Part 3: Analyzing business tools

SECTION 3 – Questions 21–30

Questions 21–25
Choose the correct letter from A–G.

What are the characteristics of the following analysis methods?
Choose FIVE letters from the box and write letters A–G, next to questions 21–25.

A. it will save a lot of business time and effort
B. it is visualized
C. it does not fit our company
D. it will take too long
E. it is easy to use
F. it is difficult to apply
G. it is suitable to almost all sized companies

Analysis methods
21. PEST → ________
22. Drill Down → ________
23. PMI → ________
24. Pareto → ________
25. SWOT → ________

Questions 26–30
Choose the correct letter, A, B or C.

26. What does Frances consider as the best strength of the company?
A. reputation
B. experienced employees
C. management

27. What factor did Sam overlook for the future growth of the company?
A. seek for cheaper suppliers
B. set up an overseas office
C. compete with major competitors

28. Which of the following can be the threat to a company?
A. increasing competition
B. outdated technology
C. new legislation

29. What has Sam learned from the research?
A. using better tools
B. cost of a success business
C. gap between reality and theory

30. What is the professor’s suggestion for the report?
A. give a final determination
B. reorganize a clear structure
C. add more detailed information

Keys

1. C
2. D
3. E
4. A
5. G
6. B
7. B
8. C
9. C
10. A

Transcript

Section 3 (No Timeline)

Hi Francis, Sam. So how did you go with applying the different theoretical business tools for the report I asked you to write?

It was interesting and made us really focus on which tool was best to use when analyzing a business.

Good. So, tell me what you found out.

We liked the theory behind PEST analysis – that’s political, economic, social and technological – although

we’re not sure if it was very applicable to our case. Some of the other groups had studies for which it worked really well and they said it was easy to use. But I felt it focused too much on the big picture and was unsuitable for our company.

I agree. On the other hand, I enjoyed using the Drill Down method. It was painstaking to do and we seemed to be working on it for ages, but the results were worth waiting for.

Yes, I liked the way it eventually broke down complex problems.

Yes. I much preferred doing the PMI analysis. It was so straightforward to break down into its three components: plus, minus and interesting implications. You just needed to brainstorm these components and then write them up. Fast and effective.

And it didn’t make your brain hurt doing it.

I agree. And you don’t need any special training at all, anyone can use it.

Hmm. So was there any tool that you thought was superior to the others?

In my opinion, the one tool that is critical to business, especially for larger companies, is Pareto Analysis. If they apply Pareto Analysis, they would see that by focusing on the critical 20% of their problems, they could generate 80% of the benefits. This would allow them to work faster and it also reduces their workload. It’s all about finding out what their basic problems are.

I agree with Francis about Pareto, but my favourite was the SWOT analysis. You know, looking at the company’s strengths, weaknesses, opportunities and threats, as it can be used in so many different situations. It works in large and small companies, and even down to departmental level. It was great for our case study.

Yes, that’s true.

Okay, I’ve read your draft report, but can you tell me a bit more about that company you focused on?

Well, the company we used in our study was a manufacturing company who have relied on distributors to take their product to the end user. We did some analysis examining the possibility of them distributing their own products. We initially looked at their strengths. The company, although it is small, is well known and has a very good reputation. The management are very committed to increasing the company profits and they are confident this move would be successful.

Right, and the company has quite a lot of staff who have previously worked for distribution companies, so the knowledge is already there. That was something we didn’t expect to find and is probably going to help them the most to achieve their goals.

I was quite impressed by some of the opportunities you detailed. I did think you missed something quite pertinent to their future growth, however.

What was that?

You didn’t consider the potential for establishing an offshore division. You talked about the company negotiating better terms with its suppliers. Most of these are based abroad, and so if the company had a way of actually distributing the product there, this could be a tremendous opportunity and give them an edge over their competitors.

That’s a good point.

So what did you think about the threats we identified?

I thought you did a good job. I was really pleased to see that you considered how the government’s planned environmental policy could really affect the viability of this venture. With this law being introduced next year, they might need to find new ways of using their existing technology. It’s easy to identify what your competitors are doing, but it’s the bigger picture that often gets ignored.

So, Sam, what did you learn from this assignment?

Heaps. I guess I hadn’t realized how much time it takes to ensure your company survives and profits. It was great to study the different tools in books, but applying them in the real world was much harder than I thought. It was a great learning experience.

I’m glad I could make your assignment relevant. I’m basically happy with your report. You’ve got the format correct, with the necessary headings, etc. And you’ve got sufficient details under the different headings. Just remember to state whether or not you think the company should go ahead with the new venture. But you’ve done a good job so far.