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.
Generally Accepted Accounting Principles define the accounting procedures, and understanding them is essential to producing accurate and meaningful records. In this article we emphasize on accounting principles and concepts so that the learner can understand the “why” of accounting which will help you gain an understanding of the full significance of accounting.
What is Accounting & Book Keeping
Accounting is a process designed to capture the economic impact of everyday transactions. Each day, many events and activities occur in an entity, these events and activities are in the normal course of business; however, each of these events may or may not have an economic impact. Events or activities that have an effect on the accounting equation are accounting events.
In this article we will focus on and understand the accounting process which enables the accounting system to provide the necessary information to business stakeholders. We will deep dive into each of the steps of accounting and will understand how to identify accounting transactions and the process for recording accounting information and transactions.
Reversing Journals are special journals that are automatically reversed after a specified date. A reversing entry is a journal entry to “undo” an adjusting entry. When you create a reversing journal entry it nullifies the accounting impact of the original entry. Reversing entries make it easier to record subsequent transactions by eliminating the need for certain compound entries. See an example of reversing journal entry!
GL - Different Accounting Methods
The accounting method refers to the rules a company follows in reporting revenues and expenses. Understand the two common systems of bookkeeping, single, and double-entry accounting systems. Learners will also understand the two most common accounting methods; cash and accrual methods of accounting and the advantages and disadvantages of using them.
Shared Services is the centralization of service offering at one part of an organization or group sharing funding and resourcing. The providing department effectively becomes an internal service provider. The key is the idea of 'sharing' within an organization or group.
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.
The general ledger is the central repository of all accounting information in an automated accounting world. Summarized data from various sub-ledgers are posted to GL that eventually helps in the creation of financial reports. Read more to understand the role and benefits of an effective general ledger system in automated accounting systems and ERPs.
An allocation is a process of shifting overhead costs to cost objects, using a rational basis of allotment. Understand what is the meaning of allocation in the accounting context and how defining mass allocations simplifies the process of allocating overheads to various accounting segments. Explore types of allocations and see some practical examples of mass allocations in real business situations.
Operational Structures in Business
Large organizations grow through subsidiaries, joint ventures, multiple divisions and departments along with mergers and acquisitions. Leaders of these organizations typically want to analyze the business based on operational structures such as industries, functions, consumers, or product lines.
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