Mc Kinsey's 7S Model

Internal Factor Evaluation

External Factor Evaluation

What is the McKinsey 7S Model?
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.
Structure, Strategy, and
Systems collectively ac-
count for the “Hard Ss”
elements, whereas the re-
maining are considered
“Soft Ss.”
1. Structure
Structure is the way in which a company is organized – 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 sustain-
able competitive advantage, reinforced by the company’s mis-
sion and values.
3. Systems
Systems entail the business and technical infrastructure of
the company that establishes workflows and the chain of
decision-making.

4. Skills
Skills form the capabilities and competencies of a com-
pany 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 founda-
tion of every organization and play an important role
in aligning all key elements to maintain an effective
organizational design.
Advantages of the Model
-It enables different parts of a company to act
in a coherent and “synced” manner.

-It allows for the effective tracking of the im-

pact of the changes in key elements.

-It is considered a longstanding theory, with

numerous organizations adopting the model
over time.
 IInternal Factor Evaluation

An Internal Factor Evaluation (IFE) Matrix is a

strategy formulation tool that summarizes and
evaluates the major strengths and weaknesses in
the functional areas of a business, and it also
provides a basis for identifying and evaluating re-
lationships among those areas.
 Steps to calculate IFE

List key internal factors as identified in the internal audit

process. Use a total of from ten to twenty internal
factors, including both strengths and weaknesses. List
strengths first and then weaknesses. Be as specific as
possible, using percentages, ratios, and comparative
numbers.
 Assign a weight that ranges from 0.0 (not import-
ant) to 1.0 (all important) to each factor. The weight
assigned to a given factor indicates the relative im-
portance of the factor to being successful in the
firm’s industry.
Assign a 1 to 4 rating to each factor to indicate whether that
factor represents a major weakness (rating = 1), a minor
weakness (rating = 2), a minor strength (rating = 3), or a major
strength (rating = 4). Note that strengths must receive a 4 or 3
rating and weaknesses must receive a 1 or 2 rating.
Multiply each factor’s weight by its rating to
determine a weighted score for each variable.

Sum the weighted scores for each variable to

determine the total weighted score for the or-
ganization.