OBJECTIVES


As a person with knowledge of Mckinsey and Co., the author has always brought up to his superiors the viability of strategy formation regarding the analysis of this case study and at times fail to understand the reasons or logic behind certain strategic implementations imposed on it.


By delving into this project paper, the author intends to have better insights into how business strategies of Mckinsey and Co. are thought up, formulated and then imparted down into its subsidiaries. The author hopes to have an in-depth understanding as to how the operations management of the company enables them to compete effectively and profitably in this era of internationalization where competition is extremely intense.


In order to reinforce the learning objectives, two key focal issues were focussed upon i.e. innovation and diversity. Innovation was discussed with regard to the business strategies of Mckinsey and Co. where they were renowned for their developmental capabilities to constantly innovate. Diversity came under strategic thinking and formation as the author considered the diverse culture, political climate, economic surroundings, social environment, technological settings, government policies and legal systems in order to better analyse the case of Mckinsey and Co.


EXECUTIVE BRIEF


This case study utilized McKinsey and Co. as the model organization to review its present business strategies and how they dealt with critical situations. From the analysis, key trends in the business strategies of the company were then identified, how they worked and their effectiveness in dealing with critical situations was ascertained. The paper then moved on to assess these business strategies of McKinsey and Co. with regard to their suitability to critical situations, during which the internal capabilities of these business strategies in relation to the strategy being followed was determined also. An overall analysis of the performance and effectiveness of McKinsey and Co. was also conducted to assess and compare the capabilities of their business strategies with those of others. Gaps in the operations management capabilities and environment of McKinsey and Co. were then identified.


Finally, several choices of strategies to improve the operations management of McKinsey and Co. as effective means in critical situations were recommended and evaluated in terms of appropriateness to the issues reviewed, feasibility in carrying out the options and acceptability within the key stakeholders and decision makers. Several key implementation issues related to managing strategic change were also addressed as well.


ANALYSIS


1) What is Mckinsey’s strategy for competing successfully in its chosen market?


Mckinsey and Co. aims for sustainable growth as a broad market leader in management consultancy as well as for segment leadership. In both cases, the services of Mckinsey and Co. will play a crucial part. The company is able to establish its broad leadership usually by acquiring other strong management consultancy companies and their services, which are then combined into a new, larger company. Offering training to its employees, improving the company operations, and the introduction of new technologies then reinforces the positions of the various products of Mckinsey and Co. This practically results in economies of scale that is able to create a distribution network for both the local and international consultancy services of Mckinsey and Co. If a market is already in the control of other consultancy companies, Mckinsey and Co. devotes its attention towards the development of a premium segment with its various services.


            The mission of Mckinsey and Co. is to secure the growth of its business in a sustainable manner, while at the same time constantly improving the company’s profitability. The strategy to achieve this involves four elements:


  • Striving in order to reach a leading position in attractive markets

  • Focusing on securing a competitive share of the market segments.

  • Working in order to improve the company’s efficiency and cut costs in operations.

  • Continuous growth through selective acquisitions for as long as they are able to create shareholder value. 

  •  


    Mckinsey and Co. Generic Strategy


    Mckinsey and Company’s generic strategy in the management consultancy market changed for the better at the start of the new millennium and began pursuing service differentiation. True enough, the differentiated consultancy services of the company were able to satisfy the needs of customers through a sustainable competitive advantage. This allowed Mckinsey and Co. to desensitize the prices of their services and instead focused on the values that generated not only a comparatively higher price but also a better margin.


    POSITIONING STRATEGY AND TACTICS


    In order to sustain its growth on the international level, McKinsey and Co. builds its business on four (4) main positioning strategies.



    • The first is building a strong local operating platform, and then testing it over time to determine if profitable growth would be possible through the selection of the right management consultancy services and creation of the structures for distribution.

    • The second is broadening the portfolio in order to make way for international consultancy services to give access to those not supported by the local services. Global perspectives are also gathered to help optimize both the local and global consultancy services. By broadening the portfolio, McKinsey and Co. is able to meet the consumer’s needs and minimize the costs of local infrastructures.

    • The third positioning strategy involves a balanced portfolio of countries among established and developing markets. In this instance, the established markets will provide the funds to invest in developing markets that have lower GDPs but possess a tremendous potential for growth and development (Baumol, 2002).

    • The last positioning strategy involves market consolidation which would help in the securing of positions and the creation of shareholder values. McKinsey and Co. strives to be in the top position on each market.


     


    2) What behaviors, skills, and attitudes will the firm need from its people to execute its strategy?


    It is interesting to know the basic innate behaviours, skills and attitudes that the employees of Mckinsey and Co. must possess in order to contribute towards the development of their effective management consultancy image.


    ·        Mental Stability


    Mental stability is crucial especially in the pursuit of the correct management consultancy decision as well as the management and development of the processes accompanying it. It is important for the employees of McKinsey and Co. to remain updated with the latest developments to be able to stay aware and knowledgeable in all issues.


    ·         Performance and Credibility


    The production of their best management consultancy services and outputs of McKinsey and Co. comes as a result of well-funded research management and development activities regarding management consultancy. The strong performance of their services and outputs in the market could also be linked to the effective strategic planning and human resource mobilization of the company. Thus, the company’s credibility increases as their performance becomes better (Best, 2001).


    ·        Planning and Strategy Formation Capabilities


    Planning and strategy formation nowadays has created the need for McKinsey and Co. to become aggressive especially in the area of marketing themselves. This is because the access to strong distribution channels is critical for their continued popularity.


    ·        Decision-making abilities.


    Upon arriving at the correct decision or choice, the consultants of McKinsey and Co. now gains confidence in their ability to make critical decisions or choices especially when their company’s integrity is on the line. Thus, this consultant will now search for even more challenges and opportunities where he / she could further enhance his / her decision-making abilities regarding current issues in management consultancy.


    ·        Holistic Mindset of Issues


    Through the exposure to various puzzling management consultancy issues, the consultants of McKinsey and Co. along the process are able to develop a holistic mindset regarding the issues surrounding them. The consultants now become a keen observer of the truths and lies surrounding the issue being tackled, instead of relying on mere hearsays. The continuous pursuit of the truth behind the puzzling issues enables the consultants to consistently practice and enhance a healthy and holistic mindset which makes it difficult for detractors to give influence. Because of this holistic approach, the consultants of McKinsey and Co. are able to effectively select the right choice and continue to maximize this potential for future use.


    3) How has the firm been growing so far?


    McKinsey and Co. has been able to maintain its reputation as one of the world’s leading management consultancy companies for years now. It is able to face the challenges in many of its markets directly. This is made possible by the effective promotional and positional strategies aimed to deliver not only profit growth, but also on building down the foundation of the company’s services and business.


    The promotional campaigns and strategies of McKinsey and Co. are focused mainly on driving the growth of its services and improving the company’s financial performance. These campaigns have also helped secure significant acquisitions and partnerships. And more importantly, these campaigns have led to the release of the potentials of the company’s employees, thus building a quality performance- based culture (Bjorkman, 2002).


    The promotional strategies of Mckinsey and Co.’s services are practically reinforced by the local employees themselves. These moves certainly allow the company to improve even more without the costs of introducing new technologies. These efforts have resulted in increased financial gains for the company and have allowed the establishment of distribution networks.


    Because of these concerted efforts by McKinsey and Co., it has grown and expanded virtually around the entire globe. This was also made possible by their strong efforts to acquire smaller management consultancy firms from other countries. Over the years and decades, McKinsey and Co. has slowly but surely established a management consultancy empire, with strong segment markets established in the Middle East, the Western Hemisphere, the Europe and most recently the Asia Pacific.


    In America for instance, McKinsey and Co. was able to achieve a broad market leadership in management consultancy through various acquisition deals over the years. The company also exerts efforts to communicate with their customers in every local culture about their services and their impressions. And this is no easy thing because Americans have different tastes and lifestyles. This critical information gathered by McKinsey and Co. paves the way for them to make the right decision regarding the appropriate strategies to pursue.


    Heineken has even solidified its empire by adding India as one of its markets in the Asia Pacific Region just recently. And this move is a sure sign that there will be more acquisitions and mergers that McKinsey and Co. will be involved in the coming years.


     


    4) To what extent can competitors (BBCG, Mercer, Bain& CO etc.) duplicate McKinsey’s business model?


    The competitors of McKinsey and Co. are slow to adapt to new technologies and services that the company releases, therefore making it difficult for their competitors to duplicate McKinsey’s business model.


     


    How does the firm selects and motivates its professional?


    A. Equal Opportunity and Employment Practices


     


    1) McKinsey and Co. does not allow employment discrimination on the basis of race, gender, religion, age, or against qualified disabled persons.


    2) McKinsey and Co. does not allow the lowering of bona fide job requirements or qualifications in order to give favor to any applicant for employment.


    3) McKinsey and Co. does not allow all its employees, including, managers from taking any grudge against any person making allegations of violations of the company policies.


     


    B. Compensation and Benefits Management


    McKinsey and Co. determines how it will implement the Compensation and Benefits Management System which is the basis for ensuring the equitable implementation of pay decisions. The Salary Administration Plan administers the company’s internal compensation philosophy and policies, recruitment and selection process, performance management, administration of pay practices, and program evaluation plan. McKinsey and Co. regularly evaluates this plan to make sure that its employees are continuously complying to the company policies as well as to the company’s mission and organizational needs.


     


    C. Management Development and Training


    McKinsey and Co. provides various employee training sessions appropriate for them to be able to help the company in achieving its mission and accomplishing its objectives.


    1. The company appoints an employee that is capable in helping to implement its training and development programs and serving as coordinator for the duration of training services.


    2. The company develops a biennial training plan which includes:


    a. a training needs assessment;


    b. an action plan illustrating the objectives and approaches through which the plan can possibly be done; and


    c. funding needed to implement the plan.


    CONCLUSION

    The results of the analysis carried out on the business strategies of McKinsey and Co. indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that the business strategies of McKinsey and Co. could still be expected to improve faster than average.


    The review of the McKinsey and Co.’s operations management capabilities and resources revealed very little inconsistencies regarding their business strategies. This is coherent with their traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for McKinsey and Co.


    The analysis of the environment as well as the needed behaviors, skills and capabilities of the employees of McKinsey and Co. revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of the company.


    Also, the employees of McKinsey and Co. have to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options.


     


     



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