OUTLINE OF THE SESSION:

1 - BCG Matrix
2 – GE Matrix
3 - Difference between BCG and GE Matrix
4 – McKinsey 7S Framework
5 – The Core Competency Model
3- Difference between McKinsey 7S Framework and – The Core
Competency Model
What is Strategic Model ?
The definition of "strategy model" exists within the term itself. Basically, a strategy
model constitutes a strategic plan, or model, designed to improve a process.
Organizations use strategy models to improve operations and meet their goals.

It helps identify your key goals. It allows you to better understand which elements
of your strategy need work. It helps you see how your objectives affect the others

Why there is a need for strategic management models?

Strategic management is the ongoing planning, monitoring, analysis and
assessment of all that is necessary for an organization to meet its goals and
objectives. Changes in the business environment require organizations to constantly
assess their strategies for success.
BCG-matrix, also know as
-  Boston Consulting Group analysis, portfolio
diagram)
- Boston matrix,
- The growth–share matrix 
- (aka the product portfolio matrix,[1] Boston Box) 
 
BCG –matrix is a chart that was created for
the Boston Consulting Group 
by Bruce D. Henderson in 1970 to help corporations
and their managers to
- analyze their business units ( their product lines).
- allocate resources (invest - capitalize) and
- be used as an analytical tool (for growth
opportunities) in brand marketing, 
product management, strategic management,
and portfolio analysis harvest

The natural cycle for most business units is that they start as question marks,
then turn into stars. Eventually, the market stops growing; thus, the business unit
becomes a cash cow. At the end of the cycle, the cash cow turns into a dog.
Business units /
products growth
stages 4-    Dogs – pets
1-    ? Question
2-    Stars -
marks - problem
a niche 3-    Cash Cow
Factors to be Child
leader
identified or Wild cats)

Market Share Low High High Low

Market / industry
Growth Rate?
High High Low Low
Product’s life
cycle’s stage
introductory growth "mature" decline
generate cash in These units typically
have a potential to gain excess of the "break even", generating
Starts generating
Generate Cash ? market share and amount of cash barely enough cash to
cash
become stars needed to maintain maintain the business's
the business. market share
Profitability
yes yes yes no
chances
must be analyzed carefully require high
Options for in order to determine funding to fight continuously with as
Further whether they are worth competitors and little investment as Dogs, should be sold off.
investment ? the investment required to maintain their possible,
grow market share., growth rate
The GE Matrix is also known as
the GE Multi-factor Portfolio Matrix or 
the Directional Policy Matrix. 
It was developed for GE in the 1970s
by McKinsey as an improvement on the Boston
Matrix and is now one of the classic market
analysis matrices taught at business schools
around the world.
The GE matrix helps a strategic business unit
evaluate its overall strength.
Each product, brand, service, or potential
product is mapped in this industry
attractiveness - business strength space.

The GE Matrix is a way of mapping a number of

different factors to
- Help in the understanding of markets.
- useful for concurrently examining multiple
markets or a portfolio of products.
Prudent – practical, sensible, wise
Harvest – crops, yield , produce
Divest – disassociate, separate
 Difference between BCG and GE Matrix
• BCG MATRIX (1970) • GE MATRIX (1970)
• Its gives portfolio • Multi-factor or directive
analysis policy matrix
• When we compare • Compares business
market share and strength and industry’s
market growth, it tells, attractiveness, tells,
where your product when to invest, when to
stands and how hold, when to harvest in
profitable a product is product to get best
or will be. profit
McKinsey 7S Framework
The well-known business consultants Robert H.
Waterman, Jr. and Tom Peters of McKinsey &
Company, in June 1980 , published an
international bestselling book , “In Search of
Excellence”, selling 3 million copies in its first
four years, in which they argue that the
"picture of the thing is not the thing.... …………..
An organizational structure is not an
organization."[
They developed a management model named as
McKinsey 7S Framework . This framework was a
strategic vision for groups, to include businesses,
business units, and teams.
McKinsey’s 7S is used for Identifying core
competencies and capabilities
It is also useful in wide variety of situations, such as:
• Examine the likely effects of future changes within
the company
• Improve the performance of a company
• Determine how best to implement a proposed
strategy
• Align departments and processes during Merger
and Acquisition
McKinsey 7S Framework : The Seven
Interdependent Elements / levers / factors - The basic
premise/ principle of the model is that there are seven
internal aspects of an organization that need to be
aligned if it is to be successful
Hard Elements - "hard" technical aspects of organization
• 1- Strategy - Purpose of the business and the way
the organization seeks to enhance its competitive
advantage.
• 2- Structure - who reports to whom - Division of
activities; integration and coordination mechanisms.
• 3- Systems - This is the daily activities, Formal
procedures for measurement, reward and resource
allocation.
Soft Elements - "soft" cultural aspects.
• 4-Shared Values – super-ordinate Goals
• 5- Skills - The organization's core competencies and
distinctive capabilities.
• 6- Staff - Organization's human resources,
demographic, educational and attitudinal
characteristics.
• 7- Style - Typical behavior patterns of key groups,
such as managers, and other professionals.
 The Core Competencies Model
• The Core Competencies Model was introduced
by two business management theorists called
Hamel and Prahalad. They introduced the model
in a 1990 paper called, The Core Competence
• Model of core competencies tells us about the
competitive advantage we have against our
competitors. It brings our attention to following
4 points about a specified activity “x” we
perform to achieve competitive advantage
The Core Competencies Model
Difference between McKinsey 7S Framework
and Core competency Model
• McKinsey 7S • Core competency
Framework (1980) Model (1990)
• People oriented model • Activity oriented model
• Which tells the qualities • Steps to be taken to be
of the people, either to competent.
be built or to be present
in the human resource
of the organization
 McKinsey’s 7S is used for Identifying core competencies and capabilities
It is also useful in wide variety of situations, such as:
• Examine the likely effects of future changes within the company
• Improve the performance of a company
• Determine how best to implement a proposed strategy
• Align departments and processes during Merger and Acquisition

FINDINGS /MAIN BODY - HISTORY

The McKinsey 7S framework was named after a consulting company, McKinsey and
Company, which has conducted applied research in business and industry (Pascale &
Athos, 1981; Peters & Waterman, 1982). All of the authors worked as consultants at
McKinsey and Company; in the 1980s, they used the model to analyse over 70 large
organisations. The McKinsey 7S Framework was created as a recognisable and easily
remembered model in business. The seven factors or variables, which the authors
term “levers”, all begin with the letter “S”:

The McKinsey’s 7S framework is a value based management (VBM) model that

describes how one can holistically and effectively organize a company and together,
these factors determine the way a company operates.