Module VII

STRATEGIC IMPLEMENTATION
Topics

1. Strategy Implementation: Mc Kinsey’s 7S Framework

2. Functional Plans & Policies

1. McKinsey’s 7 S Framework

• The model was published by Tom Peters and Waterman in their book, ‘In Search for Excellence’.

• The authors were consultants at McKinsey at that time and were strongly influenced by
Japanese organizations.

• The McKinsey 7S Model refers to a tool that analyzes a company’s “organizational design.” The
goal of the model is to depict how effectiveness can be achieved in an organization through the
interactions of seven key elements – Structure, Strategy, Skill, System, Shared Values, Style, and
Staff.
Hard Elements

1. Structure
Structure is the way in which a company is organized – the chain of command and accountability
relationships that form its organizational chart.

2. Strategy
Strategy refers to a well-curated business plan that allows the company to formulate a plan of action
to achieve a sustainable competitive advantage, reinforced by the company’s mission and values.

3. Systems
Systems entail the business and technical infrastructure of the company that establishes workflows
and the chain of decision-making.
Soft Elements
4. Skills
Skills form the capabilities and competencies of a company that enables its employees to achieve its
objectives.

5. Style
The attitude of senior employees in a company establishes a code of conduct through their ways of
interactions and symbolic decision-making, which forms the management style of its leaders.

6. Staff
Staff involves talent management and all human resources related to company decisions, such as training,
recruiting, and rewards systems

7. Shared Values
The mission, objectives, and values form the foundation of every organization and play an important role
in aligning all key elements to maintain an effective organizational design.
 2. Functional Plans & Policies

 Functional strategy refers to a business strategy that focuses on the action plans by a particular
functional area in order to achieve the set business objectives. It aims at improving the
effectiveness of a firm's operations across various functional units or departments. It helps align the
strategies of all these operating departments with the overall business strategy.

 For example, if the overall goal is to increase market share, the marketing department's functional
strategy might be to create a new marketing campaign.
 Functional Strategy Development
 Functional strategies are developed to support the operational strategy and business goals. They
detail the specific actions and activities that need to be carried out in each area of the business.
Functional strategies address how a business will produce its products or services, market them,
finance them, and organize its operations.

 Deals with a relatively restricted plan designed to achieve objectives in a specific functional area,
allocation of resources among different operations within that functional area and coordination
among different functional areas for optimal contribution to the achievement of the business and
corporate level objectives.
Strategy Levels & Functional Plans
Financial Plans and Policies

1. Sources of Funds:

Capital structure, procurement of capital and working capital borrowings, reserves and surplus,
relationship with lenders, banks and financial institutions.

2. Usage of Funds:

Capital investment, fixed asset acquisition, current assets, loan and advances , dividend decisions etc.

3. Management of Funds:

The system of finance, accounting and budgeting, cash, credit and risk management, cost control and
reduction etc.
Marketing Plans and Policies

1. Product:
Quality, features, choice of models ,brand names, packaging etc.

2. Pricing:
Discount, mode of payment, allowances, payment period, credit terms etc.

3. Place:
Channels to be used, transportation, logistics and inventory storage management and coverage of markets
etc.

4. Promotion:
Advertising, personal selling, sales promotion and publicity.
Operations Plans and Policies

1. Production System

Capacity, location, layout, product or service design, work systems, degree of automation, extent of
vertical integration.

2. Operations Planning and Control

Aggregate production planning; materials supply; inventory, cost and quality management; and
maintenance of plant and equipment.

3. Research and Development

Product development, personnel and facilities, level of technology used, technology transfer and
absorption, technological collaboration and support.
Personnel Plans and Policies

1. Personnel System

Manpower planning, selection, development, compensation, communication and appraisal.

2. Organizational and Employee Characteristics

Corporate image, quality of managers, staff and workers, perception about and image of the
organization as an employer, availability of development opportunities for employees, working
conditions.

3. Industrial Relations

Union-management relationship, collective bargaining, safety, welfare and security, employee

satisfaction and morale.
Information Management Plans and Policies

1. Acquisition and Retention of Information

Sources, quantity, quality and timeliness of information, retention capacity and security of information.

2. Processing and Synthesis of Information

Database management, computer systems, software capability and the ability to synthesize information.

3. Integrative, Systemic and Supportive Factors

Availability of IT infrastructure, its relevance and compatibility to organizational needs, upgradation of
facilities, willingness to invest in state-of-the-art systems, availability of computer professionals and top
management support.