McKinsey 7S Framework is most often used as an organizational analysis tool to assess and monitor changes in the internal situation of an organization. The model is based on the theory that, for an organization to perform well, seven elements need to be aligned and mutually reinforcing.
McKinsey 7S Framework is most often used as an organizational analysis tool to assess and monitor changes in the internal situation of an organization. The model is based on the theory that, for an organization to perform well, following seven elements need to be aligned and mutually reinforcing:
A set of actions that the company starts with and which it must maintain. Strategy is the manner in which the organization derives, articulates, communicates and implements it's vision and direction. Strategy is the purpose of the business and the way the organization seeks to enhance its competitive positioning and competitive advantage.
Strategic thinking involves the understanding of basic economics of business; identifying one’s sources of competitive advantage, and allocating resources to ensure that ones distinctive capabilities remain strong.
Structure defines how people, tasks, work is organized and represents the way business divisions and units are organized and includes the information of who is accountable to whom. In other words, structure is the organizational chart of the firm. It is also one of the most visible and easy to change elements of the framework. Structure allow the firm to focus on areas that are deemed important for its evolution. This includes division of activities; integration and coordination mechanisms. Functional superiority can only be achieved if there is enough reliability and focus within each business unit.
Systems refer to policies and procedures that govern the way in which the organization acts within itself and its external environment. These processes and information flows link the organization together and used by staff to get the work done. This includes computer systems, operational systems, HR systems, etc., which reveal business’ daily activities and how decisions are made. Systems do not only refer to hard copy reports and procedures but also to
informal mechanisms such as meetings and conflict management routines.
Style represents the way the company is managed by top-level managers, how they interact, what actions do they take and their symbolic value. How managers behave, leadership style, unwritten norms of behavior and organizational culture etc.
This element is concerned with how the company develops managers (current and future) and employees. Their selection, training, reward and recognition, retention, motivation and assignment to work etc. Identifying what type and how many employees an organization will need and how they will be recruited, trained and deployed.
These values define the firm's key beliefs and aspirations that form the core of its corporate culture. These values shapes the organizational culture as the employees share the same goals guiding values. Values act as an organization's conscience, providing guidance in times of crisis and are the foundation of every organization.
Values are intangibles that affects employees (treating them with dignity), customers (treating them with fairness) and society (making a social contribution).
Dominant attributes, competence or capabilities that exist in the organization. It refers to the fact that employees have the skills necessary to execute company’s strategy. Skills enables its employees to achieve its objectives.
Organization is a system of consciously coordinated activities of two or more persons in order to achieve a common goal. As per the model these seven internal aspects of an organization need to be aligned if it is to be successful. The 7Ss framework provides a useful framework for analyzing the strategic attributes of an organization. Whatever the type of change – restructuring, new processes, organizational merger, new systems, change of leadership, and so on – the model can be used to understand how the organizational elements are interrelated, and to ensure that the wider impact of changes made in one area is taken into consideration. The model can be applied to many situations and is a valuable tool when organizational design is at question.
The most common uses of the framework are:
Organizational structure aligns and relates parts of an organization, so it can achieve its maximum performance.
Organizational structure sets out who does what within a company and specifies who answers to whom.
A strategic, carefully planned organizational structure helps a business run effectively and efficiently.
It helps determine how your products are produced, distributed, marketed and sold.
Structure is also dependent on your company’s unique mission and goals.
Regardless of the type of structure you choose, you’ll find key elements that they all have in common.
One of the most important components of your organizational structure is defining who’s in charge.
It’s important that you have a clear defined chain of command.
How and where your products or services are produced is also considered within your business structure.
An organization’s structure also maps out how products are delivered to customers.
Each of these elements affects how workers engage with each other, management and their jobs in order to achieve the employer’s goals.
When the quantum of business is expected to be moderate and the entrepreneur desires that the risk involved in the operation be shared, he or she may prefer a partnership. A partnership comes into existence when two or more persons agree to share the profits of a business, which they run together.
Horizontal or Flat Organizational Structures
Flat organizational structure is an organizational model with relatively few or no levels of middle management between the executives and the frontline employees. Its goal is to have as little hierarchy as possible between management and staff level employees. In a flat organizational structure, employees have increased involvement in the decision-making process.
Divisional Organizational Structures
The divisional structure or product structure consists of self-contained divisions. A division is a collection of functions which produce a product. It also utilizes a plan to compete and operate as a separate business or profit center. Divisional structure is based on external or internal parameters like product /customer segment/ geographical location etc.
In this article, we will describe how to determine if an account needs adjustment entries due to the application of the matching concept. Learners will get a thorough understanding of the adjustment process and the nature of the adjustment entries. We will discuss the four types of adjustments resulting from unearned revenue, prepaid expenses, accrued expenses, and accrued revenue.
Matrix Organizational Structures
In recent times the two types of organization structures which have evolved are the matrix organization and the network organization. Rigid departmentalization is being complemented by the use of teams that cross over traditional departmental lines.
In this article we will help you understand the double-entry accounting system and state the accounting equation and define each element of the equation. Then we will describe and illustrate how business transactions can be recorded in terms of the resulting change in the elements of the accounting equation.
Accrued expenses, sometimes referred to as accrued liabilities, are expenses that have been incurred but have not been recorded in the accounts. Discuss the need to record accrued liabilities and why they require an adjustment entry. Understand the treatment for these entries once the accounting period is closed and learn to differentiate when the commitments become liabilities.
Funds contributed by owners in any business are different from all other types of funds. Equity is the residual value of the business enterprise that belongs to the owners or shareholders. The funds contributed by outsiders other than owners that are payable to them in the future. Liabilities are generally classified as Short Term (Current) and Long Term Liabilities. Current liabilities are debts payable within one year.
Learn the typical accounting cycle that takes place in an automated accounting system. We will understand the perquisites for commencing the accounting cycle and the series of steps required to record transactions and convert them into financial reports. This accounting cycle is the standard repetitive process that is undertaken to record and report accounting.
Period End Accruals, Receipt Accruals, Paid Time-Off Accruals, AP Accruals, Revenue Based Cost Accruals, Perpetual Accruals, Inventory Accruals, Accruals Write Off, PO Receipt Accrual, Cost Accrual, etc. are some of the most complex and generally misconstrued terms in the context of general ledger accounting. In this article, we will explore what is the concept of accrual and how it impacts general ledger accounting.
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