2-1Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

Managerial Problem SolvingFrameworks, Tools, Techniques

Robert WoodJulie Cogin

Jens Beckmann

2-2Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

Chapter 2

Problem Identification

2-3Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

SWOT AnalysisDefinition

• A tool to identify the Strengths, Weaknesses, Opportunities and Threats associated with the organisational context for a particular problem

• Strengths and weaknesses are internal value-creating (or -destroying) factors (e.g. skills and resources) that can be measured using internal assessments or external benchmarking

• Opportunities and threats are external value-creating (or -destroying) factors a company cannot control, but which emerge from the environment

2-4Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

SWOT AnalysisWhen to Use

• Problem identification (exploration of organisational context)

• Solution generation (identification of alternative problem solutions)

• Solution evaluation (appraisal and prioritisation of solutions)

• To define an organisation’s strategy• To developplans for work or personal life• Individual’s career planning

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SWOT AnalysisSimple Rules

• Be realistic• Be specific• Distinguish between where your organisation is today,

and where it could be in the future• Always analyse strengths and weaknesses in the

context of your competition• Keep it short and simple• Keep in mind: A SWOT is subjective

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SWOT AnalysisGuiding Questions

Strengths

Every organisation has strengths

• What are your advantages?• What do you do well?• What can you offer that your competition cannot?

Don’t be modest, be realistic

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SWOT AnalysisGuiding Questions

Weaknesses

Every organisation has weaknesses

• What could be improved?• What is done poorly?• What should be avoided?• Do you have any current problems?

This should be considered from an internal and an external basis Do others perceive weaknesses that you don’t see? Do your competitors do any better?

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SWOT AnalysisGuiding Questions

Opportunities

All organisations have some opportunities that they can gain from

• What chances are available?• What are the interesting trends?

Useful opportunities can come from:• Changes in technology and markets on both a broad

and a narrow scale• Changes in government policy related to your field• Changes in social patterns

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SWOT AnalysisGuiding Questions

Threats

No organisation is immune

• What obstacles do you face?• What is your competition doing?• Are the required specifications for your job,

products or services changing?• Is changing technology threatening your position?

2-10Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

SWOT Analysis QuestionsWhat to Look For

Potential Resource Strengths

• Powerful strategy

• Strong financial condition

• Strong brand name, image, reputation

• Widely recognized market leader

• Proprietary technology

• Cost advantages

• Staff motivations, skills

• Shared values, commitment of staff

• Good customer service

• Better product quality

• Alliances

Potential Resource Weaknesses

• No clear strategic direction

• Outdated practices, facilities

• Weak balance sheet, excessive debt

• Higher overall costs than rivals

• Missing some key skills, competencies

• Low morale, weak commitment of staff

• Internal operating problems.

• Falling behind in R&D

• Too narrow product line

• Weak marketing skills

Potential Resource Opportunities

• Serving additional customer groups

• Expanding to new geographic areas

• Expanding product line

• Transferring skills to new products

• Vertical integration

• Openings to take MS from rivals

• Alliances

• Expansion of products, services

• Openings to exploit new technologies

• Openings to extend brand name, image

Potential Resource Threats

• Entry of potent new competitors

• Loss of sales to substitutes

• Slowing market growth

• Adverse shifts regulatory rules, etc

• Costly new regulations

• Vulnerability to business cycle

• Growing leverage of customers or suppliers

• Shift in buyer needs for product

• Demographic change

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SWOT AnalysisLimitations

• Provides a description of the organisation’s position• Raises awareness• Can encourage to explore widely• Can help to inform debates• Does not identify problems• Does not provide answers

2-12Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

PEST AnalysisDefinition

• A tool to identify the Political, Economic, Social and Technological factors of a particular problem

• The emphasis is on the importance of the environment when generating solutions to problems

• Organisation’s environment• Internal: staff, internal customers, office technology, wages, etc.• Micro: external customers, agents, distributors, suppliers,

competitors• Macro: political, economic, socio-cultural, technological forces

2-13Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

PEST AnalysisWhen to Use

• To assist solving more complex problems for large businesses

• Revision of a strategy, marketing proposition, etc.• Problem identification (the position, potential and

direction for a business)• Solution generation (triggers proactive thinking about

consequences of proposed problem solutions)

2-14Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

PEST AnalysisSimple Rules

• Be realistic• Be specific• Distinguish between where your organisation is today,

and where it could be in the future• Always analyse strengths and weaknesses in the

context of your competition• Keep it short and simple• Keep in mind: A PEST is subjective

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PEST AnalysisGuiding Questions

Political

Influence upon the regulation of businesses

• How stable is the political environment?• Will government policy influence laws that regulate

or tax your business?• What is the government’s position on marketing

ethics?• What is the government’s position on the economy?• Does the government have a view on culture and

religion?• Is the government involved?

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PEST AnalysisGuiding Questions

Economic

Consider short- and long-term state of trading economy

• Interest rates?• Inflation?• Employment level per capita?• Long-term prospects for the economy Gross

Domestic Product (GDP) per capita?

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PEST AnalysisGuiding Questions

Socio-cultural

Varies from country to country

• What is the dominant religion?• What are attitudes to foreign products and services?• Does language impact upon the diffusion of products onto markets?• How much time do consumers have for leisure?• What are the roles of men and women within society?• How long is the population living? Are the older generations wealthy?• What are the differences between age groups?• Does the population have a strong/weak opinion on green issues?

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PEST AnalysisGuiding Questions

Technology

Major driver of globalisation

• Does technology allow for products and services to be made more cheaply and to a better standard of quality?

• Do the technologies offer consumers and businesses more innovative products and services?

• How is distribution changed by new technologies?• Does technology offer companies a new way to

communicate with consumers?

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PEST AnalysisExample

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5Ws and Root Cause AnalysisDefinition

• The 5Ws provide a questioning structure for clarifying some element of a problem through repeated questioning (what, when, who, where, and why?)

• Root cause analysis is an extension of the 5Ws (repeatedly asking why, in order to get to the root cause of a problem)

2-21Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

5Ws and Root Cause AnalysisWhen to Use

• Problem identification• To be used to clarify and redefine problems• To provide cues for determining the goals• To find out what additional data and analyses is needed

• Solution generation• Can be used in combination with a fishbone diagram• To explore all potential or actual causes for a problem

Most useful when problems involve human factors or interactions

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5Ws and Root Cause AnalysisSimple Rules

• All problems can be defined in terms of five simple attributes:1. the What?

2. the When?

3. the Who?

4. the Where?

5. the Why?

• Not all attributes are relevant for all problems• The What?-attribute is always relevant and should be

addressed first• The Why?-attribute should be addressed last• Avoid thinking about solutions before all the attributes are

known

2-23Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

5Ws and Root Cause AnalysisGuiding Questions

• What: What is the problem here? • What do we need to know? What would the ideal situation look

like? What criteria will we use to measure our success at solving this problem?

• Where: This refers to the physical or structural locations of problems• Where does the problem usually arise? Where might we

expect problems to arise?

• When: Timing issues include: • When does the problem occur? When do we have to be done?

When will the solution be used?

2-24Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

5Ws and Root Cause AnalysisGuiding Questions

• Who: This refers to who is affected by a problem or who is the source of a problem• Who is involved in the problem? Who will determine whether

or not we have succeeded?

• Why: This is used for determining either values/goals or, more commonly, the cause of a problem• Why do we need to solve this problem? Why is that

happening? Why do people react in that way?

2-25Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

5Ws and Root Cause AnalysisLimitations

• This tool relies on inferences, hence assumptions / conclusions can be incorrect• use of data (“hard evidence”)

2-26Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

5Ws Analysis Example

2-27Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

Value Chain AnalysisDefinition

• Tool for analysing the activities in which a firm can pursue a competitive advantage strategy (e.g. low cost versus differentiation)

• Can help to make the implementation of competitive strategies more systematic

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Value Chain AnalysisTwo Categories of Activities

• Primary activities are those involved in the creation, sale and transfer of products or service (including after-sales)• Inbound logistics – concerned with receiving, storing,

distributing inputs• Operations – comprise the transformation of the inputs into

the final product form• Outbound logistics – involve the collecting, storing, and

distributing the product to the buyers• Marketing and sales – how buyers can be convinced to

purchase the product• Service – involves how to maintain the value of the product

after it is purchased

2-29Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

Value Chain AnalysisTwo Categories of Activities

• Support activities are not directly involved in production, but should increase a firm’s effectiveness or efficiency• Procurement—concerned with the tasks of purchasing inputs

such as raw materials, equipment, and labour• Technology development—these activities are intended to

improve the product and the processes and can occur in many parts of the firm

• Human resource management—recruiting, hiring, training, development, performance, management and compensation

• Firm infrastructure—the activities that are not specific to any primary area; including general management, planning, finance, and accounting

2-30Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

Value Chain AnalysisWhen to Use

• Problem identification (identification of obstacles to implementing a competitive strategy)

• In combination with a SWOT analysis of the value chain, it can facilitate effective outsourcing decisions

• Evaluation of strategic alliance choices

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Value Chain AnalysisSimple Rules

• In a company with more than one product area, it is appropriate to conduct the value chain analysis at the product group level, and not at the corporate strategy level

• Be sure to include the subcontracted or outsourced portions of work as activities

• Do not just look at each activity independently; the value chain is a system of activities that are interdependent because they are related by their linkages

• If you have strong relationships with one or more of your customers, it may be worth presenting your conclusions to them and getting their feedback

2-32Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

Value Chain Analysis Three Simple Steps

Step 1: Activity analysis• Identify the activities you take to deliver your product or

service to the customer• Start with primary activities, continue with support activities

Step 2: Value analysis• Add to all activities listed customer value factors• Add to needs to be improved in order to further differentiate

you from competitors

Step 3: Planning and implementation• Evaluate ideas for increasing value to your customers with

regard to costs and benefits• Be aware of linkages between activities

2-33Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

Value Chain AnalysisFramework

2-34Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Managerial Problem Solving by WoodSlides prepared by Robert Wood, Julie Cogin and Jens Beckmann

Value Chain AnalysisLimitations

• Time consuming• Typically used for industrial organisations that buy

material and transform these into physical products• Hence, adaptations are needed to apply this tool to

service-based industries