Business Frameworks

SWOT Analysis

SWOT analysis (or SWOT matrix) is a strategic planning technique used to help a person or organization identify strengths, weaknesses, opportunities, and threats related to business competition or project planning.

McKinsey's 7S

The model was developed in the late 1970s by Tom Peters and Robert Waterman, former consultants at McKinsey & Company. They identified seven internal elements of an organisation that need to align for it to be successful.

Strategy: this is your organisation's plan for building and maintaining a competitive advantage over its competitors.
Structure: this how your company is organised (that is, how departments and teams are structured, including who reports to whom).
Systems: the daily activities and procedures that staff use to get the job done.
Shared values: these are the core values of the organisation, as shown in its corporate culture and general work ethic. They were called "superordinate goals" when the model was first developed.
Style: the style of leadership adopted.
Staff: the employees and their general capabilities.
Skills: the actual skills and competencies of the organisation's employees.

MECE

MECE is an acronym for the phrase Mutually Exclusive, Collectively Exhaustive. Put simply, it is a principle that will help you sharpen your thinking and simplify complex ideas into something that can be easily understood. MECE is a principle used by management consulting firms to describe a way of organizing information. MECE is a systematic problem-solving framework that helps to solve complex problems.

It was developed in the late 1960s by Barbara Minto at McKinsey & Company and underlies her Minto Pyramid Principle

Skinner - Stimulus-Response

The theory of B.F. Skinner is based upon the idea that learning is a function of change in overt behaviour. Changes in behaviour are the result of an individual's response to events (stimuli) that occur in the environment. Reinforcement is the key element in Skinner's Stimulus-Response (S-R) theory.

Operant conditioning, sometimes referred to as instrumental conditioning, is a method of learning that employs rewards and punishments for behaviour. Through operant conditioning, an association is made between a behaviour and a consequence (whether negative or positive) for that behaviour.

Maslow's Hierarchy of needs

Maslow's hierarchy of needs is a theory by Abraham Maslow, which puts forward that people are motivated by five basic categories of needs: physiological, safety, love, esteem, and self-actualisation.

Hierarchy of Needs and Organizational Theory. Maslow's hierarchy of needs is relevant to organizational theory because both are concerned with human motivation. Understanding what people need—and how people's needs differ—is an important part of effective management.

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PESTEL Analysis

A PESTEL analysis or PESTLE analysis (formerly known as PEST analysis) is a framework or tool used to analyse and monitor the macro-environmental factors that may have a profound impact on an organisation’s performance. This tool is especially useful when starting a new business or entering a foreign market. It is often used in collaboration with other analytical business tools such as the SWOT analysis and Porter’s Five Forces to give a clear understanding of a situation and related internal and external factors. PESTEL is an acronym that stand for Political, Economic, Social, Technological, Environmental and Legal factors.

Ohmae's 3 C's

The 3Cs model points out that a strategist should focus on three key factors for success. In the construction of a business strategy, three main elements must be taken into account:

1) The Company, 2) The Customers, 3) The Competitors

Only by integrating these three, a sustained competitive advantage can exist. Ohmae refers to these key factors as the three Cs or strategic triangle.

There is also a new 3 Cs model emerging which centres on sustainability. This model is:
1) Capability, 2) Consistency, 3) Cultivation

Porter's Five Forces

Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry and helps determine an industry's weaknesses and strengths. Five Forces analysis is frequently used to identify an industry's structure to determine corporate strategy. Porter's model can be applied to any segment of the economy to understand the level of competition within the industry and enhance a company's long-term profitability. The Five Forces model is named after Harvard Business School professor, Michael E. Porter.

DMAIC - Six Sigma

DMAIC is the problem-solving approach that drives Lean Six Sigma. It's a five-phase method—Define, Measure, Analyze, Improve and Control—for improving existing process problems with unknown causes. DMAIC is based on the Scientific Method and it's pronounced “duh-may-ik.”

Benchmarking

Benchmarking is a method in which a corporation estimates its performance in comparison to the top companies in their field. The company uses benchmarking to match its competitor’s growth and utilize the information to increase their performance.

The Business Process Reengineering

The business process reengineering or BPR is the interpretation and remodification of core business methods to obtain tangible improvements in its performance, productivity, and quality.

McKinsey’s - 3 Horizons of Growth

McKinsey’s Three Horizons of Growth are all about keeping you focused on growth and innovation. This strategy framework requires you to categorise your goals into 3 different ‘horizons’:

Horizon 1: Maintain & Defend Core Business - Activities that are most closely aligned to your current business. Most of your immediate revenue making activity will sit in horizon 1. Your goals in horizon 1 will be mostly around improving margins, bettering existing processes and keeping cash coming in.

Horizon 2: Nurture Emerging Business - Taking what you already have, and extending it into new areas of revenue-driving activity. There may be an initial cost associated with your horizon 2 activities, but these investments should return fairly reliably.

Horizon 3: Create Genuinely New Business - Introducing entirely new elements to your business that don't exist today. These ideas may be unproven and potentially unprofitable for a significant period of time.

Balanced Scorecard

Balanced Scorecard is a very useful decisive outlining system that enables you to plan your objectives and strategies with the help of these four key performance indicators from four different perspectives. It was first proposed by accounting academic Dr. Robert Kaplan. These are four elements:

Financials
Customer
Internal Business Process
Learning and Growth

Triple Bottom Line

The triple bottom is a framework used in accounting, and it consists of three main elements, which are: social, environmental, and financial.

Some companies have used the TBL framework to upgrade their performance to create better business value. The theory was introduced by business writer John Elkington in 1994.

BCG's Growth Share Matrix

The growth share matrix was created in 1968 by BCG’s founder, Bruce Henderson.

The growth share matrix is, put simply, a portfolio management framework that helps companies decide how to prioritize their different businesses. It is a table, split into four quadrants, each with its own unique symbol that represents a certain degree of profitability: question marks, stars, pets (often represented by a dog), and cash cows. By assigning each business to one of these four categories, executives could then decide where to focus their resources and capital to generate the most value, as well as where to cut their losses.

Ansoff Matrix

Igor Ansoff identified four strategies for growth and summarised them in the so called Ansoff Matrix. The Ansoff Matrix (also known as the Product/Market Expansion Grid) allows managers to quickly summarise these potential growth strategies and compare them to the risk associated with each one. The four growth strategies are Market Penetration (offering more of the existing products to existing markets), Market Development (offering the existing products to new markets), Product Development (offering new products to existing markets) and Diversification (launching new products in new markets). The idea is that each time you move into a new quadrant (horizontally or vertically), risk increases.

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