Thinking Skills

Business Problem Solving Skills: 15 Ways To Look At Business Problems

Problem solving skills

1. SWOT Analysis: Strengths and Weaknesses (mostly internal factors in business cases), pitted against Opportunities and Threats (Mostly external factors in business cases).


2. Analyzing the marketing mix


The 4 Ps

- Product

- Promotion

- Pricing

- Place


Lauterborn's four marketing Cs

- Consumer

- Cost

- Communication

- Convenience


Shimizu's four marketing Cs

- Commodity

- Cost

- Communication

- Channel


3. Analyzing the Service Strategy (Four P's )

- Perspective: where the service strategy is articulated as a mission statement or vision statement.

- Position: where the service strategy is expressed in a specific way that allows comparison between competitors.

- Plan: where the service strategy is asked as a question.

- Pattern: where the service strategy is defined as a consistent set of activities to be performed in a defined period of time.


4. The Boston matrix (to analyze product portfolio/product range)

- To help focus effort on products that will give the greatest returns

- Grid pattern: bottom left (dogs: low market share, low growth products) top left (question marks: low market share in a high growing market) - bottom right ( cash cows: milk them as long as possible), top right (stars: high market share in a fast growing industry - this is gold)


5. The Ansoff matrix (to think about future growth)

- Aka product/market expansion grid - you start with existing products and existing markets, thinking towards new products for new markets.

- Grid positions: bottom left (market penetration) top left (market development ) - bottom right ( product development), top right (diversification).


6. Porters' five forces (to analyze the competition)


The Five Forces Theory of Industry Structure: Five questions to ask before entering any new industry

- Is this an attractive industry for me to be in?

- Can I duplicate the existing industry leader’s strategy?

- Can I win in a price battle if I choose to enter?

- What is the profit potential for me, if I choose to enter?

- Could my money be better invested elsewhere?


The five forces that drive industry competition


- Threat of Substitutes: Determinants of Substitution’s threat are - relative price performance of substitutes; switching costs; buyer propensity to substitutes


- Threat of new entrants: Determined by - Entry barriers like Economies of scale; Proprietary product difference; brand identity; switching costs; capital requirements; access to distribution; absolute cost advantages; proprietary learning curve; access to necessary inputs; proprietary low-cost product design; government policy; expected retaliation


- Bargaining Power of Suppliers: Determined by - differentiation of inputs; switching cost of suppliers and firms in the industry; presence of substitute inputs; supplier concentration; importance of volume to suppliers; cost relative to total purchases in the industry; impact of inputs on cost of differentiation; threat of forward integration relative to threat of backward integration by firms in the industry.


- Bargaining Power of Buyers: Determined by - bargaining leverage; buyer concentration versus firm concentration; buyer volume; buyer switching costs relative to firm switching costs; buyer information; ability to backwardly integrate; substitute products; pull-through; price sensitivity; Price/total purchases; product differences; brand identity; impact on quality/performance; larger profits; decision makers’ incentives


- Intensity of rivalry among competitors: Determined by- industry growth; fixed (or storage) costs/value added; intermittent overcapacity; product differences; brand identity; switching costs; concentration and balance; informational complexity; diversity of competitors; corporate stakes; exit barriers.


Among the above five kinds of market forces, three forces from 'horizontal' competition: the threat of substitute products or services, the threat of established rivals, and the threat of new entrant


Two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers.


7. Core competence analysis: Analyzing the skills and production techniques that will help you deliver better quality and service to customers.

- In other words, find the skills etc to get ahead, and stay ahead

- You can either analyze the core competencies of the whole organization, or for a particular product (range).


8. USP (Unique Selling Proposition) analysis: Finding your competitive edge

- Understand what customers value most in product/market category, rank yourself and your competitors on those criteria, identify where you will rank well

- Don't forget the unmet needs of your target customer, it may help you improve the USP further still.


9. Critical Success Factors (CSF): Understanding the things that really important for success of company/product/project

- CSFs are related to the mission of your company/project

- ideally one or more CSF for each objective


10. The Griener curve: Businesses undergo six distinct phases as they grew, each finally ending at a ‘crisis’ or ‘pinch point’ at which a 'revolution' occurs, and new thinking and approaches take the business to the next stage. The big idea is that successful companies survive the crises that come with growth.

- Phase 1(growth through creativity)

- Phase 2 (growth through direction)

- Phase 3 (growth through delegation)

- Phase 4 (growth through coordination)

- Phase 5 (growth through collaboration)

- Phase 6 (growth through alliances)


11. The McKinsey 7 S Framework: How you can best organize your company, ensuring all parts of the company are working in harmony. This model is used most during restructuring, new processes, organizational merger, new systems, change of leadership, etc.

- Hard elements (strategy, structure, systems)

- Soft elements (shared value, skills, style, staff)


12. 5 C Situation Analysis



Product line

Image in the market

Technology and experience










Market size and growth

Market segments

Benefits that consumer is seeking, tangible and intangible.

Motivation behind purchase; value drivers, benefits vs. costs

Decision maker or decision-making unit

Retail channel - where does the consumer actually purchase the product?

Consumer information sources - where does the customer obtain information about the product?

Buying process; e.g. impulse or careful comparison

Frequency of purchase, seasonal factors

Quantity purchased at a time

Trends - how consumer needs and preferences change over time



Actual or potential

Direct or indirect



Market shares

Strengths and weaknesses of competitors


Climate (or context):

The climate or macro-environmental factors are:

- Political & regulatory environment - governmental policies and regulations that affect the market

- Economic environment - business cycle, inflation rate, interest rates, and other macroeconomic issues

- Social/Cultural environment - society's trends and fashions

- Technological environment - new knowledge that makes possible new ways of satisfying needs; the impact of technology on the demand for existing products.


13. PEST Analysis: Understanding 'big picture' forces of change


A PEST analysis is an analysis of the external macro-environment that affects all firms.


P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment.


Political Analysis:

Political stability

Risk of military invasion

Legal framework for contract enforcement

Intellectual property protection

Trade regulations & tariffs

Favored trading partners

Anti-trust laws

Pricing regulations

Taxation: Tax rates and incentives

Wage legislation: Minimum wage and overtime

Work week

Mandatory employee benefits

Industrial safety regulations

Product labeling requirements


Economic Analysis:

Type of economic system in countries of operation

Government intervention in the free market

Comparative advantages of host country

Exchange rates & stability of host country currency

Efficiency of financial markets

Infrastructure quality

Skill level of workforce

Labor costs

Business cycle stage (e.g. prosperity, recession, recovery)

Economic growth rate

Discretionary income

Unemployment rate

Inflation rate

Interest rates


Social Analysis:


Class structure


Culture (gender roles, etc.)

Entrepreneurial spirit

Attitudes (health, environmental consciousness, etc.)

Leisure interests


Technological Analysis:

Recent technological developments

Technology's impact on product offering

- Impact on cost structure

- Impact on value chain structure


14. Eight Disciplines Problem Solving

Formulated by the Ford Motor Company


D0: Plan: Plan for solving the problem and determine the prerequisites.

D1: Use a Team: Establish a team of people with product/process knowledge.

D2: Describe the Problem: Specify the problem by identifying in quantifiable terms the who, what, where, when, why, how, and how many (5W2H) for the problem.

D3: Develop Interim Containment Plan: Define and implement containment actions to isolate the problem from any customer.

D4: Determine, and Verify Root Causes and Escape Point.

D5: Verify Permanent Corrections (PCs) for Problem will resolve problem for the customer (Verify that the correction will actually solve the problem.)

D6: Define and Implement Corrective Actions: Define and Implement the best corrective actions.

D7: Prevent System Problems: Modify the management systems, operation systems, practices, and procedures to prevent recurrence of this and all similar problems.

D8: Congratulate Your Team: Recognize the collective efforts of the team. The team needs to be formally thanked by the organization.


15. Relativism: We can’t decide on matters of right or wrong, or good and evil since things are rarely black or white.

There are so many shades of gray. Examining why we often ignore ethics in our decision-making, relativism says that ethics are ‘relative’ to the personal, social, and cultural circumstances in which one finds oneself.


Relativism has four forms:


1. Naive Relativism: Every person has his own standard that enables him or her to make choices.

2. Role Relativism: It distinguishes between private selves and public selves. Public roles call for a ‘special’ morality, like, we must let go our individual biases and preferences while making decisions in a professional position.

3. Social Relativism: Just like Naive Relativism. Evident in terms like 'Industry Practices', 'club rules', 'professional' code of conduct', and 'accepted practices'.

4. Cultural Relativism: It says that there is no Universal Moral Code. It is evident in the saying, 'When in Rome, be a Roman'.


(Source: ’10 Day MBA’ by Steve Silbger)


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