to customers. Giving ads on
social media, banners and exes on roadsides and malls will attract customers' eyes.

When to use 4Ps of Marketing?

This tool could be of use while launching a product in the market. At the time, analysing
the existing development and sales will clearly show the areas of interest. This tool can
optimise sales. Although it seems the 4Ps are mutually exclusive in their way, they overlap
inevitably when the product sale begins to grow in the market.

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Solved Example — Amazon
Product: Amazon started to keep various products ranging from electronics, clothing, home
appliances & decoration, and accessories. It expanded its product range to Amazon Fresh for
groceries, Kindle for reading e-books, Amazon Prime Video for movies, TV shows and web
series, etc.

Price: Amazon gives an option to search for items below a speci c price, providing ease to its
customers. It also announces sales and highlights discount percentages on the product. Amazon
Prime allows customers to take a subscription plan with multiple bene ts of shopping. The
options of pay later and auto-pay for subscriptions draws the customers.

Place: Amazon offers all its products and services globally. It operates massive warehouses at
strategic locations all over the world to ensure timely delivery at even the remotest of places.

Promotion: Amazon uses aggressive marketing campaigns to promote its brand. It uses older
searches and shows advertisements on other social media platforms linked with the same
account.

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Miscellaneous
 1. Potential Industry Earnings (PIE)
This can be considered a modern version of the original Five Forces Model and is used to
evaluate a rm's ability to enjoy its share of the industry pro ts.

= −

In addition to the original ve elements, the PIE model considers the effect added by value
disciplines, which explains how some companies can achieve and maintain market leadership
despite being in competitive industries. The three value disciplines are:

1. Operational Excellence
2. Product Leadership
3. Customer Intimacy

By identifying what is most important for an industry and its customers, a strategist can make
speci c recommendations about the direction a company should go. Companies should adopt
either of the value disciplines to enjoy success.
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 2. RICE Model
RICE is a prioritisation model companies use to
improve internal decision-making processes.

Each of the four factors is scored as depicted in

Impact
the illustration on the left:
Con dence

1. Reach is measured as the number of people/

events per time period.
2. The impact of an idea on an individual user is
Reach estimated.
3. The level of con dence in the estimates is
Effort factored in.
4. The effort is estimated as the work that one
team member can do in a month.

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3. VRIO Model
VRIO stands for value, rarity, imitability, and organisation and
is used to evaluate an organisation's resources and capabilities to determine its competitive
advantage. You can use a decision tree to help map the outcomes of your probe, depending on
whether you deem a resource as having met the criteria or not.

- The Question of Value: Can the rm exploit an opportunity or neutralise an external threat
with the resource/capability?
- The Question of Rarity: Does the rm control scarce resources or capabilities or own
something hard to nd yet in demand?
- The Question of Imitability: Is it dif cult to imitate, and will there be a signi cant cost
disadvantage to a rm trying to obtain, develop, or duplicate the resource/capability?
- The Question of Organization: Is the rm organised, ready, and able to capitalise on
resources and capabilities? Has the rm managed to capture value?

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