Implementation of Concepts Management Strategy 7s Mckinsey for

Start-up Business: Fruit Combining

Mukhamad Mamun

, Semerdanta Pusaka

, H. S. Darmansyah

and Suryari Purnama

Faculty of Economics and Business, Esa Unggul University – Jakarta

Keywords: Barriers to Strategy Execution, Strategy Implementation, Leadership, Vision, Process, Individual Behavior.

Abstract: Strategies are a critical element in organizational functioning, but whereas most organizations have good

strategies, successful strategy implementation remains a major challenge. Despite the clear importance of

this management area and the apparent problems associated with its execution it has, however, been

substantially neglected by industries. The objective of the study is to determine the barriers to strategy

execution in start-up business food combining focusing on vision barrier, leadership barrier, process barrier

and people’s behaviour barrier. The study constitutes the review of theoretical and empirical literature

relevant to the subject. The key barrier to strategy execution was identified and discussed: including a vision

barrier, leadership barrier, process and resources barrier and people barrier. The research was compiled from

the theoretical, conceptual and empirical review of the literature and a summary and conclusion was drawn.

Translation of vision to clear objective and to align it to strategy remains a big challenge. Also leadership

style, approach and perceptions are critical to implementation in addition to the leader’s role of

communicating strategy to the employee. Failure to adopt the best approach with a given type of strategy

and employing the best communication tactic implementation is likely to fail. Aligning process resources,

structures and program in the implementation of the strategyare also critical to implementation failure to

which a problem is likely to occur. Moreover,individual’s behaviours determine if the strategy will be

implemented or not. Individuals must be assigned duties that motivate them otherwise they will not be

committed to the organization operations. The author recommends that specific studies be conducted on

effective tools to measure and control performance to assist in overcoming barriers to strategy execution.

1 INTRODUCTION

How do you go about analysing how well your

organization is positioned to achieve its intended

objective? This is a question that has been asked for

many years, and there are many different answers.

Some approaches look at internal factors, others

look at external ones, some combine these

perspectives, and others look for congruence

between various aspects of the organizationbeing

studied. Ultimately, the issue comes down to which

factors to study.

While some models of organizational

effectiveness go in and out of fashion, one that has

persisted is the McKinsey 7-S framework

(Hanafizadeh and Ravasan, 2011; Singh, 2013;

Alshaher, 2013; Gyepi-Garbrah and Binfor, 2013;

Teh and Corbitt, 2015). Developed in the early

1980s by Tom Peters and Robert Waterman, two

consultants working at the McKinsey & Company

consulting firm, the basic premise of the model is

that there are seven internal aspects of an

organization that need to be aligned if it is to be

successful.

The 7-S model can be used in a wide variety of

situations where an alignment perspective is useful,

for example, to help to:

 Improve the performance of a company.

 Examine the likely effects of future changes

within a company.

 Align departments and processes during a merger

or acquisition.

 Determine how best to implement a proposed

strategy.

The McKinsey 7-S model can be applied to

elements of a team or a project as well. The

alignment issues apply, regardless of how you

decide to define the scope of the areas you study.

The McKinsey 7-S model involves seven

interdependent factors which are categorized as

2734

Mamun, M., Pusaka, S., Darmansyah, H. and Purnama, S.

Implementation of Concepts Management Strategy 7s Mckinsey for Start-up Business: Fruit Combining.

DOI: 10.5220/0009951727342743

In Proceedings of the 1st International Conference on Recent Innovations (ICRI 2018), pages 2734-2743

ISBN: 978-989-758-458-9

either "hard" or "soft" elements as shown in Figure

Figure 1:Seven Interdependent Factors

"Hard" elements are easier to define or identify,

and management can directly influence them: These

are strategy statements; organization charts and

reporting lines; and formal processes and IT

systems. "Soft" elements, on the other hand, can be

more difficult to describe, and are less tangible and

more influenced by culture. However, these soft

elements are as important as the hard elements if the

organization is going to be successful.

The way the model is presented in Figure 2

depicts the interdependency of the elements and

indicates how a change in one affects all the others.

Figure 2: Concept of Human Resource Management

(Source: Harvard Business School Management

Consulting Club)

Let's look at each of the elements specifically:

 Strategy: the plan devised to maintain and build

competitive advantage over the competition.

 Structure: the way the organization is structured

and who reports to whom.

 Systems: the daily activities and procedures that

staff members engage in to get the job done.

 Shared Values: called "superordinate goals"

when the model was first developed, these are

the core values of the company that are

evidenced in the corporate culture and the

general work ethic.

 Style: the style of leadership adopted.

 Staff: the employees and their general

capabilities.

 Skills: the actual skills and competencies of the

employees working for the company.

2 PT Redceri INDONESIA

PT Redceri Indonesia is a new company engaged in

Fruit Combining. The company is located in

Warehousing Area Bizlink Block X11/20 Citra

Raya, Jl. Pemda Tigaraksa. The location is included

in the administrative area of Sukamulya, Cikupa

Sub-district, Tangerang District, Banten Province.

The company offers Fruit Combining products in the

form of a combination of jelly with fresh fruits in the

packaging.

The selection of PT Redceri Indonesia products

is based on the high level of public awareness to

consume the fruit but collide with various obstacles

to implement it. Today people are well aware that

consuming fruits regularly in sufficient quantities,

can meet the intake of nutritional needs for the body,

such as vitamins, phytochemicals, fibre, and

minerals, and help reduce the risk of many diseases.

However, the constraint of the majority of people to

self-consume fruit is a matter of practicality,

especially if the fruit consumed has a thick skin that

needs to be peeled first. Besides other obstacles is

not easy to keep the freshness of fruit and consumer

behaviour shift from conventional way to the instant

way. Many people who feel bothered to eat fruit, but

this cannot be an excuse. To bridge this constraint

then PT Redceri Indonesia offers a practical product

(ready to eat) without ruling out the essence of the

benefits of consuming fresh fruit.

3 THE COMPANY'S VISION AND

MISSION

The vision of PT Redceri Indonesia is "To be the

best company in the food and beverage industry by

creating natural products".

The company's mission is as follows:

 Providing natural products by utilizing hygienic

preservation technology.

 Maintain and increase employee potential by

developing science.

 Maintaining the integrity of the corporate chain.

While the goal of the company is to become a

leading food and nutrition company and be trusted

by all stakeholders and to be a reference for joint

Implementation of Concepts Management Strategy 7s Mckinsey for Start-up Business: Fruit Combining

2735

benefit creation initiatives. With Fruit Combining

products offered, the company targets to gain a 5%

market share of fruit demand in the first year of

production.

Redceri Pure Fruit Jelly's product tagline is 'Your

Pure Fruit Jellycious', while its positioning statement

is 'For a healthy Indonesian people”. Redceri Pure

Fruit Jelly is a Fruit Combining that combination of

jelly with fresh fruits as a halal product and also as

practical and tasteful vitamin intake which is

differentbecause of only Redceri Pure Fruit Jelly as

domestic products that processed in hygienic and

modern technology.

Based on Figure 3, the positioning statement is

formed upon:

Target Segment: Indonesian healthy people.

Brand Name: Redceri Pure Fruit Jelly.

Frame of Reference: Fruit Combining combination

of jelly and fresh fruits.

Point of Differentiation: As a halal product and

also as practical and tasteful vitamin intake which is

different.

Reason to Believe: Domestic products are processed

in a hygienic and modern technology.

Figure 3: Positioning Statement

4 COMPANY’S STRATEGY

PT Redceri Indonesia's strategy is to strengthen

Research & Development to conduct market

research and product development; this is to support

the market penetration strategy in the medium term

from all-around marketing to multi-segment

marketing based on market segmentation that has

been done by the company. To that end, in the

management of human resources the company

designs to emphasize systematic plans and

comprehensive actions to ensure the success of the

company's operations.

In the selection of generic strategies, the

company considers that the new company will now

enter the Fruit Combining industry. According to

Porter (1985), as a new company will enter into

industry, then to catch up with other competitors

who have been in the industry there are only two

choices of generic strategies, namely, focus on low

cost or differentiation.

In the Fruit Combining industry, the focus of

consumers is to find the product with the lowest

price, good taste, healthy and easy to get. In line

with the results of Porter Five Forces analysis

(Narayanan and Fahey, 2005; E. Dobbs, 2014;

Grundy, 2006; Porter, 2008; Siaw and Yu, 2004)

that has been done by the previous company, then a

suitable strategy to be applied by the company as a

newcomer company is a low-cost focus. As the first

local company to produce Fruit Combining, it allows

the company to offer a lower total cost compared to

that offered by competitors from overseas. The

company does this by utilizing the difference

between distribution cost and import duty.

Strategies can be identifiedby most elements of

the organization's orientation to market product

development, previous research state that there are

four types of strategies, namely Prospectors,

Defenders, Analysers, and Reactors. 'The focus is

primarily on strategy and its correlation, not the

process used to formulate and implement the

strategy'.

As for the overall objectives of the company is

divided into three strategies that will be executed as

follows:

Short-Term: Offering Fruit Combining products for

DKI Jakarta and Banten communities of 16-30-year-

olds with a focus on low-cost and all-around

marketing strategies. At this stage, the company

places itself as a stage Analysers, i.e. follow the

products that have entered the market first.

Medium-Term: Develop Fruit Combining product

with the development of variant and taste based on

age group of Jakarta and Banten. At this stage, the

company positioned itself as a Prospectors by

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leveraging the power of RND by creating products

of different types and styles.

Long-Term: Expanding the market for Fruit

Combining products in Indonesian territory outside

DKI Jakarta and Banten.

Corporate strategy, for the medium term, is to do

various marketing multifarious. Currently,

competitors are entering the market with the same

marketing, offering their products in general

(general) without segmenting the needs of

Indonesian consumers. The ease of the company to

segment the Indonesian market supports the

company to enter the market with various

miscellaneous marketing, which classifies the

market based on the level of consumer needs

resulting from market research conducted by

developing several types of products offered.

5 COMPANY’S SHARED VALUE

Corporate culture is similar to a person's personality.

Corporate culture is shared norms that act as the

basis for an individual in the organization. Because

corporate culture has a strong influence on the

behaviour of all employees, the corporate culture

also has a major impact on the company's ability to

change its strategic direction. If within the company

there is a change in mission, objectives, strategy or

policy, if steps are taken by the corporate culture,

then the process of strategy implementation will be

easier to do.

Culture as defined above can be regarded as a set

of values or beliefs that produce certain patterns of

behaviour collectively in the corporation. With these

shared values, the common problems that arise as a

result of environmental changes can be effectively

overcome because there is a togetherness built on

mutual trust with each other.

Based on the culture definition, the company's

company has a work culture motto: "Quality first,

working hard and family number one".

The familyis defined as internal and external

parties that are interconnected in the company's

business processes. Internal party refers to all

employees of the company along with their

respective families, while the external party refers to

the working partner that is the supplier, distributor

and customer. With a family culture that is upheld

by the company will produce the best quality of

service.

Reflecting on the motto, the company describes

the corporate culture as shown in Table 1.

Table 1: The Corporate Culture Describe

6 DEVELOPMENT AND

TRAINING (SKILL)

Development is a process created to improve

conceptual ability, decision-making ability, and

expand relationships. Training is a process created to

increase knowledge and technical skills, or improve

employee performance. The purpose of development

and training are:

 Introduction of business background, rules and

work patterns.

 Embed the culture, vision and mission of the

company.

 Ensure employees reach the standards set by the

company.

 Increasing employee productivity.

 Maintain the quality of products and services.

 Increasing company sales.

There are four major stages in training and

development, i.e.:

a. Assessing training needs

The main objective of determining the need for

this training is to gather as much relevant

information as possible to find out and/or

determine whether or not the training within the

company is necessary. In this stage there are

three kinds of training needs:

 General treatment need

Assessment of training needs for all

employees in a job classification regardless

of data on the performance of a particular

employee.

 Overstable performance discrepancies

Implementation of Concepts Management Strategy 7s Mckinsey for Start-up Business: Fruit Combining

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Assessment of training needs to be based on

observations on issues, interviews,

questionnaires, and performance

evaluations/assessments, performed by each

employee.

b. Designing a training program

 Training Methods

The technique used by the company is on the

job training, i.e. employees are trained on

new jobs by an experienced trainer, usually

other more senior employees.

 General Principles for Training Methods

The chosen training method should meet the

following principles:

‐ Motivate the trainees.

‐ Showing the skills.

‐ Must be consistent with training

content.

‐ Participants participate actively.

‐ Provides opportunities for skills

expansion.

‐ Provide feedback.

‐ Encourage from training to work.

‐ It must be cost effective.

c. Evaluating training program effectiveness

The purpose of this stage is to test whether the

training is effective in achieving its established

goals.

d. Training plan

Table 2: Training Plan

7 ORGANIZATIONAL

STRUCTURE, TYPE AND

HUMAN RESOURCES

The purpose of organizational structure planning and

human resources for PT Redceri Indonesia are:

 Provide a compassionate employee.

 Be the best workplace for employees.

 Being a place of training and employee

development that will support the company's

strategic goals.

The goal of organizational structure and human

resource planning for PT Redceri Indonesia are:

 Keep the turnover rate not exceed 1% per year.

 Allocate funds for employee development and

training, range Rp. 100,000,000.- up to Rp.

200,000,000.-.

The company adopts Traditional organizational

structure. This structure is based on the functions of

divisions and departments. This is the type of

structure that follows the rules and procedures of the

organization. Characterized by a clear line of

authority across all levels of management.

The type of structure used is the functional

structure - this type of organizational structure group

people according to the function they perform in the

professional life or according to the function

performed in the organization.

The organizationis headed by a Director and 4

Managers who are divided according to their

respective departments. The organisational structure

of the company is shown in Figure 4.

Figure 4:Organizational structure of the company

8 COMPANY REGULATIONS

(SYSTEM)

Personnel regulations are the rules that are used by

the company to control all employees to work

according to the plan set by the company.

Furthermore, if the middle of the journey turns out

there are irregularities or errors must be held

corrective action or improvement and refinement of

the plan. Employee attendance, discipline,

behaviour, cooperation, job execution and keeping

the work environment situation are the things that

should be controlled by the company. The

regulations include: working day and overtime

regulations; Rest and leave regulations, employment

relations and termination of employment.

In the Working Day Regulations, Working Hours

and Company Overtime Calculations refer to UU

No. 13 of 2003 on Manpower; Kepmenakertrans No.

102/MEN/ VI/2004 on Overtime and Overtime

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wages. As for the regulation of leave and rest days

the company refers to Article 79 paragraph 1-5, UU

No. 13, 2013 on Manpower. As for the regulations

of Employment Relations and Termination of

Employment (PHK) companies refer to Article 156

and Article 160 to Article 169 of UU No. 13 of 2003

on Manpower.

One of the important parts that became the object

of attention of company regulations is occupational

safety and health (OSH). Occupational Health and

Safety is outlined in the Employment Agreement

whereby the company and each worker are fully

aware that OSH is a shared obligation and

responsibility. In the event of a violation, the

company will apply sanctions.

The focus of the company in implementing K3

are:

 Preventing a work accident.

 Prevent occupational diseases.

The company's policy regulation about

Occupational Safety and Health (OSH) is adjusted

according to the following rules:

 UU No. 13 Year 2003 on Manpower.

 UU No. 1 of 1970 on Occupational Safety.

 Law no. 23 of 1992 on Health.

The objectives of occupational safety and health

are as follows:

 In order for each employee to be guaranteed

safety and health work both physically, socially,

and psychologically.

 In order for operational activities to run

smoothly.

 In order for every equipment and work

equipment to be used as well as possible.

 For all production to be kept secure.

 In order for a guarantee for the maintenance and

improvement of nutrition health of employees.

 In order to increase enthusiasm, work

harmonious, and work participation.

 In order to avoid health problems caused by the

environment or working conditions.

 In order for every employee to feel safe and

protected in work.

While the rights and obligations relating to

Occupational Safety and Health are as follows:

 Provide correct information when requested by a

supervisor or occupational safety officer.

 Use the required personal protective equipment.

 Comply with and comply with all required safety

and health requirements.

 Ask the board to carry out all required safety and

health requirements.

 Expressing work objection to employment in

which conditions of occupational safety and

health, as well as the means of personal

protection which are required to be questioned

by him except in special cases, are determined

otherwise by the supervisory officer within

reasonable limits.

In the OSH implementation, the company

employs a special staff of the OSH section which

has the following responsibilities:

 Examining the body's health, mental condition

and physical capability of the workforce to be

received or to be transferred by the nature of the

work given to it.

 Checking the health of all workers under his

leadership, periodically.

 Show and explain to each new worker about:

‐ Conditions and dangers and what may arise

in the workplace.

‐ All safeguards and protective equipment are

required in all workplaces.

‐ Self-protection tools for the workforceis

concerned.

‐ Ways and attitudes are safe in carrying out

his work.

 Responsible in the prevention of accidents and

fire eradication and improvement of occupational

safety and health, also in the provision of first aid

in an accident.

 Report any accidents occurring within the

workplace it leads.

 In writing puts in the workplace he leads, all

required safety requirements, basic OSH rules

and all applicable regulations applicable to the

workplace concerned, in places that are easily

seen and legible and according to the instructions

of the supervisor or occupational health officer.

Another important part of this company's

regulation is Education and Training K3. The

implementation of K3 training can prevent unsafe

behaviour and improve unsafe environmental

conditions. Occupational safety and health education

are also useful so that the workforce has the

knowledge and ability to prevent accidents, develop

the concepts and habits of the importance of

occupational safety and health, understand the

hazards present in the workplace and use

occupational injury prevention measures.

Also, the company's system also aims to build a

family culture. The company carries it and fostered

Implementation of Concepts Management Strategy 7s Mckinsey for Start-up Business: Fruit Combining

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by doing various activities involving all members of

the company, such as:

 Breaking the fast together

 Annual Gathering

 Blood donor action

9 LEADERSHIP (STYLE)

Leadership is the process of directing and

influencing members regarding the various activities

that must be done. The leadership process focuses on

what leaders do, the process by which leaders use

their influence to clarify organizational goals for

employees, subordinates, or leads, motivate them to

achieve those goals, and help create a productive

culture within the organization.

PT Redceri implements Transformational

leadership, i.e. leadership is not the ability to

motivate people to work hard for their salaries, but

the ability to change followers becomes more

independently directed in everything they do. The

result is a mutual relationship between stimulation

and elevation that converts followers into leaders

and can convert leaders into moral agents.

As for employees of PT Redceri Indonesia will

build employees with the perspective of

Followership Partners that employees are actively

involved in every process of the company, have a

high level of performance, and promote positive

relationships within the group.

Characteristics of leaders who put forward by PT

Redceri Indonesia is as follows:

 Has a high intelligence and broad general

education.

 Exemplary in speech, attitude, and deeds.

 It is authoritative and has a persona.

 Physically and mentally healthy.

 Have good analytic ability.

 Have good communication skills.

 Have the skills to educate.

 Objective.

 Honest.

10 PROCUREMENT AND

MANPOWER PLACEMENT

(STAFFING)

The function of the procurement of human resources

within the company aims to obtain the workforce in

the number and qualifications are adequate and

according to company needs.

Procurement of human resources begins with the

conduct of first manpower needs planning,

withdrawal and selection of labor, then end with

employee placement.

The determination of the number of workers can

be done by considering the workload within the

company as well as by calculating the amount of

labor that can be available in the company at a

certain period. In the manpower planning,

department or human resources department in a

company needs to implement the process

ANALYSIS POST or JOB ANALYSIS, which is a

systematic analysis of various jobs or positions

within a company Results from job analysis can be

used to compile job description, job specification,

job evaluation, and job standard as shown in Table

Table 3: Job Analysis Result

The required labor recruitment can be obtained

from various sources.

a. Internal Recruitment

The trick, among others, through promotion or

transfer of employees.

b. External Recruitment

Namely by recruiting new workers to fill

vacancies in the company. Sources from external

recruitment, among others:

Job posting in the media

- Employment Bureau

- Recommendations from the internal

workforce

- Educational institutions (job fair at

university)

- Selection of labor

The purpose of the selection of labor is to

seek or select the workforce in accordance

with the requirements or qualifications of a

particular position.

- Employee placement

After the selection process is done, it is

expected the company can make the process

of placement of employees in the position or

appropriate positions.

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The flow of selection and placement of

employees at PT Redceri Indonesia can be

seen in Table 4.

Table 4: The flow of selection andemployee placement

- Performance appraisal

Performance appraisal is intended to measure

work performance that refers to the work

achieved by a person in performing the tasks

charged.

- Training and development

Training and development is aimed at

eliminating the gap between elements and

qualifications possessed by an employee with the

elements and qualifications desired by the

company.

- Career development

Career development employees can go through

several ways namely:

1. Promotion

2. Demotion

3. Transfer

4. Termination of employment.

The company uses the Point Method method to

determine the division of the employee class. The

determinants used by the company is shown in Table

Table 5: The Company Point Method

Variable compensation is described and divided into

groups as shown in Table 6.

Table 6: Variable Compensation

After the company determines the above

compensation variable, using the weight and degree

of factor composition, the firm determines the value

of each level with a maximum value of 500 as

shown in Table 7.

Table 7: Composition

Application Point in determining the employee class

in accordance with the evaluation of each

employee's work, where then the company divides

employees into 5 groups:

Table 8: Employee Class

Group A: Group A is a grouping of directors’ level

employees, who at this level have a

responsibilityregarding strategic planning, and

decision-making affecting company policies,

procedures and practices.

Group B: Group B is a grouping of manager-level

employees, which at this level has the responsibility

to supervise and direct its subordinates, and to report

directly to the director according to his division.

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2741

Group C: Group C is the grouping of head section

level, where at this level in the execution of its work

requires good interaction ability with internal and

external.

Group D: Group D is the grouping of employee

level supervisors and staff, where at this level in the

execution of his work more concerned with the

ability of administration and physical work.

Group E: Group E is the grouping of employees'

level of personnel, where at this level in the

execution of work more concerned with physical

work or the working agent.

11 COMPENSATION AND

BENEFIT

The purpose of providing compensation, among

others, is as a bond of cooperation, job satisfaction,

effectiveness, motivation, employee stability, and

work discipline. Compensation is divided into two

main components:

a. Financial compensation, which is subdivided into

direct compensation and indirect compensation.

b. Non-Financial compensation.

12 FINANCIAL COMPENSATION

Direct:

• Basic salary

• Tunjangan Hari Raya

• Salary Increases

• Fix allowance: meal allowance, pulse, vehicle

fuel

Indirect:

• Health Insurance

• BPJS

• Day off and holiday

In principle, the company's remuneration system

or payroll determination is competency-based.

Where a company considers equally the rewards

given to the inputs and outputs of employees. Input,

in this case, is how someone does something work to

be able to achieve performance goals. It relates to

what competencies the person needs to master. So

also, with output, is what the work achieved by the

person in his work. This output is the performance

target generated by that person.

Competency-based remuneration system equally

considers 3 factors in determining the rewards given

as total income received by each employee, i.e.:

 First Factor (Position or Position)

That is the value of the contribution given by the

function of position or position for the

organization, which can generally be seen from 3

(three) things, namely the demands of ability,

problem solving and responsibility. It is this

factor that determines the amount of basic salary

a person receives in return for the position or

position it occupies.

 Second Factor (Individual Competency)

That is the competence that is owned and

brought by the person to do his job as required.

This factor is usually taken into account in return

for additional income received in the form of

allowances or incentives.

 Third Factor (Performance)

That is the achievement or work that is shown

either individually, team or organization, who

successfully achieve the performance target set

by the organization. This factor is usually

calculated in return in the form of incentives or

bonuses.

13 NON-FINANCIAL

COMPENSATION

The company maintains a safe and healthy working

environment to support employee work

convenience. The company also concerns the needs

of employees regarding career security, labor

welfare and learning/training opportunities to be

able to face challenges and be responsible for their

work.

Non-variable benefit:

• Employee loan

• Pension fund

Variable benefit:

• Sales incentives

• Year-end bonuses

14 PERFORMANCE APPRAISALS

Performance appraisal is to assess the ratio of real

work to the quality standards and quantities

produced by each employee. Follow-up assessments

allow employees to be promoted, demoted,

developed and earned a raise.

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