Solving Business Problems for Consultants

In order to solve the problems faced by businesses, you’ll require the knowledge of:

• Fundamentals of Finance & Accounting to understand the structure.
• Business Functions
• Analytics and Industry knowledge to gain deeper insight.

For finance, we have Cost Structure (Types), Profitability Tree, Interest and Break-even analysis while for accounting: Income Statement & some useful business vocabulary.

Referring to Victor Cheng’s framework to understand business situations such as New Market Entry, New Product, New Business, How to Grow, Strategy, Turnaround and Company Position Assessment. I have composed the key metrics to look for:

CUSTOMER

• Who is the customer? identify segments (market size, growth rate, % of the total market) and compare current year metrics to historical metrics (look for trends)
• What does each customer segment want? identify their key needs.
• What price is each segment willing to pay? determine price points and price elasticity/sensitivity (How customer reacts to the price)
• Distribution channel preference for each segment, how customers receive the service/product.
• Customer concentration and power * (does one customer control all the demand, the “ Wal-Mart” effect)

PRODUCT

• Product Specifications (think out loud about the product, its benefits, why someone would buy it)
• Commodity goods or easily differentiable goods (could the company increase differentiation and unique selling point)
• Identify complementary goods: can we piggyback off or use the trend for growth in compliments or near compliments? (introducing bundles, similar products or leveraging existing network etc. to increase growth)
• Identify substitutes in the market (is the business vulnerable to indirect competitors namely substitutes?)
• Determine the product’s lifecycle (new vs. almost obsolete)

The various stages of a product’s life cycle determine how it is marketed to consumers. Successfully introducing a product to the market should see a rise in demand and popularity, pushing older products from the market. As the new product becomes established, the marketing efforts lessen and the associated costs of marketing and production drop. As the product moves from maturity to decline, demand wanes and the product can be removed from the market, possibly be replaced by a newer alternative.

• Packaging (optional) → what’s bundled, included (ex. Razor vs. razor blades, without w/o service contract… can change in packaging make the product more likely to meet needs of specific customer segments.)

COMPANY

• Capabilities and expertise of the company
• Distribution channels used: the paths that products and services take on their way from the manufacturer or service provider to the end consumer.
• Cost structure (mainly fixed vs. variable — is it better to have higher fixed cost with lower variable or vice versa? High fixed cost means more investment in infrastructure = increased barrier to entry …. compare to industry, often insightful)
• Investment cost (optional: only if the case involves working on deciding with investment) Intangibles (e.g., Other brands, brand loyalty)
• Financial situation of the company (Revenues, losses, Profits, Demand)
• Organizational structure (optional: e.g., is team organization in conflict with how customers want to do business. Ex: We’re organized by product line, but customers want one point of contact across all product lines)

COMPETITION

• Competitor Concentration* & Structure (monopoly, oligopoly, competitive, market share concentration)
• Competitor behaviours (Target customer segments, products, pricing strategy, distribution strategy, brand loyalty)
• Best industrial practices (are they doing things we’re not?)
• Barriers to entry* (do we need to worry about any new entrants to the market)?
• Supplier concentration* as in Microsoft or Intel holds the biggest share of supplies in the PC Market… use full 5 Porter’s forces if this is a likely issue
• Industry regulatory environment, Life-cycle of industry

Additionally, here’s how PMs at startups/companies co-ordinate among several entities to bring the best product outcomes aligning everyone on design thinking principles.