Assignment of Strategic Management Topic: Mckinseys 7-S Framework of Nestle

Mckinseys 7-S Framework of Nestle

Introduction: McKinsey's 7S Model that was created by the consulting company McKinsey and Company in the early 1980s. Since then it has been widely used by practitioners and academics ali e in analy!ing hundreds o" organi!ations. #t also includes practical guidance and ad$ice "or the students to analy!e organi!ations using this model. Mckinseys 7-SFramework: %he McKinsey 7S model was named a"ter a consulting company& McKinsey and Company& which has conducted applied research in business and industry '(ascale ) *thos& 1981+ (eters ) ,aterman& 198-.. *ll o" the authors wor ed as consultants at McKinsey and Company+ in the 1980s& they used the model to analy!e o$er 70 large organi!ations. %he McKinsey 7S /ramewor was created as a recogni!able and easily

remembered model in business. %he se$en $ariables& which the authors term 0le$ers0& all begin with the letter 0S01

%hese se$en $ariables include structure& strategy& systems& s ills& style& sta"" and shared $alues. Structure: Structure is de"ined as the s eleton o" the organi!ation or the organi!ational chart. Strategy: 2arious authors describe strategy as the plan or course o" action in allocating resources to achie$e identi"ied goals o$er time. Systems: %he systems are the routine processes and procedures "ollowed within the organi!ation. Staff: Sta"" are described in terms o" personnel categories within the organi!ation 'e.g. engineers.. Skills: %he s ills $ariable re"ers to the capabilities o" the sta"" within the organi!ation as a whole. Style: %he way in which ey managers beha$e in achie$ing organi!ational goals is considered to be the style $ariable+ this $ariable is thought to encompass the cultural style o" the organi!ation. Shared values: %he shared $alues $ariable& originally termed super ordinate goals& re"ers to the signi"icant meanings or guiding concepts that organi!ational members share '(eters and ,aterman& 198-.. %he shape o" the model 'as shown.was also designed to illustrate the interdependency o" the $ariables.

Mckinseys 7-S Framework of Nestle:

1. Shared values of Nestle:

3estl4 is committed to the "ollowing 5usiness (rinciples in all countries& ta ing into account local legislation& cultural and religious practices1 3estl4's business ob6ecti$e is to manu"acture and mar et the Company's products in such a way as to create $alue that can be sustained o$er the long term "or shareholders& employees& consumers& and business partners. 3estl4 does not "a$our short7term pro"it at the e8pense o" success"ul long7term business de$elopment. 3estl4 recogni!es that its consumers ha$e a sincere and legitimate interest in the beha$iour& belie"s and actions o" the Company behind brands in which they place their trust& and that without its consumers the Company would not e8ist. 3estl4 belie$es that& as a general rule& legislation is the most e""ecti$e sa"eguard o" responsible conduct& although in certain areas& additional guidance to sta"" in the "orm o" $oluntary business principles is bene"icial in order to ensure that the highest standards are met throughout the organi!ation. 3estl4 is conscious o" the "act that the success o" a corporation is a re"lection o" the pro"essionalism& conduct and the responsible attitude o" its management and employees. %here"ore recruitment o" the right people and ongoing training and de$elopment are crucial. 3estl4 continues to maintain its commitment to "ollow and respect all applicable local laws in each o" its mar ets.

2. Structure of Nestle: 3estle has a decentrali!ed and "unctional "orm o" organi!ational

structure. #t has it9s operations di$ided worldwide on the basis o" : !ones o" continents. *ll the !ones ha$e their respecti$e heads. /ollowing is the organi!ation structure o" 3estle worldwide1

3. Strategy of Nestle: 3estle has "ollowing components o" it9s business strategy1

%he Company managed to deli$er sustainable returns abo$e the weighted a$erage cost o" capital through its '"our pillar' strategy1

o o o o

;perational e""iciency #nno$ation and reno$ation ,hene$er& where$er& howe$er Consumer communication

%o enhance its strength the company "ocused on limited number o" brands and on brand inno$ation. %he company may consider new products to add to its stable. 3estle launched 3esca"e classic with *roma. #t also wants to shi"t its "ocus "rom a low7growth premium product port"olio to a higher $olume7based growth port"olio.

4. Skills/key com etency areas in Nestle: 3estle9s ey competency area lies in it9s

technology part. *ll production plants and <aboratories are e=uipped with the latest e=uipment. %here is continuous impro$ement in technology and wor Standards. processes to meet #nternational

* series o" sophisticated lab test > analysis are conducted in the ?uality *ssurance @epartment at $arious stages o" production to ensure the ?uality (roducts o" #nternational Standards.

5.

Staff in Nestle: 3estl4 is now the 3o. 1 /ood Company. #t is present on all "i$e continents

has an annual turno$er o" nearly 89.- 5illion Swiss /rancs is present on all "i$e continents. *t present there are around A08 "actories spread o$er 80 countries with around -B0 operating companies ;ne basic research centre and 17 technological de$elopment groups and has in e8cess o" -&:0&000 employees. Most o" the employees are basically engineers or "ood specialists.
6. Style/Management style: 3estle "ollows an *utocratic "orm o" Management style. *ll

the ma6or decisions are made by top management but as it is a decentrali!ed "orm o" organi!ation so sometimes it becomes democratic also.

7. Systems in Nestle: 3estle has& li e other organi!ations "ollow $arious systems li e

recruitment& selection& per"ormance appraisal and others. Cecruitments are mostly done by head o""ices o" the respecti$e countries. Campus recruitments are & say& common in #ndia. *lso the standardi!ed criteria "or selection o" students are "ollowed by the respecti$e plants.

*ll these abo$e e8plained parts clearly e8plain and analyses about $arious components and processes o" 3estle as an organi!ation. Dence it "ul"ills the ob6ecti$e o" clear and complete analysis o" an organi!ation.