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Learning Guide
Unit of Competence: Improve Business Practice
Information Sheet
1. DIAGNOSE THE BUSINESS
Diagnosis derives from an old Greek word meaning to know or discern. The word has a long
history in medicine, where the notion is one of identifying the root cause of an ailment. You
cannot cure if you do not know what is really causing the ailment in the first place.
The crossover to business is straightforward. To diagnose a business problem is to
determine the source. Executives who can’t diagnose end up treating symptoms or maybe
even nothing at all. The problem probably keeps getting worse. When things in business
start going bad, the deterioration usually accelerates until there is active and focused
intervention. If an executive can’t figure out why whatever is wrong is wrong, the executive
can’t fix it; executives who can’t fix things are at best nice people who are no help and do
not get in the way. Almost certainly, they impede performance, competitiveness and
progress.
Why is diagnosis so tough? For starters, any serious problem in business, medicine or
whatever is likely to be complex and involve multiple causes. The greater the complexity
Diagnosis may not be easy in business but there are things that can improve an executive’s
chances of getting it right.First, define the problem properly. Time spent getting good
definition of a problem is usually time well spent. It is only by luck that you will correctly
diagnose a problem that you have not properly defined. Executives need to curb the natural
instinct to immediately leap to the diagnosis and cure stages.
Second, listen. Much of the information needed to diagnose the cause of a problem
invariably comes from the people associated with the problem. To get the needed
information requires asking the right questions of the right people and then having the
discipline to be quiet and listen closely. Determining the right questions to ask too often
gets short shrift, with predictable consequences for results.
Listening closely is difficult; talking is easier and more fun; but listening closely is what
executives must do if they are to get to the bottom of business problems. Listening takes
considerable time; you have to restrain the temptation to assert your own views; you need
to give people room; you need supportive body language; you need to be non-judgmental.
Warm, respectful relationships with people will also help you find out what you need to
know. Those who know what you need to know are unlikely to help you if they don’t feel
good about you. Bedside manners may not be a substitute for the right diagnosis but they
can’t hurt.
Third, analyze. Analysis is another key to proper diagnosis. Try to quantify the problem at
hand; develop hypotheses on causes; collect data; study the data in light of the hypotheses;
keep digging in the data; keep an open mind; go where the data and the analysis takes you.
So called fact-based decision-making is simply decision-making based on the analysis of
facts. Bad decisions are often explained afterwards by inadequate analysis.
1.2. Competitive advantage of the business is determined from the data SWOT analysis of
the data is undertaken.
services/products
Product is:A good, idea, method, information, object or service created as a result of
a process and serves a need or satisfies a want. It has
a combination of tangible and intangible attributes (benefits, features, functions, uses) that
a seller offers a buyer for purchase. For example a seller of a toothbrush not only offers the
physical product but also the idea that the consumer will be improving the health of their
teeth.
An advantage that a firm has over its competitors, allowing it to generate greater sales or
margins and/or retains more customers than its competition. There can be many types of
competitive advantages including the firm's cost structure, product offerings, distribution
network and customer support.
COMPETITIVE ADVANTAGE
Competitive advantages give a company an edge over its rivals and an ability to generate
greater value for the firm and its shareholders. The more sustainable the competitive
advantage, the more difficult it is for competitors to neutralize the advantage.
There are two main types of competitive advantages: comparative advantage and differential
advantage. Comparative advantage, or cost advantage, is a firm's ability to produce a good
or service at a lower cost than its competitors, which gives the firm the ability sell its goods
or services at a lower price than its competition or to generate a larger margin on sales. A
differential advantage is created when a firm's products or services differ from its
competitors and are seen as better than a competitor's products by customers.
The fundamental basis of long-run success of a firm is the achievement and maintenance of
a sustainable competitive advantage .Indeed, understanding which resources and firm
behaviors lead to SCA is considered to be the fundamental issue in marketing strategy.
A competitive advantage (hereafter CA) can result either from implementing a value-
creating strategy not simultaneously being employed by current or prospective competitors
or through superior execution of the same strategy as competitors .The CA is sustained
when other firms are unable to duplicate the benefits of this strategy. Because of its
importance to the long-term success of firms, a body of literature has emerged which
addresses the content of SCA as well as its sources and different types of strategies that
may be used to achieve it.
Then, the construct is linked to other concepts that exist in the strategy field, including
market orientation, customer value, relationship marketing, and business networks. A
theoretical model of how SCA may be achieved in a network setting is provided, along with
a brief discussion of problems related to both theory and measurement of SCA.The paper
This level of analysis enables an organization to determine whether there are factors
present that will aid in the achievement of specific objectives (due to an existing strength or
opportunity) or if there are obstacles that must be overcome before the desired outcome can
be realized (due to weaknesses or threats).
Highly useful for developing and confirming your organizational goals, each of the four
categories provides specific insights that can be used to cultivate a successful marketing
strategy, including:
Strengths – Positive attributes internal to your organization and within your control.
Strengths often encompass resources, competitive advantages, the positive aspects of those
within your workforce and the aspects related to your business that you do particularly
well, focusing on all the internal components that add value or offer you a competitive
advantage.
Weaknesses – Factors that are within your control yet detract from your ability to obtain or
maintain a competitive edge such as limited expertise, lack of resources, limited access to
skills or technology, substandard services or poor physical location. Weaknesses
It’s important to remember that SWOT analysis can be influenced (and often quite strongly)
by those who perform the analysis. So it’s a good idea to have an outside business
consultant review the results to provide the most objective plan.
Self Check
1. List some type of data required to diagnose a business
2. What is competitive advantage
3. What are the focus of competitive advantage
4. Explain SWOT analysis
Observing Competitors
Benchmarking is used to identify what other businesses do to increase profit and
productivity, and then adapting those methods to make your business become more
competitive. Imagine if you had a car lot that sells 50 cars per month and down the street a
competitor sells 300 cars per month. By studying and identifying what your competitor is
doing, you could increase sales.
Businesses also use benchmarking as an ongoing process that always changes and adapts.
By studying and comparing your benchmarks to the competition, the industry, and within
the individual processes of your company, you allow them to evolve to meet changing
demands and requirements. By keeping your company and your personal business
benchmarks fluid, you ensure that your business follows the best practices defined by you.
The end result should be a marked increase in productivity and profits.
Operation Sheet 1
Operation Title: - How to benchmark a business
Step 1
Identify the processes in your businesses that are important for achieving the business
goals. Typical processes are production, sales and customer service. Define key quantities
within these processes that you can measure and compare. For production, include quality
and productivity. For quality, measure the percent defective items and the number of
customer complaints per thousand items shipped. For productivity, find the number and
value of items produced per worker. For sales, include the sales volume per salesman. For
customer service, calculate the average length of calls and the percent of issues resolved on
the first call.
Step 2
Survey your industry and similar industries for the best performers. Search public records
such as annual reports, company filings and government records for the data on these
companies that you require to establish your benchmarks. Look for data comparable to the
data that you used in defining the key quantities for the processes of your own business.
For data not available in public records, approach the best performers in related industries
and offer to swap data so that they can use your data for their own benchmarking.
Continue to collect data until you have a pool of several companies for each key quantity
and until you are certain that each pool includes top performers.
What Is the Difference Between Benchmark Indicators & Key Performance Indicators?
Benchmark indicators and key performance indicators are two measurements that help
companies improve performance. You can set benchmarks and key performance indicators
for individuals, departments, projects or the company as a whole, and use them to measure
everything from manufacturing production to employee performance. Though similar in
some ways, benchmark indicators and key performance indicators are not the same thing.
Benchmark Indicators
Benchmarks are goals to aim for. Other names for benchmarks include best practices and
exemplary practices. Businesses choose benchmarks based on standards within their
industry. For instance, you might look to peak performers in your industry and set their
performance levels in areas such as manufacturing or marketing as your benchmarks --
the levels you will strive to reach.
Benchmarks as Baseline
Another use of the term benchmark is to indicate a baseline or starting point. In this use,
you'd gather information to determine where you are right now and then set further goals
building on that baseline or benchmark.
invested. Setting results benchmarks, also known as key performance indicators, will help
you better plan selling methods.
Sales
The most obvious KPI in marketing is sales. In addition to gross sales, track sales by
distribution channel to determine whether wholesalers, retailers, sales reps, direct-
response methods or online selling tools work best for you. If you sell using different
retailers, look at your sales volumes, margins and gross profits from each store. Looking at
percentage increases in sales can tell you where you have the most opportunity to grow,
showing that one or more of your smaller territories or sales channels might provide your
best exponential growth opportunity. If your company buys or generates sales leads, track
where they come from, how many convert to sales and the quality of the sales generated by
each lead generator.
Brand Awareness
One of the functions of marketing is to make consumers aware of your brand. This can help
shift consumers from being unplanned impulse buyers to repeat buyers who look for your
product or service when shopping. Brand awareness can also help develop brand
preference and loyalty. Use consumer surveys before and after an advertising campaign or
consumer promotion to determine the impact of your marketing efforts on consumer
awareness of your product of service.
Repeat Business
It often takes marketing dollars to get a customer to buy from you the first time, while
repeat customers often require no further marketing spending. Customer service efforts can
be a critical part of your marketing, because they help maintain consumer loyalty. If
possible, try to determine how much of your business comes from repeat business and
evaluate the customer loyalty programs you use. Customer loyalty programs include
discount cards, birthday and buyer clubs, and invitation-only offers.
Market Share
In addition to increasing sale volumes, increasing market share is an important goal for
businesses. This will require you to take sales away from one or more competitors. Your
marketing strategies to do this might include offering free samples, honoring competitor
coupons, reducing your price or selling where your competition sells. Measuring your
Key
The first objective in outlining KPI is determining what aspects of your business are "key."
These aspects include anything that allows the business to gain a competitive advantage
over others in the same market. The indicators should deal only with the aspects of the
business that help it succeed. For example, the amount of turnover in a department is
something you can measure, but it does not make or break the company's success. On the
other hand, year-over-year sales for a retail store indicate whether its business is growing
or shrinking.
Performance
The objective for the "performance" portion of KPI is to find actions and events that the
business can clearly identify, measure and quantify, and that the company itself or its
employees can influence. It's easy to find metrics that affect your business, such as the
percentage of costs, but since you can't control how much things cost, you would not use
this as one of your KPIs. Instead, a KPI might concern itself with locating the lowest-cost
item without giving up quality for your consumers.
Indicators
An "indicator" should be a metric that helps predict future results. Too many metrics are
looked at and kept for historical purposes. For example, your aging report might give a good
indication of how long it takes you to collect on debts, but it has no bearing on how well the
company can do in the future. For this, you might analyze statistics such as sales over a
month, using history as a guide. For instance, if your company has always achieved a
certain level of sales in the month of November, the objective of a KPI might be to determine
what level you want to be at based on historical results.
What Are Key Performance Indicators & What Role Do They Play in the Strategic Planning
Process?
The business world regularly uses key performance indicators, or KPIs, to track the
performance and project the future success of a business organization. No standard list of
KPIs exists that the business world recognizes and adheres to as a way to track these.
Instead, KPIs can vary from industry to industry and even from business to business within
the same industry.
Date: September, 2017
Examples
Businesses use various types of KPIs and these differ greatly because each type of business
has its own concerns and measures of success. Of course, profitability is usually the
bottom line, but that, in and of itself, is not necessarily a KPI. A KPI could, however,
include the improvement in profit from one quarter to the next because this provides an
indication of whether the company is moving forward and, if so, at what rate that
movement takes place. Other KPIs can include those used in human resources such as
employee retention rates. Closing ratios in sales are another. A business could conceivably
consider any level of measurable change as a KPI.
Role
The role of KPIs in the strategic planning process stems from the belief that KPIs provide a
measurable and objective standard by which business leaders can track progress and
implement change. Businesses use KPIs in the strategic planning process to provide
benchmark by which they can measure current performance. Business leaders rely upon
these KPIs to help them make more objective and scientific planning decisions, thus
reducing the chance of human error. A business tracks KPIs over time to determine what
progress the business is making and what changes it needs to implement if positive change
does not occur.
Considerations
Business managers and executives can run the risk of being tied to their KPI paradigm so
much that it becomes the only way they measure success. Also problematic is the tendency
to measure anything and everything as if all quantifiable data were useful in some way.
This can result in a tendency for a business to collect massive amounts of data, only to be
overwhelmed by it and not able to use it in any real or meaningful way.
Each form of business ownership has its advantages and its disadvantages.
I. SOLE PROPRIETORSHIPS.
1. ADVANTAGES OF SOLE PROPRIETORSHIPS.
A. EASE OF STARTING AND ENDING THE BUSINESS. All you need is a permit from
the local government.
B. BEING YOUR OWN BOSS. Working for yourself is exciting.
C. PRIDE OF OWNERSHIP. Sole proprietors have taken the risk and deserve the
credit.
D. LEAVING A LEGACY behind for future generations.
E. RETENTION OF COMPANY PROFITS. You don=t have to share profits with
anyone.
F. NO SPECIAL TAXES. Profits of the business are taxed as the personal income of
the owner.
2. DISADVANTAGES OF SOLE PROPRIETORSHIPS.
A. UNLIMITED LIABILITY is the responsibility of business owners for all of the debts of the
business.
B. LIMITED FINANCIAL RESOURCES. Funds available are limited to the funds that the
sole owner can gather.
C. MANAGEMENT DIFFICULTIES. Many owners are not skilled at record keeping.
D. OVERWHELMING TIME COMMITMENT. The owner has no one with whom to share the
burden.
E. FEW FRINGE BENEFITS. Fringe benefits can add up to 30% of a worker=s income.
F. LIMITED GROWTH.
G. LIMITED LIFE SPAN. If the sole proprietor dies or leaves, the business ends.
II. PARTNERSHIPS.
B. TYPES OF PARTNERSHIPS.
Self Check
1. What are the four legal structure of a business
2. Explain the following
Sol proprietorship
Partnership
Limited company
Corporation
3. List at least three requirements to form
Sol proprietorship
Partnership
Corporation
product the
the good or service augmented/greater
provided than before/
product mix product - total
the core product - package of
what is bought consumer
the tangible product features/benefits
- what is perceived
Date: September, 2017
practice image
practice logo/letter head/signage
phone answering protocol
facility decor
slogans
templates for communication/invoicing
style guide
writing style
AIDA (attention, interest, desire, action)
4.8. Benefits of practice/practice products/services are identified.
Benefits may include:
features as perceived by the client
benefits as perceived by the client
4.9. Promotion tools are selected /developed.
Promotion tools include:
Operation Sheet 2
Study the past successes of your company and use this to create new ideas for future
achievements. Also, study your competition, the trends of your target market, and
economical trends to forecast your growth plan.
Look over the business growth plans of various others companies that have seen great
recent success in both your industry as well as other industries. Use their ideas as
motivation to create your own development strategy, unique to your company and its
employees.
Assess your current company employee's efficiency, abilities, and adaptability as well
as your own. This will help you realize what you can or cannot do with your current
staff, if you will need to hire supplemental staff and what skills they should attain,
and/or what training will need be needed to move you in the desired direction of your
development strategy.
Assess your company's current technology and acknowledge any need for updating
operating systems and computer networks to assist and adapt to the new
developments.
Create a thorough proposal on how you will raise excess capital to support the
expansion. Begin with looking at the financial stability of your company as it is in its
current state. Get an analysis of your business' finances and see if funding your
development is possible with internal growth or if outside funding is necessary.
Generate a high intensity marketing strategy that will catapult your new development
efforts into the population's conscious. Include this in your business growth plan and
especially focus on how your marketing efforts will continue and develop with the
expansion of your company. The concentrated marketing will aid your new
development strategy in taking the reins, demonstrating its effectiveness and the
necessity of growth within the company.
Collaborate with a business owner that has successfully expanded his or her company
as you are trying to do. Advice from someone who has been in your position and has
gotten to where you want to be is invaluable and should be a highly regarded method
in your business development plan.
9
Date: September, 2017
The company's employee breakdown of what will be needed, cut, and expanded
including the new skill set necessary of each position.
What is Monitoring?
• Monitoring is the action watching the movement or behavior of something or
someone
• In plan implementation, monitoring is defined to be the systematic attempt to
measure the extent to which:
1. Results achieved correspond to the set goals and objectives, in terms of quantity,
quality and time standard, and
2. Corrective actions need to be taken in order to reach the intended objectives
_ EFA Planning Guide (UNESCO) defined monitoring as: “the process and mechanism
of overseeing and
Controlling the implementation of a plan, a program, or a budget in order to assess its
efficiency and its effectiveness”
What is Monitoring?
“A continuing function that uses systematic collection of data on s specified indicators
to provide management and the main stakeholders of an ongoing development
intervention with Indications of the extent of progress and achievement of objectives
and progress in the use of allocated funds”.
• “A continuous management function that aims
Primarily at providing programmer managers and key stakeholders with regular
feedback and early indications of progress or lack thereof in the achievement of
intended results. Monitoring tracks the actual performance against what was planned
or expected according to pre determined standards. It generally involves collecting and
analyzing data on program me processes and results and recommending corrective
measures”.
Monitoring Process
• define benchmarks within the implementation process concerning
_ Inputs (physical, human resources, budget)
_ Process (progress of work, performance)
Self Check
1. Define monitoring indicators
2. What is Monitoring?
3. List the mechanism to increase Yield per existing client