Emergent Strategic Approach and MC Kinsey’s 7S Framework

Adoption at Saigal Polymers

Pallavi Rallan and Arpita Baijal

Anil Surendra Modi School of Commerce, NMIMS, Mumbai, India

Keywords: MSME, India, Covid19, Strategy, Integration, Retrenchment, Mc Kinsey 7S Framework, Dynamic Capability

Approach.

Abstract: In the recent studies a lot of attention is given to large scale organizations and how they underwent a variety

of transformations during Covid times. However, the real challenge lied with resource scant small and mid-

sized organizations and with the entrepreneurs responsible for taking decisions for their organization. It is a

critical case focusing on the phenomenon of strategy formulation and implementation in context of covid by

theoretically anchoring the 7 S model for implementation and highlighting the dynamic capability approach.

1 INTRODUCTION

The announcement of countrywide lockdown on 24

March, 2020 in India on account of rise in the

Covid19 cases dragged businesses into unexpected

times with no experience to handle the situation. Mr.

Saigal, director of a family owned rubber sheet

manufacturing unit in a semi-urban town of India

could not foresee what’s going to come his way.

Extended lockdown had a negative multiplier impact

on the supply of finished goods, availability of

employees to work, product demand shift, mounting

costs, liquidity etc. The challenge during this period

was of survival of the business rather than growth. It

was during this time that Mr Saigal introduced some

new strategies with the hope of making the most of

the situation. While some of his strategies worked,

others did not.

2 LITERATURE

There have been researches done to understand the

impact of COVID on the MSME sector and how

entrepreneurs have to adapt in order to sustain and

grow. Margarida et.al. (2021) highlights that

pandemic has caused a lot of destruction and SMEs

have been hit the most. The paper highlights the

principle obstacle faced by SMEs in resilient

response is limited liquidity, human resources,

digitalization, and use of information technology. The

onus of the response lies with the

manager/entrepreneurs and his capabilities of

dynamic response. Muneer M. Alshater et.al. (2021)

in a bibliometric review highlights that most of the

researches revolve around dynamics of COVID-19 in

business and management research, COVID-19 and

global economy, COVID-19 and its implication for

tourism & hospitality industry, COVID-19 and

financial markets, dynamic of supply chain and

COVID-19 and COVID-19- functionality of

government. These researches closely review the

small businesses and their response to the pandemic.

Martinez (2021) highlights the motivation to change

in Covid in small organisations led to business model

innovations to allow uninterrupted operations during

Covid and afterwards. Elias (2021) highlights the

importance of Psychological resilience to adapt or

thrive in the face of uncertainties as were noticed in a

longitudinal study of small business owners during

the covid crisis.

2.1 Emergent/Dynamic Approach to

Strategic Management

Strategic management takes two approaches to

strategic planning namely, Prescriptive and

Emergent. While Prescriptive approach plans in

advance the intended strategy according to the

Rallan, P. and Baijal, A.

Emergent Strategic Approach and MC Kinsey’s 7S Framework Adoption at Saigal Polymers.

DOI: 10.5220/0012502700003792

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 1st Pamir Transboundary Conference for Sustainable Societies (PAMIR 2023), pages 733-738

ISBN: 978-989-758-687-3

733

priorities of the top management, in Emergent

approach the strategy emerge as mangers take

strategic decisions from time to time to adapt to the

business environment changes. Dynamic capability

approach as a part of emergent theory has evolved

during the pandemic. Zahra et al. (2006: p. 918)

explain dynamic capabilities as the ability of the

management “to reconfigure a firm's resources and

routines in the manner envisioned and deemed

appropriate.” Dynamic capabilities are valuable in

highly turbulent settings (Zahra et al., 2006). This is

how companies especially MSMEs have responded to

the crisis as there was a shift in objectives from

growth to survival.

Mc Kinsey’s 7 S Framework. 7S Framework was

introduced by Mc Kinsey in 1970s and stresses on the

requirements and interdependence of elements for

successful implementation of a business strategy. The

model is based on the premise that all the 7 elements:

Hard S-Strategy, Structure and System and Soft S-

Shared values, Skills, Style, Staff are interwoven and

they should be aligned. The model can be used as a

static parameter to access how effectively the strategy

is being implemented and can help to guide the

improvement and revise action plans in case of a

planning or performance gap.

3 METHODOLOGY

Exploratory research design has been adopted for the

purpose of this case as the researchers wanted to

explore and get in-depth data with respect to the topic.

Further, qualitative case study method was

implemented which provides a detailed information

of one entity and judgemental analyses is conducted

from the perception of those involved and the

researchers (Chawla & Sondhi, 2011). For preparing

this case study, the authors conducted a personal

interview with Mr. Saigal, the owner of Saigal

Polymers Pvt. Ltd. The focus of the interview was to

understand how Covid 19 had an impact on

organizations (especially in the MSME sector) in

India, how the organizations had to change their

strategies in light of Covid 19 and the implement the

same. The questionnaire used was unstructured in

nature, with most questions being open ended. The

interview was conducted in February 2022. As the

researchers adopted the case study method, only one

organization was selected and studied. Further, the

organization was selected based on non-probability

judgement sampling method. As qualitative case

study method has been adopted, statistical testing was

not permissible to draw generalizable conclusions.

Case company. Saigal Polymers Private Limited was

established in 1990 in Sitapur, Uttar Pradesh, India

and is a renowned manufacturer and supplier of a

wide range of rubber foams and sheets that

includes Excel Polyethylene Foam, Polyolefin Foam,

Cross-Linked Polyolefin Foam among others. They

also offer Rubber Sole Sheets for footwears, High

Styrine Raisen Sheets and Micro-cellular Rubber

Heat & Foam (Ethyl Vinyl Acetate). They mainly

supply their material to footwear manufacturers, the

defense sector, and to the packaging industry. The

organization is a MSME engaged in manufacturing

activity in India and is one of the many small

businesses supporting the Indian rural economy. Mr.

Saigal, is currently the Managing Director of the

business and the organization currently consists of 55

employees.

Overview of MSME sector in India. SME or Micro

Small and Medium enterprises are businesses that

employ less than 250 people. MSMEs play an even

more important role for an economy in terms of

generation of employment at a comparatively lower

capital cost, contributing to the country’s GDP and

reducing imbalances though industrialization of rural

and backward areas.

As per the Annual Report 2020-21, published by

Ministry of Micro Small and Medium enterprises,

Government of India; during the period 2015-16,

there were 633.88 lakh MSMEs in the country out of

which 196.65 lakh were mainly engaged in

Manufacturing. In addition, Uttar Pradesh leads with

approx. 90 Lakh registered MSMEs. Further, the

MSME sector provides employment to around 1100

Lakh people in the country and contributes to around

30% of India’s GDP (Source-MSME Annual Report).

Saigal Polymers a MSME engaged in manufacturing

sector of the biggest contributing state of the country,

Uttar Pradesh. It is a good representative sample of

the working of MSMEs in India.

Impact of covid on MSME in India. Covid19 has

had a huge impact on the MSME sector. As per the

reports published by Ministry of Statistics and

Programme Implementation 2020, April to

September 2020 data shows a drastic fall in industrial

production during lockdown and subsequent months.

Index of Industrial Production (IIP) is used to analyze

current and future trends of output of the industrial

sector. As per the IIP report, year on year growth rate

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was 2.5% in April 2019. However, there was a

contraction 66.6% in production during April 2020

because of Covid19. IIP gradually improved in the

subsequent months while the growth rate remained

negative. The impact was seen more in labor intensive

industries which are majorly micro and small in size

like metal, rubber, textile etc. As a result, in order to

sustain and grow during this period, organizations

have had to incorporate various strategies.

The covid story and strategies adopted. In

December 2019, a mysterious pneumonia outbreak

was reported in Wuhan, Hubei, China. By February

2020, a total of 28,276 confirmed cases with 565

deaths globally were documented by WHO,

involving at least 25 countries and was named 2019

novel coronavirus. (Source-WHO report).

Due to this growing number of Covid cases and

casualty globally, most countries started imposing

restrictions. On 24

March 2020, complete

nationwide lockdown was announced in India for a

period of 21 days which was later extended in phases

upto 31

May 2020. Post this, India entered the

‘Unlock Phase’ where the lockdown and restrictions

were slowly being lifted in a phased manner. During

this period, factories were shut, demand was at an all-

time low, people were scared and the focus had

shifted to essential and healthcare products and

services.

During the period of lockdown, Mr. Saigal faced a

number of challenges, as there were a number of

financial commitments that he was expected to fulfil

(salaries to staff, rents etc.) without any sources of

revenue. Further, Mr. Saigal realized that the market

started showing a product shift. The footwear

manufacturers saw a huge decline in the demand of

party and outdoor footwear, which directly affected

Mr. Saigal business as these footwear manufacturers

were the focus customer group of his company’s

manufactured rubber sheets. However, during this

period, Hawai slippers were in high demand in the

market. In the scenario, he decided to start

manufacturing Hawai slippers along with his usual

business of making rubber sole sheets for footwear,

to take advantage of the changing trends of the market

and to survive.

The manufacturing of the Hawai slippers were to take

place in the existing factory itself and the existing

staff were going to be absorbed in the manufacturing

of this product. However, for manufacturing Hawaii

slippers, certain activities had to be added in the

production process. For example, to manufacture

rubber sheets, melting and binding of rubber granules

is carried out followed by pressing and packaging the

rubber sheets. Whereas, for the manufacturing of

Hawai slippers, additional steps of pressing, printing,

strapping has to be carried out post the pressing and

before packaging of the products.

For the same, Mr. Saigal had to carry out a number of

activities in order to get the organization ready to

undertake the production of Hawai slippers. Firstly,

Mr. Saigal had to acquire the required knowledge to

manufacture slippers through trial error,

experimentation, talking to peers etc. Once he was

confident, he procured molds and dyes for

manufacturing the final product for which he

approached dealers in Ludhiana. Then staff had to be

trained to work at different temperatures and follow a

different procedure in addition to the rubber sheet

manufacturing process.

However, Mr. Saigal faced certain challenges in the

production of Hawai slippers. Initially, when plain

rubber sheets were manufactured, the Hydraulic Press

could be easily used as the rubber sheets that were

being manufactured were of a single quality and

colour. However, while producing slippers, sheets of

different colors, sizes, quality had to be integrated

together which required additional synergy to be

maintained between different compounds that have to

be pressed against each other. Further, since initially

the rubber sheets were part of the input, quality

standards for the same were not as stringent as when

it came to the quality standards and checks for the

slippers (finished products). Another issue with the

manufacturing of Hawai slippers is that it is

comparatively a more labor-intensive process than

manufacturing rubber sheets.

Once the manufacturing had started, the next step that

came their way was of product testing. For product

testing, Mr. Saigal decided to distribute samples of

his product to the family of his staff and encouraged

them to wear. Feedback was taken in order to

understand the shortcomings of the product in order

to make improvements in the same.

The shift from B2B to B2C market led to a change in

the marketing approach of the company. Previously,

the rubber sheets were sold with the help of dealer

networks to manufacturers. However, as Hawai

slippers are finished products, Mr. Saigal had to

directly connect with distributor and retailers. While

trying to tap into the urban markets, he realized that

brands like Roopani, Bata, Relaxo, Lakhani etc.

already have a very big market share in the urban

market and the existing urban retailers were hesitant

in promoting and selling an unbranded product.

Further, these brands could not compete with the

brand name, variety, and the margins offered by the

existing players to the retailers and customers. Hence,

Emergent Strategic Approach and MC Kinsey’s 7S Framework Adoption at Saigal Polymers

735

Mr. Saigal decided to focus on taking the product to

the rural markets. His team conducted market

research in the rural markets in order to understand

how this category works in the rural markets. Some

major findings of the research were: rural market is a

price sensitive market, they prefer slippers that are

usually sturdy and heavier in weight, there is a

dominance of non-branded products, and big

companies only use the market to dump their rejected

products. This seemed to be an attractive market for

the company and they decided to enter the rural

markets with sturdy and heavy slippers with attractive

prints to differentiate in the market. Since the

organization was initially involved in the

manufacturing of semi-finished goods, they never

had to actually market the product to the final

customers so they lacked the expertise in the area of

marketing. Mr. Saigal soon realized that in order to

succeed in the rural markets: 1. He had to make

products available in the target market without

relying on the retailers, 2. Collect the information and

response of the customers in order to improve the

product. Hence, Mr Saigal put stalls in the weekly

mela or bazaar organized in every village and tehsil

of Uttar Pradesh to promote and sell his products.

One major focus while implementing this strategy

was the type of leadership style that Mr. Saigal

adopted. He used paternalistic style of leadership. For

Mr. Saigal, his employees are like family and despite

the problems the organization faced on account of

Covid19, Mr. Saigal was not only willing to support

his employees but was also willing to undertake

decisions that would help them sustain their

livelihoods during COVID pandemic. Further, he was

very open in his communication with his employees

and explained them the need to undertake this

strategy, helped answer their doubts/apprehensions,

provided necessary motivational support to keep

them productive and uphold their morale.

Initially, this strategy worked and business started

picking. However, Mr Saigal faced the challenge of

credit and refinancing. To run a new business vertical,

a company has to create a parallel credit ecosystem,

which was very difficult to form and maintain for Mr.

Saigal amid crisis. Retailers were not ready to give

credit and with the 2

wave of pandemic approaching

every form of refinancing stopped.

Furthermore, the second wave of Covid 19, which

began in India in March 2021, had a much more

devastating impact than the first. Even though India

did not see a national wide lockdown during this

period, there were some form of statewide and

localized restrictions imposed in India. Restrictions in

the operations of industries further negatively

affected the organizations that were trying to re-

establish themselves after the challenges they faced

during the 1

wave of the pandemic.

To add to these problems, the rubber MSME sector

during this period faced scarcity in the raw material

supply mainly due to global shipping container

shortage. Rubber sheet manufacturers are dependent

on imports of many raw materials, for example,

rubber industry imports 100% of EPDM

Polychloroprene and 40% of Styrene-Butadiene

Rubber (SBR) and Nitrile Butadiene Rubber (NBR)

required for manufacturing. Additionally, reduction

in the imports, closure of factories manufacturing

these components, shortage of containers and

subsequent increase in their rents, reducing number

of importers serving the general markets among

others led to rise in raw material price by 200-400%.

For example, EVA (Ethylene-Vinyl Acetate) required

in the manufacturing of rubber sheets costed

approximately Rs 125/kg during 2019 and the cost of

the same has risen to approximately Rs 400/kg as on

2021.

It was because of these factors Mr. Saigal realized

that it is not economically and operationally viable to

continue the production of Hawaii slippers for the

market, so he decided to stop the manufacturing

activity. After all the efforts, Mr. Saigal was still

facing the question of survival. Labor were idle,

demand was low, cost of raw material was rising. He

decided to backward integrate and start producing

inputs required to produce rubber sheets. Initially in

order to manufacture rubber sheets, Mr. Saigal used

to purchase LDPE (Low-density polyethene) and

reprocessed LDPE (Low-density polyethene). LD are

low-density polythene made by virgin chemical while

reprocessed LD is made by recycling used polybags.

Mr. Saigal now decided to make reprocessed LD

instead of buying the same from suppliers with an

ambitious vision of later becoming a supplier.

For the same, he bought a second hand machine and

started the process of producing reprocessed LD,

which required procuring polythenes, sorting them,

shredding, melting and mixing and finally

compressing them into sheets. For the production of

reprocessed LD, the entrepreneur started buying

unsorted cleaned polybags from different suppliers.

The idle labor were given the task of sorting the

polythenes and running the process. The entrepreneur

himself decided to train the employees to carry out

the process as only a handful of consultants were

available for training people.

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Figure 1: Strategy Link to McKinsey’s 7S Framework.

This strategy worked for the company mainly due to

reasons such as the entrepreneur was always involved

in production of semi-finished products and the new

strategy matched his strengths. Further, marketing

skills that were also not a core competence of the

entrepreneur were not that important in the new

strategy. Additionally, there were a number of things

that were out of the control of the business in case of

forwards vertical integration strategy but the

functions under backward integration strategy were

fully under control. This strategy also helped

overcome the problems faced by Mr. Saigal when he

purchased reprocessed LD from suppliers in the past.

Most of the suppliers mix calcium in the material to

increase the weight and command high prices which

interferes with the manufacturing process later.

Through this approach quality could be improved and

price fluctuations in the market can be managed

better. The new manufacturing process led to better

utilization of fixed cost, better labour utilization,

decrease in variable cost, and increase in profitability.

All of this led to success in the market with this new

strategy. With the improvement in the general

economic condition, Mr. Saigal is now out of survival

instinct and now moving forward with a vision to

become supplier of better and innovative reprocess

LD. He plans to supply reprocess LD but under a

different business name. Findings

Dynamic capability approach is a crises driven

approach to use competencies to respond to the

changing market conditions. The entrepreneur

responded with vertical- backward and forward

integration along with retrenchment at suitable times.

The snapshot of strategy is summarized in Figure 1.

4 DISCUSSIONS &

SUGGESTIONS

This is a typical case of a small business and its

response to uncertainties. The pandemic has

presented new insights to how the post covid business

world should look at resilience from the lens of rapid

and effective adaptation to change. Systems should be

designed to actively sense new insights, developing

responses on these insights, revising business models

in terms of creating value for customers, company

and collaborators. A broad framework is designed for

small scale organizations like these where a new way

of working could be adopted which include: Cognize:

Awareness is the key to follow the approach of

dynamic capability. Research conducted by Mudey,

Emergent Strategic Approach and MC Kinsey’s 7S Framework Adoption at Saigal Polymers

737

A., Ambekar, S., Goyal, R. C., Agarekar, S., & Wagh,

V. V. (2011) suggested that people living in rural

communities have strong social relations and social

participation. Rural organisations can utilise their

social skills to their advantage to extract insights of

the market to identify new opportunities and threats.

Devise: Once the insights are gained, the strategic

priorities of the organization should be revisited and

in small organizations, the entrepreneur acts as the

pilot and leads everything. The entrepreneurial rather

than bureaucratic culture will help such organizations

in collecting ideas (David J. Teece, 2020). Seize:

Entrepreneur along with experienced employees

prepare plans and decisions to move ahead in the

market. It should be a continuous process of seizing

the opportunities identified. Revive: Entrepreneur has

to be a risk taker in the dynamic environment and

should not be afraid to change systems in light of the

new findings. This will help him to stay ahead in the

market and bring an extraordinary zeal in the

organization. As these changes will be implemented,

it will generate new data, which can be used to take

decisions to grow or retrench.

5 CONCLUSION

The COVID pandemic scenario has created a sea

change in the way business especially small scale

businesses operate. The pandemic broke monotony of

these organization and forced them to rethink. In this

case the entrepreneur tried his best to extend its

resources and capabilities to fulfill survival needs. In

the post COVID world these organizations should

continue to innovate and develop systems to counter

the dynamic times.

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