UNIT 5 STRATEGY
IMPLEMENTATION:
STRUCTURE AND SYSTEMS
THE MCKINSEY 7-S
FRAMEWORK
How do you go about analyzing how
well your organization is positioned to
achieve its intended objective?
The 7-S model can be used in following situations
where an alignment perspective is useful :-
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.
Determine how best to implement a proposed strategy.
"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.
SEVEN ELEMENTS
• Strategy: the plan devised to maintain and build
competitive advantage over the competition.
• Structure: the way the organization is structured and who
reports to whom.
• Systems: the daily activities and procedures that staff
members engage in to get the job done.
SEVEN ELEMENTS cont.
• Shared Values: the core values of the company that are
evidenced in the corporate culture and the general work
ethic.
• Style: the style of leadership adopted.
• Staff: the employees and their general capabilities.
• Skills: the actual skills and competencies of the
employees working for the company.
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.
• You can use the 7-S 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 7-S model to ensure that your organization works
effectively and well once you reach the desired endpoint.
STRATEGIC CONTROL AND
CORPORATE GOVERNANCE
It becomes crucial for the Managers to assess the
process of implementing strategy then to reconsider the
strategy execution process.
Significant time span occurs between initial
implementation of a strategy and achievements of its
intended results. During that time, numerous projects are
undertaken, investments are made, and actions are
undertaken to implement the new strategy.
Also, during that time, both the environmental situation
and the firm’s internal situation are developing and
evolving.
Strategic controls are necessary to steer the firm through
these events.
Premise Control:
Premise control is necessary to identify the key
assumptions and keep track of any change in them to
assess their impact on strategy and its
implementation.
Premise control serves the purpose of continually testing
the assumptions to find out whether they are still valid or
not.
This enables the strategists to take corrective action at the
right time rather than continuing with a strategy which is
based on erroneous assumptions.
The responsibility for premise control can be assigned to
the corporate planning staff who can identify key
assumptions and keep a regular check on their validity.
Implementation Control:
Implementation control may be put into practice through the
identification and monitoring of strategic thrusts such
as an assessment of the marketing success of a new
product after pre-testing or checking the feasibility of a
diversification programme after making initial attempts at
seeking technological collaboration.
• Strategic Surveillance: Strategic surveillance can be
done through a broad-based, general monitoring based
on selected information sources to uncover events that
are likely to affect the strategy of an organisation.
• Special Alert Control: Special alert control is based on
trigger mechanism for rapid response and immediate
reassessment of strategy in the light of sudden and
unexpected events called crises.
• Crises are critical situations that occur unexpectedly and
threaten the course of a strategy.
• Organisations that hope for the best and prepare for the
worst are in a vantage position to handle any crisis.
Process of Strategic Control
1. Determine What to Control
2. Set Control Standards
3. Measure Performance
4. Compare Performance to Standards
5. Determine the Reasons for the Deviations
6. Take Corrective Action
⦿ Governance is the term for the way a
group of people such as a
country do things.
⦿ Many groups create a government to
decide how things are to be done.
⦿ Governance is different from politics.
⦿ Corporate governance is the way an
organization is governed. It is the
method by which companies are
directed and managed. It is all
about balancing individual and
societal objectives, as well as, economic
and social goals.
⦿ CONDUCT OF BUSINESS in
accordance with shareholders
desires (maximizing wealth)
while confirming to the basic rules of
the society embodied in LAW and
LOCAL CUSTOM.
⦿ Better access to external finance.
⦿ Lower cost of capital – interest
rates on loans.
⦿ Improved company
performance – sustainability.
⦿ Higher firm valuation and
share performance.
⦿ Reduced risk of corporate
crisis and scandals.
⦿ ACCOUNTABILI
TY
⦿ FAIRNESS
⦿ TRANSPARENC
Y
⦿ INDEPENDENC
E
⦿ The Board is responsible for:
⦿ Oversight of the Bank, including its
control and accountability systems
⦿ Appointing and removing the managing
Director, deputy managing Director,
executive Directors and senior
management
⦿ Formulation of policy
⦿ Input into and final approval of
management’s development of corporate
strategy and performance objectives
⦿ Reviewing and ratifying systems of risk
management and internal compliance and
control, codes of conduct and legal
⦿ The Group must ensure that there is a
balance of independence, diversity of
skills, knowledge, experience,
perspective and gender among
the Directors. It should have a Board
of an effective composition, size and
commitment to adequately discharge
its responsibilities and duties.
⦿ The Board ensures that the Bank
promotes ethical and responsible
decision-making and complies with all
relevant policy, laws, regulations and
codes of best business practice
using the Group’s ethics and
operating principles.
⦿ The Board has a structure in place to
independently verify and safeguard the
integrity of the holding company’s
financial reporting, including the
internal audit department headed by
the chief internal auditor and the
establishment, as required by law, of
the audit committee, to which the
chief internal auditor reports.
⦿ The Board shall promote timely and
balanced disclosure of all material
matters concerning the Bank. To
achieve this the Bank has put in place
structures designed to ensure
compliance with the relevant legislation
and to ensure accountability at a
senior management level for that
compliance
⦿ The Board respects the rights of
shareholders and facilitates the
effective exercise of those rights. To this
end, the Board has a responsibility, for
ensuring that a satisfactory
dialogue with shareholders takes place.