1. Business Consulting Services Jeffrey M. Kurtz

2. Agenda Problem Definition discussion Problem Definition Exercise Objectives: 1.Understand the Problem Definition Process 2.Be Able to Define a Client’s Problem

3. What’s a Problem? Something that isn’t right that has finally reached the point that it can’t be ignored any longer.

4. Presenting Problems = Symptoms Symptom - Back Pain Ask questions: Where? In the middle of my back & sometimes my neck. How long? About 2 hours. When does it hurt? It started when I was shoveling snow. It goes away if I sit down and rest. Are there any significant medical issues in your family? Dad died from a heart attack. Do Research: Check Pulse – rapid Check BP – high Check Breathing – labored and shallow Check Skin – pink, cool and damp Hypothesis: Heart attack. Treatment: Immediate cardiac care. Symptom - Back Pain Ask questions: Where? In the middle of my back. How long? About 2 hours. When does it hurt? It started when I was shoveling snow. It goes away if I sit up straight and don’t turn my head. Are there any significant medical issues in your family? No. Do Research: Check Pulse – normal Check BP – normal Check Breathing – slightly elevated and shallow Check Skin – pink, warm & dry Hypothesis: Strained back muscles. Treatment: Ibuprofen, heat, relaxation.

5. Presenting Problems Presenting Problem – Profitability Ask Questions: What has happened to sales? Remained steady. What has happened to expenses? Increased What areas have increased the most? COGS Why? I’m not sure. Research: Industry Norms Historical – COGS% up Break down components of COGS – shipping costs 30% above industry norm. Hypothesis: Examine ways to lower shipping costs of raw materials. Presenting Problem – Profitability Ask Questions: What has happened to sales? Declined. What has happened to expenses? Increased slightly. What products have declined the most? Our pink widgets. Why? I’m not sure. Research: Industry Norms Historical – Pink & Striped widget sales are down Competition, trends, pricing, etc. Hypothesis: Competition has increased in the Pink widget business and technology has made Striped widgets unnecessary.

6. Defining the Problem 1. Uncover the Presenting Problems. 2. Identify the key questions to ask and investigate further. 3. Answer the key questions and define the overall issue. 4. Define a course of action.

7. Developing the Overall Issue The 6 Step Process 1.Assess the current situation 2.Define success measures 3.Identify drivers of the measures 4.Identify the key elements of the context / environment 5.Define the overall issue in the form of a question 6.Develop a strategy for solving the problem.

8. Issue Decomposition Issue Decomposition = A tool to define/structure key questions to be answered to solve a business issue (i.e., Issue Tree) Issue Tree Enables You to: Clearly state a business problem Understand the business problem’s key drivers and components Identify interrelationships between factors Comprehensively answer/address the business problem Organize efforts to collect relevant information Communicate your approach, and, eventually, your recommendations in a logical fashion

9. Basic Decision Tree

10. Decision Tree Example Ensure that all aspects of the business issue are considered and that no overlaps exist. The number of primary questions and the number of question tiers is dependent upon the business issue being addressed.

11. How can we profitably increase sales of pipe to our target customers? What improvements can be made to our sales strategy? What enhancements can be made to our marketing strategy? What is the optimal product mix? Mutually Exclusive Elements

12. How can we profitably increase sales of pipe to our target customers? What improvements can be made to our sales strategy? What enhancements can be made to our marketing strategy? What is the optimal product mix?

13. Practice How can your retail client optimize profitability?

14. Case Practice as a Group

15. Have a Great Weekend!