Business & Corporate Strategy

Economic Margin Model

Typical application
The Economic Margin (EM) model is a powerful fnancial tool that provides valuable insights into a company’s economic value and helps assess its overall fnancial performance. By incorporating a company’s cost of capital and its operating proft, the EM model offers a comprehensive view of the economic value generated by a business. This practical guide aims to help you understand and utilize the EM model effectively.

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Porter’s Five Forces

Typical application
Use at the early stages of a business strategy assignment. It’s sometimes useful to workshop each of the elements of Porter’s Five Forces with a client’s board as a way of really getting them to think about what a strategy project is trying to achieve. It’s a way of ‘stepping in the helicopter’. It can be useful to then research the detail behind this first workshop analysis and present back to the board a more detailed consolidated view of what’s behind each force.

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The McKinsey 7S Model

Typical application
The McKinsey 7S Model defines the essential tenets of most organisations. It’s an inward-looking approach to strategy planning and should be used as a first step in mapping out the key elements of a client’s business. Like many of these models, it’s useful to facilitate a workshop to surface the major elements of the model – but then will require detailed ‘filling out’ as strategy work develops. (McKinsey 7S Model might precede or be combined with the more externally facing PESTLE framework – covered in separate ARC worksheet). 

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The Ansoff Matrix

Typical application
Use for clients that are struggling to clarify product portfolio strategies. Perhaps they have a legacy or well-established product suite in a mature market and are looking for new ways to exploit these or add complimentary or even diverse products. This is about planning growth and operations, but it is critical to remember that business risk increases the further a business concentrates in the top right quadrant. 

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BCG Share Growth Matrix

Typical application

The BCG Growth-Share Matrix or Product Portfolio was created in 1970 by the founder of the Boston Consulting Group, Bruce Henderson. Its purpose is to help organisations allocate resources effectively, particularly when managing cash flow. 

It is one of the oldest frameworks available to strategic management, however it is still widely used and when correctly applied, can help a business make strategic decisions about where to allocate resources, which products or services to retain, to sell or to invest in.  

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Pestle Analysis

Typical application

Use PESTLE as the cornerstone of the environmental analysis element of a strategic planning exercise. PESTLE is a commonly used model to give a company a framework to inspect the Political, Economic, Social, Technological, Legal and Environmental (and ethical) factors that are impacting them. Unlike the McKinsey 7S Model, the 6 PESTLE factors are infuences outside the control of the organisation that it needs to take account of when developing a strategy.  

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