Strategic Management

Assignment
1. Explain McKinsey 7’s frame Work?
Answer
Strategy- The strategy is the plan deployed by an organization in order to remain competitive in
its industry and market. An ideal approach is to establish a long-term strategy that aligns with the
other elements of the model and clearly communicates what the organization’s objective and
goals are.
Structure- The structure of the organization is made up of its corporate hierarchy, the chain of
command, and divisional makeup that outlines how the operations function and interconnect. In
effect, it details the management configuration and responsibilities of workers.
System- Systems of the company refer to the daily procedures, workflow, and decisions that
make up the standard operations within the organization.
Shared Values- Shared values are the commonly accepted standards and norms within the
company that both influence and temper the behavior of the entire staff and management. This
may be detailed in company guidelines presented to the staff. In practice, shared values relate to
the actual accepted behavior within the workplace.
Skills- Skills comprise the talents and capabilities of the organization’s staff and management,
which can determine the types of achievements and work the company can accomplish. There
may come a time when a company assesses its available skills and decides it must make changes
in order to achieve the goals set forth in its strategy.
Style- Style speaks to the example and approach that management takes in leading the company,
as well as how this influences performance, productivity, and corporate culture.
Staff- Staff refers to the personnel of the company, how large the workforce is, where their
motivations reside, as well as how they are trained and prepared to accomplish the tasks set
before them.
2. Explain Michael Potters value chain analysis?
Answer
Given the importance of the value chain, Michael Porter developed a strategic management tool
for analyzing a company’s value chain. Porter, known for Porter’s five forces, laid out his
method of analyzing value chains in his 1985 book Competitive Advantage
Porter sought to define a company’s competitive advantage noting that it stems from a
company’s processes, such as marketing and supporting activities. Porter breaks value chain
analysis into five primary activities. Then, he further breaks those down into four activities that
help support primary activities. The primary activities of Michael Porter's value chain are
inbound logistics, operations, outbound logistics, marketing and sales, and service. The goal of
the five sets of activities is to create value that exceeds the cost of conducting that activity,
therefore generating a higher profit.
Porter’s Value Chain Primary Activities
Inbound Logistics
Inbound logistics include the receiving, warehousing, and inventory control of a company's raw
materials. This also covers all relationships with suppliers. For example, for an e-commerce
company, inbound logistics would be the receiving and storing of products from a manufacturer
that it plans to sell.
Operations
Operations include procedures for converting raw materials into a finished product or service.
This includes changing all inputs to ready them as outputs. In the above e-commerce example,
this would include adding labels or branding or packaging several products as a bundle to add
value to the product.
Outbound Logistics
All activities to distribute a final product to a consumer are considered outbound logistics. This
includes delivery of the product but also includes storage and distribution systems and can be
external or internal. For the e-commerce company above, this includes storing products for
shipping and the actual shipping of said products.
Marketing and Sales
Strategies to enhance visibility and target appropriate customers—such as advertising,
promotion, and pricing—are included in marketing and sales. Basically, these is all activities that
help convince a consumer to purchase a company’s product or service. Continuing with the
above example, an e-commerce company may run ads on Instagram or build an email list for
email marketing.
Services
This includes activities to maintain products and enhance consumer experience—customer
service, maintenance, repair, refund, and exchange. For an e-commerce company, this could
include repairs or replacements, or a warranty.

Porter's Value Chain Secondary Activities

Procurement
Procurement is the acquisition of inputs, or resources, for the firm. This is how a company
obtains raw materials, thus, it includes finding and negotiating prices with suppliers and vendors.
This relates heavily to the inbound logistics primary activity, where an e-commerce company
would look to procure materials or goods for resale.
Human Resource Management
Hiring and retaining employees who will fulfill business strategy, as well as help design, market,
and sell the product. Overall, managing employees is useful for all primary activities, where
employees and effective hiring are needed for marketing, logistics, and operations, among others.
Infrastructure
Infrastructure covers a company's support systems and the functions that allow it to maintain
operations. This includes all accounting, legal, and administrative functions. A solid
infrastructure is necessary for all primary functions.
Technological Development
Technological development is used during research and development and can include designing
and developing manufacturing techniques and automating processes. This includes equipment,
hardware, software, procedures, and technical knowledge. Overall, a business working to reduce
technology costs, such as shifting from a hardware storage system to the cloud, is technological
development.