Assessment Tools - Company Analysis
Assessment tools are a good approach for businesses to check up that their key drivers are performing and enables an organisation to improve their approach and activities to support their strategy and business plan.
Some tools review strategy and others look at operational effectiveness like the famous Lean Six Sigma.
There are numerous assessment tools available to companies that can either provide a holistic, or birds eye analysis and recommendations like the 7-S Framework, or a more focused assessment to address categories like IT service management and ITIL4 tool.
Every model can offer benefit to some degree if carried out in a measured way and implemented without disrupting existing business revenues.The following tools (below) are where an analysis of the company can be made;
1. McKinsey 7-S Framework
There are seven elements to 7-S with the original and expanded models. See Figure 1 showing the original framework and Figure 2 for the expanded model.
These tools combine the hard and soft elements and can be applied to improve existing company performance, implement a desired strategy, or highlight synergies from, or during mergers and acquisitions. It can also explore future company state and its impact based on known changes.
There are checklists with proposed initiatives and metrics that can be adopted to utilised the S-7 tools, see Figure 3 below.Most companies would require assistance with utilisation and implementation of the 7-S model and seek external support to ensure that proposed changes and improvements are properly bedded down and improvements are realised. Companies like BSC Designer specialise in helping senior managers and CEOs to formulate the execute their strategy using assessment tools.
There are many articles that explore the advantages and disadvantages of the 7-S model. As outlined my M Prachi for the Investor’s Book, many advantages that enables an organisation to improve organisational effectiveness through cross functional process alignment. The model enables implementation of strategies with points raised above in mind. A key part of the model provides benefit of analysing the impact of future organisational change and finally links academic research to the management practice.
There are drawbacks to the 7-S model as it does have some limitations. Key disadvantages have been noted as; complexity of model makes this time consuming external factors and environment is not included.
There have been reports that some companies that have used the 7-S model have reported incidents of failure.
1. Balanced Scorecard (BSC)
BSC is closely aligned to the 7-S framework and was introduced in the early 1990s.In terms of usages, there have been multiple surveys and assessments to determine how successful this approach has been with data from annual surveys conducted by 2GC Active Management.Data from 2019 shows that it is utilised for execution of strategy.
According to Bernard Marr, there are 7 Benefits of a balanced scorecard which include improved strategic planning, communication and execution, better alignment of organisation, projects and processes including enhanced management information
Drawbacks to this are time, cost, stakeholder engagement and lack of external focus as outlined by Carol Finch or Bizfluent
1. MOST analysis (SWOT)
Exhibit 4 below shows a basic framework that connects the daily processes against the strategy of the business to visualise alignment opportunities and identify gaps. It is considered a powerful approach to look within an organisation.Every company has one mission and internally, this can lead to numerous objectives each with their own strategy.MOST stands for Mission, Objectives, Strategy, Tactics
1. SWOT analysis
Methods used to assess internal and external factors that impact on company performance.SWOT is commonly used to review existing processes, strategies or for new business plans.Exhibit 5 illustration from Adams Media Group below
There are both benefits and limitations to SWOT. Key benefits are that this can be applied at any level (organisation, department, team or individual, product, strategy, brand, marketing, finance etc.)
In an article written by Billie Nordmeyer MBA, MA in 2019, a comprehensive list outlines advantages and disadvantages to MOST with reasons why.
The management study guide provides comprehensive on the advantages and disadvantages of SWOT analysis and its limitations.
1. PESTLE analysis
Used for macro-environmental factors and common for businesses entering a new or foreign market.Figure 4 below which is part of an wider article that explores the relevance of PESTLE with the Brexit impact
CIPD author Ally Weeks explores PESTLE and provides useful tips on cross referencing SWOT with PESTLE. Advantages have been reported as simple framework, facilitates understanding across wider business, encourages external strategic thinking, enables organisation to anticipate future business threats to avoid or take action and helps a business to spot business opportunities.
Disadvantages can result in oversimplification of data, risk of capturing excessive data, assumptions made can be unfounded, pace of change could be too fast.