Livingsta shares her positive experience in business administration, customer service and education.
Every company and business has problems. The difference between a successful and unsuccessful business is the way they react to problems and deal with them so that they do not occur again. We will look at understanding business problems and their causes, understanding techniques for solving business problems, understanding the factors that influence solutions to business problems and understanding how to evaluate approaches to solving business problems.
This article is written to help candidates who are working towards their NVQ Level 2 or Level 3 Diploma in Business and Administration. This is a level 3 unit with a credit value of 4.
There are seven learning outcomes in this unit.
1. Understand business problems and their causes (1.1 to 1.3)
2. Understand techniques for solving business problems (2.1 to 2.5)
3. Understand factors that influence solutions to business problems (3.1, 3.2)
4. Understand how to evaluate approaches to solving business problems (4.1, 4.2)
5. Be able to recognise and analyse business problems (5.1 to 5.5)
6. Be able to plan and carry out own solution to the business problem (6.1 to 6.9)
7. Be able to evaluate own solution to the business problem (7.1 to 7.3)
Learning outcomes 1, 2, 3 and 4 will be assessed based on knowledge and understanding; I have written down the knowledge based information here for the first 4 learning outcomes only. Learning outcomes 5, 6 and 7 will be assessed by observing the candidate’s ability to solve business problems. This can be through workplace observation of your performance, evidence of problems solved, examination of work products, questioning, professional discussion, witness testimonies from colleagues or manager, personal statements and other evidences.
Note: On a kind note, please write down the knowledge based outcomes relating the outcomes to your area of work quoting examples and experiences wherever you can. Please do not re-present what is published here. Thank you. All the best!
Understand Business Problems and Their Causes
In this section, we will look at ways of recognising business problems when they exist, ways to identify the causes of those business problems and also ways of analysing the business problems.
1.1 Describe Ways of Recognising When a Business Problem Exists
Problems in businesses do exist in all small and large businesses/organisations, but not every organisation recognises and solves them. Solving business problems is a very important part of a business and it plays a very important role for a business to be successful.
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Problems may start at a lower risk level, stay without being identified for some time and grow out to be a highly risky one. Problems may come all of a sudden without any warning or may develop slowly over a period of days, weeks or months. Sometimes what we think is a problem may not be a problem at all. In order to avoid all these situations, every business or organisation should have methods or ways in which any business problem could be recognised or identified.
Management reports and performance indicators are important data that help with recognising business problems. Performance indicators are scored against a standard expected value and it forecasts a measure of the quality of service, costs, speed of the service, customer satisfaction, loss and profit and many other factors. Variation in these indicators towards a negative side will warn you and help recognise business problems. Some problems could be temporary and could be just a one-time issue, while other problems can start at a smaller level and become highly risky.
Business problems can sometimes be also observed through personal observations and experiences. Feedback from customers and employees play an important role in identifying or recognising business issues.
There are several ways in which business problems can be recognised and every business has its own way of recognising problems. Some of the ways in which business problems can be recognised are:
- The first and most important issue to be looked at is the organisation’s goals. Goals should not be just blindly set or just set, but they need to follow the SMART (Specific Measurable Attainable Realistic Timely) objective. They need to be specific with a clear timeline, without which that goal may never be achieved. For example, upgrading an existing software. This should not be set just like that, but instead, specific features for the upgrade should be set, investigations on what will be required to achieve this goal, the time limit within which this goal should be achieved and its realistic outcomes are certain things to be set for the goal.
- Feedback or surveys or questionnaires are a way of collecting performance statistics and business problems from employees. It will also help to identify problems in management. One important point to remember here is, managers’ performance is not based on the profit they make, but also depends on how they treat the employees and how approachable they are.
- Many business problems can be rectified if the employees are appreciated and looked after well by appreciating their work, reminding them of their importance and how their skills help, giving credit wherever required, encouraging them and interacting with them.
- Meetings need to be held frequently to analyse and discuss the issues faced within the business and departments. This can be used as an opportunity to discuss the goals, set goals and keep track of the progress and to lay future plans.
- Look for issues in cash flow. If cash flow is not maintained, it can block the development and normal flow of the business.
- Check for stock figures. It is good to check if there is overstock of inventories, check that you have the correct number of employees, nothing more and nothing less.
- The next step is checking the finances. Check that the statements are accurate and that they are complete, if not they can be dangerous to the performance of the business. Check the expenses and identify the necessary and unnecessary ones (eliminate unnecessary ones).
- Look at the marketing side of the business to see if this is done and done in the right way. Compare products and services and their costs with neighbouring organisations or competitors, do not sacrifice quality.
- Check that recruitment processes have all the formal and legal paperwork with guidelines and information about hiring policies, working standards, workplace ethics, discipline, payroll and all that is relevant. This will help the business when employees go their way to sue the company or the manager for any issues.
- Check that you have all the technologies to perform the tasks to their best and it is always best to keep up with the latest technologies.
While all the above are ways to recognise problems in a business, one can prevent problems by going through them on a daily basis, rather than stack them up to be dealt with later. Get into every detail, set priorities and just keep working towards the goal.
To achieve success is one thing; to sustain it is another.
1.2 Explain How to Identify Possible Causes of Business Problems
Once you have recognised the business problems, the next step is to identify the causes of these problems. Only then we will be able to rectify or solve the problems. Causes of business problems can be many reasons like, lack of organisation, poor management, poor planning, unrealistic goals, weak strategies, employee dissatisfaction, poor finance management, not keeping track of the business flow, and so on.
Some sample indicators of a business problem are, decline in profits, customers leaving, no new customers, no new goals, employees leaving or dissatisfied, lack of sales etc. The possible causes could be poor policies and procedures, poor training, poor rewards, poor quality products, price too high, lack of technology, old systems, poor maintenance, etc. In all these situations, “Why” is the word to be researched. You need to find out why this problem happened and that will help you identify the causes of the problems. Use flowcharts or histograms to write down the process for analysis.
Identifying the many or some problems cannot always be an easy task, as some problems may have existed for a long time, some may be hidden and difficult to identify, some may be due to external factors outside of the organisation and some would have been problems that existed from the start and would have always been like that, “Always a problem”.
Let us look at how these causes can be identified. Some of the ways in which the business problems can be identified are:
- First check the management and who is involved as poor management can be the root cause for many business problems. Gather all the management reports that forecast information related to the business and its finances.
- Look for all the strategies that were used to improve or even run the business. Check to see if there were positive results and if not, check to see what was done to rectify them.
- Look at all the business plans, how they are laid and what is done to implement the plans. Check to see how the plans work, who is involved and their contribution towards the business.
- Check for marketing strategies, methods and what was achieved.
- Check financial statements, the expenses, the income, the profit and how the business has improved or declined over the past months or years. Check to see the reasons for this change.
- Check for all the policies, procedures and legislations relevant to the business, its employees and its customers. See if they are all up to date and that they comply with the laws. Policies and contracts need to be there and kept updated at all times.
- Another important factor is to look at the staff management, the behaviour of staff, how they are treated, how satisfied they are and their progress in career. Also, while working towards goals, check to see if the employees are well trained and possess the knowledge and skills required to do the job, and so on.
- Get opinion and feedback from others rather than looking for causes by yourselves. Hold meetings, consultations and discussions and gather ideas and information.
- Keep an eye on the competitors and always strive to be the best.
1.3 Describe Ways of Analysing Business Problems
Now that the problems have been recognised and the causes of the problems have been identified one needs to analyse the problems in order to find the best solution for it. The important points to consider are:
- Analyse and find out what happened, define the problem
- Does the problem really exist?
- Analyse the reason why it happened
- How long has this problem persisted?
- The series of causes that led to this problem, the money and resources that it cost
- Other minor problems that led to this major problem
- Effect or impact of this problem on the business
- Work out possible solutions and methods of reducing this and preventing this from happening in the future and how they will be implemented
- Are there any risks involved?
There are various ways in which you can analyse business problems. Some of them are discussed here.
- The first step would be to define the problems. You need clear information regarding the problems that you have identified, including the reasons why they occurred and what could have been done better to avoid them. You should then be able to draw out solutions to this problem and devise methods or procedures to prevent this from occurring in the future.
- You need to identify what is wrong with the operations in the business and how this is affecting the business. Keep track of the intervals or the time between recurrences of problems. Look for the effects this problem has on the business and the employees. See if this problem creates other problems in different aspects or different parts of the business. Analyse the tasks that are dependent on the target that is problematic. Gather information regarding who is involved, what is involved, which part of the business is affected and the time it has been on-going, how much it has cost the business and also if this was intentional.
- During this period, keep monitoring the performance of the business and everyone involved including employees, customers and suppliers. This will help you analyse the issues, their side effects and draw conclusions on certain facts and figures.
- Observe staff and their behaviour as this is very important in the running of a business. Talk to them and identify any concerns they have. Take steps to help them.
- During the analysis process, you need to constantly keep reviewing figures and comparing them with the past statistics to see how the performance is changing. Try to reduce huge and complex problems by dividing them to a series of small problems. This will help sorting them easier. You need to assess the effects that the problems have on the business and provide satisfactory resources. Look for clues on how this problem could have occurred. Look for what more information, resources and for other things would have stopped this problem from occurring.
2. Understand Techniques for Solving Business Problems
In this section we will look at different ways to solve a business problem, the importance of support and feedback from others while solving business problems, the importance and purpose of reviewing progress and plans and ways to find out if the problem is actually solved.
2.1 Describe Different Ways of Planning to Solve a Business Problem
When you are planning to solve a business problem, gather relevant people for a discussion or for a meeting and brainstorm the actions or solutions to be taken to solve the problem. Do not decide alone. Form groups with people from different departments and experience levels and gather their opinions and ideas. Choose appropriate actions or solutions from the many ideas gathered. Conduct more meetings to refine the issue and the solution till you arrive at the best possible solution.
Once the most appropriate solution is arrived at, write down actions needed to solve the problem. Check that everyone is in agreement. Check for impacts this solution may have on the business. Work out plans to remove the causes of the problem. Check for costs for implementing the solutions. All these need to be recorded and analysed.
7 Step Problem Solving
- Identify the problem
- Find out the cause of the problem
- Analyse the problem
- Take ideas from people to find a solution
- Arrive at the best possible solutions
- Select the ones you wish to implement
- Implement the solution
- Monitor and evaluate
When all the above actions are complete, you will need to implement the actions or solutions. Keep monitoring the impact this has on the problem and the business. You need to be patient and wait to see the change. If problem still persists, you will have to arrange for group discussions and brainstorming sessions and continue doing this till the problem is sorted.
After the issue is sorted, you need to develop procedures from the lesson learned and bring them into practice, in order to avoid this from happening in the future.
2.2 Describe Different Ways of Solving Business Problems
There are so many ways in which a problem can be solved. Every problem is different and solving the problems depends on one’s experience, approach to the problem, knowledge about the business and in researching for the best solution.
You need to use the divide and conquer method to solve complex problems. Complex problems may have so many other minor problems that group together to form the complex problem. So as we discussed before, we need to break the problem into minor parts (divide) and first solve the minor issues, until you have just the major problem left. It will then be easier to focus on this one problem and solve (conquer) it. The major steps involved in this above logic are:
- Finding the exact problem
- Identify the causes of the problem
- Analysing the problem
- Developing plans to solve the problems
- Implementing the plans
- Monitoring the problem and evaluating the results
So to carry out the above process of solving a problem, one needs to take into account several factors and consider the different ways that are relevant to solve that particular problem.
Collect all information about the problem, the solutions and structure them. For example, develp a concept map (visual representation of the facts and assumptions and the relations between them, these are drawn or written in boxes).
How can you use Mind Maps to solve problems?
The other ways to solve problems are:
- Introducing new technologies and new products
- Hiring skilled employees
- Good organisation procedures and policies
- Employees support, good training
- Keeping track of progress
- Managing finances and money
- Staff and department restructuring
- Cutting down on unwanted inventories
- Conducting frequent meetings
- Customer satisfaction and feedback
- Responding to feedback
- Stock management
- Negotiation with suppliers
- Sending invoices on time and paying received invoices on time
All of the above or some of them are ways to solve problems depending one each problem.
“Stop thinking about what you can’t do and start thinking about what you can do.”
2.3 Give Reasons for Having Support and Feedback From Others When Problem Solving
When it comes to organisations and businesses and any issues related to the business, it is always best to work together as a team or a group right from the start to finish. There are various reasons for having the support and feedback from others while solving problems. They are:
- You do not feel overwhelmed and you know that there are people with you anytime you need help.
- When solving problems, you may be stressed or feel anxious and may take wrong decisions. You may not find the right solution. You may not have investigated or analysed the problem properly. You may not understand certain factors. So having support and feedback helps you to overcome all these issues.
- All parts and steps in the process are shared. So whether it is success or failure, it is shared.
- You do not solely become responsible for anything related to this task.
- Feedback helps you rectify errors and mistakes and helps you learn and become better.
- Feedback also helps improve performance and improve ways in accomplishing tasks.
- Feedback and support helps you identify the right and the wrong.
2.4 Explain the Purpose of Regularly Reviewing Progress and Adjusting Plans During Problem Solving
Once a solution has been implemented, you cannot just leave it like that. Constant monitoring and reviewing is necessary. Different plans may need to be laid/adjusted and solutions arrived at, during the problem solving process if the previous solutions did not work. This also helps with long term success of the business. The purpose of doing this are:
- You learn and get to know a lot about the problem solving process, you get motivated and come up with innovative ways to tackle problems and to run the business successfully.
- You know how to prioritise and what to prioritise in a business.
- Reviewing helps you to identify any advantages and drawbacks of the problem.
- It helps you to keep track of the business and the problems on a frequent basis.
- It helps you to avoid further problems in the future.
- It helps with identifying the real root cause of the problem in detail.
- You get involved and stay motivated.
- Adjusting plans are necessary for the best solutions. If one plan does not work, you may need to make changes to the already existing plan or create a totally different plan altogether.
- This will keep you on track and help you identify the best solutions for particular problems in the future.
- This process will help you identify loopholes and errors in the business structure and its policies and procedures.
- You get to work together and this strengthens employer-employee relationship and business-customer relationship thereby helping the business grow.
- This helps with saving time, money and resources.
2.5 Describe Ways of Recognising When a Problem Has Been Solved
Once you have implemented the solution and determined that the problem has been solved, you need to make sure that the problem is completely solved. There are many ways to recognise if a problem has been solved. Some of the different ways are:
- Set goals and attributes for the problem, keep monitoring them and check to see if these are achieved.
- You can conduct various tests and surveys to check if the problem has been solved.
- Feedback from employees if internal problem and feedback from employees and customers if it is an external problem are ways to check if the problem has been solved.
- Check to see if there are chances for recurrence.
- You can manually check the process in the business for any problems.
- Historical data collection, comparing the recent data with old ones are other ways to check and this helps you to look at how the business performance varied over a long period of time when it had no problems and when it had problems.
- After the performance comes to normal, the monitoring process has to continue for quite some time to ensure that the problem does not reoccur.
It’s not over till it’s over
I hope you all found the information and guidance here useful. The next part of this section that covers learning outcomes 3 and 4 are found on the link below.
Please make sure that you write down the knowledge based outcomes relating the outcomes to your area of work quoting examples and experiences wherever you can. Please do not re-present what is published here.
If you have any questions, please feel free to ask.
Thank you. All the best!
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
Da Man 420 on November 16, 2017:
you da best
livingsta (author) from United Kingdom on January 06, 2016:
Hello Holly, you're welcome. All the best! :)
Holly on June 30, 2014:
This is brillant, thanks for sharing! :)