What is a Decision Matrix? Criteria Rating Form, Weighted Ranking.

 DECISION MATRIX. Also called: Pugh matrix, decision grid, selection matrix or grid, problem matrix, problem selection matrix, opportunity analysis, solution matrix, criteria rating form, criteria-based matrix

A decision matrix evaluates and prioritizes a list of options and is a decision-making tool. The team first establishes a list of weighted criteria and then evaluates each option against those criteria. This is a variation of the L-shaped matrix.

WHEN TO USE A DECISION MATRIX

• When a list of options must be narrowed to one choice
• When the decision must be made on the basis of several criteria
• After a list of options has been reduced to a manageable number by list reduction

Typical situations are:

• When one improvement opportunity or problem must be selected to work on
• When only one solution or problem-solving approach can be implemented
• When only one new product can be developed

DECISION MATRIX PROCEDURE

1. Brainstorm the evaluation criteria appropriate to the situation. If possible, involve customers in this process.
2. Discuss and refine the list of criteria. Identify any criteria that must be included and any that must not be included. Reduce the list of criteria to those that the team believes are most important. Tools such as list reduction and multivoting may be useful.
3. Assign a relative weight to each criterion, based on how important that criterion is to the situation. This can be done in two ways:
   1. By distributing 10 points among the criteria, based on team discussion and consensus.
   2. By each member assigning weights, then the numbers for each criterion for a composite team weighting. 
4. Draw an L-shaped matrix. Write the criteria and their weights as labels along one edge and the list of options along the other edge. Typically, the group with fewer items occupies the vertical edge.
5. Evaluate each choice against the criteria. There are three ways to do this:
   

   Method 1: Establish a rating scale for each criterion. Some options are:

   1. 1, 2, 3 (1 = slight extent, 2 = some extent, 3 = great extent)
   2. 1, 2, 3 (1 = low, 2 = medium, 3 = high)
   3. 1, 2, 3, 4, 5 (1 = little to 5 = great)
   4. 1, 4, 9 (1 = low, 4 = moderate, 9 = high)
   
   It is important that your rating scales are consistent. Word your criteria and set the scales so that the high end of the scale (5 or 3) is always the rating that would tend to make you select that option: greatest impact on customers, greatest importance, least difficulty, greatest likelihood of success.

   Method 2: For each criterion, rank-order all options according to how well each meets the criterion. Number them with 1 being the option that is least desirable according to that criterion.

   Method 3 (Pugh matrix): Establish a baseline, which may be one of the alternatives or the current product or service. For each criterion, rate each other alternative in comparison to the baseline, using scores of worse (-1), same (0), or better (+1). Finer rating scales can be used, such as 2, 1, 0, -1, -2 for a five-point scale or 3, 2, 1, 0, -1, -2, -3 for a seven-point scale. Again, be sure that positive numbers reflect desirable ratings.

6. Multiply each option’s rating by the weight. Add the points for each option. The option with the highest score will not necessarily be the one to choose, but the relative scores can generate meaningful discussion and lead the team toward consensus

DECISION MATRIX EXAMPLE

Figure 1 shows a decision matrix used by the customer service team at the Parisian Experience restaurant to decide which aspect of the overall problem of "long wait time" to tackle first. The problems they identified are customers waiting for the host, the waiter, the food, and the check.

The criteria they identified are "Customer pain" (how much does this negatively affect the customer?), "Ease to solve," "Effect on other systems," and "Speed to solve." Originally, the criteria "Ease to solve" was written as "Difficulty to solve," but that wording reversed the rating scale. With the current wording, a high rating on each criterion defines a state that would encourage selecting the problem: high customer pain, very easy to solve, high effect on other systems, and quick solution.

Figure 1: Decision Matrix Example

"Customer pain" has been weighted with 5 points, showing that the team considers it by far the most important criterion, compared to 1 or 2 points for the others.

The team chose a rating scale of high = 3, medium = 2, and low = 1 and used it for the problem. "Customers wait for food." In this example, the customer pain is medium (2), because the restaurant ambiance is nice. This problem would not be easy to solve (low ease = 1), as it involves both waiters and kitchen staff. The effect on other systems is medium (2), because waiters have to make several trips to the kitchen. The problem will take a while to solve (low speed = 1), as the kitchen is cramped and inflexible.

Each rating is multiplied by the weight for that criterion. For example, "Customer pain" (weight of 5) for "Customers wait for host" rates high (3) for a score of 15. The scores are added across the rows to obtain a total for each problem. "Customers wait for host" has the highest score at 28. Since the next highest score is 18, the host problem probably should be addressed first.

DECISION MATRIX CONSIDERATIONS

• A very long list of options can first be shortened with a tool such as list reduction or multivoting.
• Criteria that are often used fall under the general categories of effectiveness, feasibility, capability, cost, time required, and support or enthusiasm (of team and of others). Other commonly used criteria include:
  
  For selecting a problem or an improvement opportunity:
  
  • Within control of the team
  • Financial payback
  • Resources required (e.g., money, people)
  • Customer pain caused by the problem
  • Urgency of problem
  • Team interest or buy-in
  • Effect on other systems
  • Management interest or support
  • Difficulty of solving
  • Time required to solve
  
  For selecting a solution:
  • Root causes addressed by this solution
  • Extent of resolution of problem
  • Cost to implement (e.g., money, time)
  • Return on investment; availability of resources (e.g., people, time)
  • Ease of implementation
  • Time until solution is fully implemented
  • Cost to maintain (e.g., money, time)
  • Ease of maintenance
  • Support or opposition to the solution
  • Enthusiasm by team members
  • Team control of the solution
  • Safety, health, or environmental factors
  • Training factors
  • Potential effects on other systems
  • Potential effects on customers or suppliers
  • Value to customer
  • Potential problems during implementation
  • Potential negative consequences

Additional considerations

• While a decision matrix can be used to compare opinions, it is better used to summarize data that have been collected about the various criteria when possible.
• Sub-teams can be formed to collect data on the various criteria.
• Several criteria for selecting a problem or improvement opportunity require guesses about the ultimate solution. For example: evaluating resources required, payback, difficulty to solve, and time required to solve. Therefore, your rating of the options will be only as good as your assumptions about the solutions.
• It’s critical that the high end of the criteria scale (5 or 3) always is the end you would want to choose. Criteria such as cost, resource use and difficulty can cause confusion (for example, low cost is highly desirable). Avoid this by rewording your criteria: Say "low cost" instead of "cost"; "ease" instead of "difficulty." Or, in the matrix column headings, write what generates low and high ratings. For example:

   

  Importance	Cost	Difficulty
  low = 1 high = 5	high = 1 low = 5	high = 1 low = 5

• If individuals on the team assign different ratings to the same criterion, discuss until the team arrives at a consensus. Do not average the ratings or vote for the most popular one.
• In some versions of this tool, the sum of the unweighted scores is also calculated and both totals are studied for guidance toward a decision.
• When this tool is used to choose a plan, solution, or new product, results can be used to improve options. An option that ranks highly overall but has low scores on criteria A and B can be modified with ideas from options that score well on A and B. This combining and improving can be done for every option, and then the decision matrix used again to evaluate the new options.

https://asq.org/quality-resources/decision-matrix

Criteria Rating Form, Weighted Ranking

Use the criteria rating form when:

• You have to select among several alternatives
• You want to make a decision objectively
• You want your group to agree on a decision

1 Start the session and list the alternatives available

 

2 Brainstorm decision criteria

You will be judging your alternatives against what you feel are the most important qualities each one should have. These qualities are called decision criteria. Brainstorming may be a useful way for a group to agree appropriate criteria.

 

3 Determine the relative importance of each criterion.

Rank the criteria and assign a relative importance (weight) to each. The total of the assigned weights should equal 100.

 

4 Establish a rating scale; rate the alternatives.

A suitable rating scale might be, for instance: 1= low, 10=high. each alternative should be weighed against each criterion, using the same scale for each.

 

5 Calculate the final score.

Multiply the weight for each alternative by the score and write this in brackets. Add up the numbers in brackets for each alternative and write the sums in the appropriate total boxes. Add any summary comments in the appropriate summary box.

 

6 Select the best alternative.

Select the alternative with the highest score. this alternative may not be the one ultimately chosen - if the group disagrees with the choice, they should review the weighting of the criteria and make the necessary changes. if necessary, repeat the process.

 

References

• Chang, RY., and Niedzwiecki, ME., "Continuous Improvement Tools", Volume 1. 1993, 1995. Kogan Page Ltd. London

https://www.ifm.eng.cam.ac.uk/

Criteria rating form

Criteria rating forms help individuals and groups decide the best option or options among a group of options. In problem solving groups, they are often used in problem and solutions selection.

 

The criteria rating form can be used anytime there are criteria that will be used to inform the decision making process.  It is often used by interview teams when selecting a candidate for any position or when selecting new materials/textbooks. 

1. The criteria are selected by the group and a rating scale is defined.  In most cases a scale of 1 to 5 is used with 5 being the most desirable.

2. Weights are assigned to each criteria depending on its importance relative to the other criteria.

3. Each potential solution is also given a rating for each criterion, and the rating is multiplied by the weight of the criterion. 

4. The weighted ratings are totaled.  In this case, a 5 on the scale was most desirable so the solution with the highest total is judged the best option.  (I typically use the .5 to 2.0 rating scale.)

Remember that this is only a tool to collect data so be sure to discuss the final outcome before making the final decision, especially if the ratings are close.

 

Criteria Rating Solutions

There are a number of general criteria that can be considered when judging solutions.  What other criteria might you consider.  Criteria are personalized to each process.

•        Control         Is the group in a position to implement the solution? 

•                                                Effectiveness To what extend does the solution solve the problem?  (How likely is it to achieve the desired state?)

•        Customer Satisfaction Will the solution result in increased satisfaction of parents, community members, staff, students, Central Office or others?

•        Time            How long will it take to implement the solution?   (Some solutions          may take less time than others.)

•        Cost of Quality To what extent will the solution reduce the cost of non-conformance?

•        Cost            Are the financial resources available to support the initiative?            

•        Acceptability Will those responsible for implementing the solution accept                             the solution? 

        

Criteria & Scale	Weighting	Potential Solutions
Brainstorm Criteria	.5 -`- 2.0
1  2  3  4  5
1  2  3  4  5
1  2  3  4  5
1  2  3  4  5
1  2  3  4  5
1  2  3  4  5
1  2  3  4  5
TOTAL

 Evaluating Alternatives:  Criteria Rating (Grid Analysis)

The Criteria Rating Matrix, or Grid Analysis, is a tool for objectively reviewing each of your solution options as related to the various criteria you need to consider in order to come to a decision about which solution to implement

For this analysis, list your options as rows on a table, and the criteria you need to consider as columns.  Each option is then rated by how well it satisfies each criterion

Criteria:	A	B	C	D	E	Total
Option 1
Option 2
Option 3

 Steps:

1. List the alternatives you are considering.
2. Brainstorm decision criteria (remember, identify all possibilities before critiquing them).
3. Discuss the suggested criteria.

ü Is this criterion clear & unmistakable in its meaning?

ü Will this criterion be observable?

4. Narrow the list of criteria to 3-6 criteria. 
5. Establish a rating scale (e.g., 0-5 or 1-10).
6. Rate each of the alternatives on each of the criteria.
7. Calculate the final score.

Select the best alternative

Commonly Used Criteria
·       Ease of implementation ·       Cost ·       Ability to meet customer requirements ·       Equipment/resources required ·       Resource Availability ·       Lowest Risk ·       Fastest to implement ·       Long-term workability ·       Effective resource use	·       Impact on employee morale ·       Level of complexity ·       Human resources time required ·       Time required for implementation ·       Degree of control by the team ·       Political support ·       Disruption caused by change ·       Impact on the problem (high, medium, low) ·       Resistance of Stakeholders

Evaluating Alternatives:  Criteria Rating (Grid Analysis)

Example:

 A kayaking enthusiast, Patrick, is getting ready to buy a new car.  He needs one that will carry his kayak but will also be good for business travel.  He has always loved and wanted a convertible sports car.  So far, no one car he has looked at seems to fit all three criteria.

The vehicles Patrick is considering are an SUV/4x4, a comfortable 'family car', a station wagon, and a convertible sports car.  His decision criteria are cost, ability to carry a kayak safely, ability to store his equipment securely, comfort over long distances, attractive look, and fun.

Patrick draws up a table with the vehicle options and the decision criteria as shown below.  He then scores each option, 0-5, by how well it satisfies each criterion.  At this point he does not consider the relative weights of the factors

Criteria/Factors:	Cost	Kayak	Storage	Comfort	Fun	Look	Total
Sports Car	1	0	0	2	5	5	13
SUV/4x4	2	5	4	4	4	4	23
Family Car	3	2	1	4	0	0	10
Station Wagon	4	5	5	5	1	1	21

Based on this calculation, Patrick should buy the    ___________________________

Evaluating Alternatives:  Criteria Rating (Grid Analysis)

Weighted Criteria Rating

In many situations we also want to ask ourselves, “Are some of the criteria more important than others?”  Essentially, what you are exploring is the relative importance of each criterion.  For example, could it be that carrying the kayak and cost are more important to Patrick than comfort and look?

If that is the case, then you will want to weight the criteria, i.e. a weighted criteria rating matrix

Factors/ Criteria:	A	B	C	D	E	Total
WEIGHTS:	#	#	#	#	#
Option 1	Rating X weight	Rating X weight	Rating X weight	Rating X weight	Rating X weight
Option 2	Rating X weight	Rating X weight	Rating X weight	Rating X weight	Rating X weight
Option 3	Rating X weight	Rating X weight	Rating X weight	Rating X weight	Rating X weight

    Steps:

1.     List the alternatives you are considering.

2.     Brainstorm decision criteria (remember, identify all possibilities before critiquing them).

3.     Discuss the suggested criteria.

4.     Narrow the list of criteria to 3-6 criteria that will be most appropriate for identifying the best solution. 

5.     Determine the relative importance of the criteria & assign weights. 

6.     Establish a rating scale.

7.     Rate each of the alternatives on each of the criteria.

8.     Calculate the final score (remember to multiply the rating by the criterion’s weight).

9.     Select the best alternative.

       Back to our Example:

Patrick reflects on this decision a bit more and realizes that, in fact, the criteria are not equally important to him. So he decides to determine the relative weights for each of the criteria and recalculates using the ratings he previously identified

Factors:	Cost	Kayak	Storage	Comfort	Fun	Look	Total
Weights:	5	5	3	4	2	3
Sports Car	5	0	0	8	10	15	38
SUV/4x4	10	25	12	16	8	12	83
Family Car	15	10	3	16	0	0	44
Station Wagon	20	25	15	20	2	3	85

      

       Based on this calculation, Patrick should buy the    ___________________________.

The following is a sample of a 5 Point Numerical / Narrative Rating Scale including sample narrative ratings and definitions for each point value on the scale.

 

 

Scale	Rating	Definitions (Choose and/or Modify as Appropriate)
5 points (Pass)	Excellent. Exceptional Mastery. Much more than acceptable.	Should ensure extremely effective performance. Significantly above criteria for successful job performance. Surpassed expectations. Reserved for the exemplary set of skills that yield a particularly sophisticated approach to handling the situation. Meets all major / essential / core criteria or acceptable equivalents and met three or more additional criteria.
4 points (Pass)	Very Good. Full Performance Behaviours. Above average.	More than adequate for effective performance Generally exceeds criteria relative to quality and quantity of behaviour required for successful job performance. Meets all of the major / essential / core criteria or acceptable equivalents and several of the minor / addiitional criteria. No major deficiencies exist in the areas assessed. Consistently demonstrated better than average level of performance. Describes / demonstrates the full range of skills appropriate for handling the situation and the desired result, or outcome is obtained.
3 points (Pass)	Good. Acceptable. Satisfactory Average	Should be adequate for effective performance. Meets criteria relative to quality and quantity of behaviour required for successful job performance. Meets several of the major / essential / core criteria one or two of the minor / additional criteria or acceptable equivalents. Describes / demonstrates a sufficient range of skills for handling the situation and the desired outcome is obtained. Some of the major and minor criteria were met; some deficiencies exist in the areas assessed but none of major concern.
2 points (Fail)	Weak. Less than Acceptable	Insufficient for performance requirements. Generally does not meet criteria relative to quality and quantity of behaviour required for successful job performance e.g. meets half or less of criteria. Does not describe / demonstrate a sufficient range of skills appropriate for handling of the situation, or describes plausible but inappropriate behaviours for handling the situation or the desired result or outcome is not obtained.
0 – 1 point (Fail)	Unacceptable. Poor. Much less than acceptable	Significantly below criteria required for successful job performance. Few or no criteria met. Many deficiencies. A major problem exists. No answer or inappropriate answer. Describes/demonstrates counter-productive behaviours that have negative outcomes or consequences (make the situation worse).

Competitive Analysis

 

Alexey Cherkasov

Competition in the market is one of the key concepts in the economy. First of all, competition is rivalry. It is rivalry that helps companies not to stand still and move forward, improving their positions. Therefore, you need to pay special attention to this area. To always be up to date, you must constantly monitor your competitors, this applies to both existing and potential ones. You should study the main players in the market in detail to finally understand their weaknesses and strengths, this will help you improve the efficiency of your company. Also, in the competitive analysis, we should determine our place in the market in relation to competitors, this will give us an understanding of where to go next and what needs to be done for this.

Competitive Analysis Based on Comparison

One of the most common methods of conducting competitive analysis is comparison. This is a logical method of competitive analysis, the point is you make a list of competitors and criteria by which you will then compare them, and then draw conclusions based on this data. It is possible to distinguish the main stages of its implementation:

Object

At this stage, we define the main idea of the study in total: why we conduct it (the goal) and general positions. To do this, you can describe the situation of the industry as a whole, the state of the market, the current situation in which your company is located, external factors that affect both the industry and your company, the problems that the organization has faced and that need to be solved with the help of this study.

Competitors

In this section, we compile lists of competitors. There are different approaches to selecting competitors for analysis.

Competitors can be divided into the following groups:

• direct competitors are companies that offer exactly the same or similar products or services that work with you in the same market, aimed at the same segment of consumers. Direct competitors represent the most serious competition for you, as they can entice your customers with various loyalty programs, lower prices, more favorable terms of cooperation, etc.,

• indirect competitors are companies that offer a substitute product but work for the same target audience. Indirect competitors also pose a threat to you, although on a smaller scale than direct competitors. First, they attract some of your customers, and, secondly, they can become direct competitors for you in the future.

• prospective competitors are companies that may pose a threat to you in the future. This type of competition is quite unpredictable, so it is difficult to track them and predict the next steps. These can be:

1. Existing companies that are not yet in your market, but that may appear at any time
2. Indirect competitors
3. A company that can offer a solution to the problem for consumers that is different from your product

Another option for making a list of competitors is based on the number of participants.

• complete list. In this case, you list all the competitors. This is quite a time-consuming path since most companies have a huge number of competitors, so you will have to collect and process too much information. This approach is preferred for companies that have a small number of competitors.
• incomplete list. It is compiled depending on the research objectives, for example, the following areas can be distinguished:

1. key players. Lists the main companies in the market that are the driving force in this industry and can be an example of successful solutions and strategies. Here we can talk about such a concept as benchmarking. Benchmarking is the ability to find or identify best practices and techniques that other firms use, to study them, and apply them to your business.
2. the closest competitors are competitors operating in the geographical areas of the market that are close to you in terms of position.
3. three main competitors. You can limit your list by highlighting your top three competitors.

Whatever method you choose to compile the list (suggested in this article or your own), it should in any case meet your needs and research goals.

Parameters

In accordance with this section, you define the criteria by which you will compare competitors and your company. The criteria are also selected individually for each company, based on the set research goals. You can select the following parameters and analyze them separately, for example, price, quality, quantity, product/service promotion activities, customer service, brand awareness/loyalty, market share, distribution, technology, personnel, target audience, etc.

You can group the criteria and use the key success factors (KSFs). KSFs are the main indicators by which a firm has an advantage.

For example:

• technological factors
• production factors
• distribution
• marketing
• personnel factors and other types of KSFs

Sources

At this step, you define the sources of information. The sources of information are usually divided into primary and secondary.

A primary source gives you direct access to the subject of your research. Primary sources can either be qualitative or quantitative data that you collect yourself (It can be observations, interviews and surveys, experiments) or sources produced by people directly involved in the topic (recordings of speeches, social media posts, letters, and others).

Primary information is reliable and authentic, but it is quite an expensive type of information collection and takes a lot of time.

Secondary sources describe, summarize, or discuss information or details originally presented in another source. This type of source is designed for a broad audience. Sources of secondary information collection can be articles in magazines and newspapers; advertising, presentations, promotional materials, etc.; consumer reviews, reviews of former employees of companies; website; online search; your sales department, and so on.

To get more complete information about competitors, you need to use all available sources of information.

Analysis

At this phase, you analyze the data and create a report with conclusions and suggestions.

For the convenience and clarity of the competitive analysis, you can create a table in which you will mark the received data. You can use a scoring system or a descriptive system for evaluating criteria.

The table can look like this, but you can also create your own according to your needs:

	Characteristic 1	Characteristic 2	Characteristic 3	Characteristic 4
Competitor 1
Competitor 2
Competitor 3
Your company

When the data is collected and organized, you can also create graphs and charts.

One of the tools for data analysis is the SWOT analysis, in which you list the weaknesses and strengths of your competitors, based on which you will see the further direction of your business development.

Porter’s Five Forces Analysis

Speaking of competitive analysis, it is impossible not to mention Porter’s five forces analysis. This methodology focuses on the industry as a whole, not on its individual part or a set of industries. One industry is characterized by one of Porter’s five forces analysis.

Porter’s five forces analysis is a method of analyzing competition that helps determine the attractiveness of an industry and the profitability of doing business in it. This model was developed by the American expert in the field of economics Michael E. Porter in 1979.

Michael Porter identifies five driving forces in the market.

Threat of New Entrants

These are external potential competitors. New players open up new opportunities, they can offer innovative solutions for this market, use new technologies and resources, this can lead to changes in consumer behavior and reduce the income level of existing market participants. There are constraints for new players to enter this market. First of all, these are barriers to entry. According to M. Porter, barriers to entry include supply-side economies of scale; demand-side benefits of scale; customer switching costs; capital requirements; incumbency advantages independent of size; unequal access to distribution channels; government policy. If the barriers to entry are high, it will be more difficult for new entrants to enter this business sector, and vice versa.

Threat of Substitutes

Substitute products are similar products produced for the same consumers, similar in purpose and use, but with any differences in characteristics. Substitute products affect the price level, so they usually offer a cheaper option for the consumer, for example, due to a different production technology or the use of cheaper raw materials. The price falls, which leads to lower profits. The more attractive the price-quality ratio in substitute products, the greater the threat to the profits of companies that exist in this market. To counter this threat, it is necessary to develop a clear policy of differentiation, focus on the additional advantages of the product, and have a strong brand.

Bargaining Power of Suppliers

These are the owners of resources to produce goods in the industry. This includes raw materials, components, labor, maintenance, etc. If suppliers provide a rare product or service, they may have an impact on the company with which they cooperate (refusal of deliveries, inflated prices, unfavorable terms of transactions, etc.).

Bargaining Power of Buyers

Consumers ensure the existence of the market. They can affect competition in the market due to high requirements for the quality of products or services, which, in turn, affects the profits of companies, as the manufacturer increases its costs to improve quality. Buyers are directly connected with the price, as they want to reduce their costs, so they are constantly looking for more favorable offers. The power of buyers is high if they have a large choice and therefore decreases if the number of alternatives decreases. Companies often introduce loyalty programs to retain or attract customers.

Industry Rivalry

Here, the fight unfolds between existing competitors in this market. Thanks to this competition, companies increase advertising and promotion costs, apply different pricing strategies, develop new technologies and solutions, which leads to a decrease in the profitability of the industry.

Profitability in the market depends on the strength of the influence of competitive forces: the stronger the influence, the smaller your profit will be, and the weaker the influence, the more likely you are to get a higher profit. Thanks to the conducted research of the industry, your company will be able to find a suitable niche in the market, the influence of competitive forces in which will be minimized.

Competitive Profiling

In our article, we would also like to pay attention to another option for conducting competitive analysis – competitive profiling. Competitive profiling is the creation of a detailed portrait of competitors for a deeper understanding of their business. As a rule, it includes:

• General description of the competitor company. History, main milestones, location, ownership and organizational structure, company leaders and management, mission and vision of the organization, the unique value proposition (UVP), financial indicators, and more.
• Production. Factory capacity, technology, equipment, production culture, and more.
• Products. Existing product portfolio and product line width, new products, products in development. Patents, intellectual property, know-how. The quality of products, the number of products (volume). Packaging, design.
• Brand. Brand awareness, brand loyalty.
• Marketing:

– Promotion and positioning

• advertising campaigns: advertising in the media (TV, radio, periodicals, Internet), outdoor advertising, indoor advertising, social advertising, etc.
• various types of sales promotion: contests, lotteries, loyalty programs, etc.
• participation in exhibitions, presentations, etc.

– Distribution (analysis of channels: intermediaries (wholesaler, retailer, agent), direct deliveries, channel mix), and more.

– Prices (discounts and sales, price mark-ups)

– Segmentation, target audience, geographical coverage, and so on

– Customer service: pre-sale service, service during the sale, and after-sales service.

• Personnel: number of employees, key employees, core competencies, leadership style, benefits, corporate programs, training, and so on.

You can also add other data to your profile. The more data you have about your competitors, the clearer you will see the overall picture of the business.

The importance of competitive analysis is very great, it allows you to learn the strengths and weaknesses of competitors, to study their strategy, goals, which will allow your company to improve the effectiveness of its actions, so it should become a necessary tool for your business.

https://www.marketing-psycho.com/

Why Human-To-Human Marketing Is the Next Big Trend in a Tech-Obsessed World

 

While multiple sessions at this month’s Cannes Lions festival looked at harnessing data and artificial intelligence, at B2B International we’ve been conducting some pretty interesting research into the role of emotion in business decision-making.

The surprising fact is that in the process of choosing a supplier, when it comes down to deciding between the two final contenders in a pitch process, a very significant 56% of the choice comes down to emotional factors.

Clearly this means marketers need to think harder than ever about building a human connection with potential customers – so we were very interested to see at least one discussion at Cannes looking at how to combine the benefits of automation with an increasing desire for a one-to-one, completely personal service.

Called ‘Human-to-human marketing in a world of technology’, the discussion featured Elizabeth Rutledge, American Express’ chief marketing officer, talking about the brand’s global marketing journey and how they are balancing technology with humanity.

‘Tech can connect us but also push us far apart,’ Rutledge said. She called for a ‘focus on digital empathy’ – that is, making things more personal and fusing marketing with a real human touch. ‘The more relevant tech becomes, the more we value true, human qualities,’ she added.

Rutledge’s philosophy ties in with the findings of our own ‘Winning with Emotion’ research, particularly our insight that business-to-business communication IS human-to-human connection.

Tracking the full decision-making process from research to appointment, we discovered that although rational factors such as an acceptable price, viable product quality and effective distribution form the minimum requirements necessary to enter and rise to the top of the consideration set, generating an emotional connection is ultimately what counts when the final decision is made.

It is critical for suppliers to have a strong brand in which customers feel emotionally invested – not only does it impact on the final decision, but 95% of decision-makers stated that even before contacting a supplier, feeling a sense of connection to a supplier’s brand is as important as feeling confident about what they do.

Whatever they might claim about their logical thinking, there is also the fact that business decision-makers don’t simply leave their experiences as consumers at the front desk.

SME decision-makers in particular, rely on their experiences as consumers when choosing a supplier. While 26% of enterprise decision-makers reported to have been influenced by their consumer experiences, 34% within SMEs reported doing so. Suppliers who serve both businesses and consumers should be aware of the synergies between their B2B and B2C offers and ensure an excellent experience and consistency across both.

So how can B2B brands form better connections with customers? Here’s the strategy we have identified:

Create positive word-of-mouth by delivering an excellent customer experience. Recommendations are important, so this can give potential buyers confidence from the outset in the suppliers they consider.

Strengthen thought-leadership positioning to connect with potential buyers. Business decision makers reported that a demonstration of expertise via content marketing was the third-most important factor in evaluating suppliers under consideration. For enterprise decision-makers, thought leadership was even more influential (ranking as the second-most important factor).

Clearly communicate your point of differentiation and sell on value because although B2B buyers are not driven by price alone, the value they perceive a supplier can add to their business is crucial.

Build connections with the influencer network because B2B decisions are rarely made unilaterally. In 80% of cases, more than one person is involved in the decision and for a third of purchase decisions, a team of four or more is required. So, do aim to connect emotionally with multiple stakeholders (often from different functions) rather than focusing all efforts on the one person traditionally considered “the decision maker”.

We also thought that Elizabeth Rutledge’s final remarks at Cannes were worth repeating: “Go out and find the empathy,” she said. “Create real human connections one customer at a time.”

It’s really something to think about. Human-to-human marketing is going to transform what we do in the most positive way imaginable – a brave new world we can embrace in good faith.

https://www.b2binternational.com/

Нормативный метод учета затрат и оценка эффективности деятельности

 

ВЕРА ПИКУРЕН

Нормативный метод учета затрат пользуется в России довольно большой популярностью. Связано это, скорее всего, с традициями, зародившимися на производственных предприятиях во времена плановой экономики. При этом мало кто использует данный метод в полном объеме, то есть доходит до анализа эффективности деятельности организации.

Нормативный метод калькуляции затрат — методика контроля, основанная на выявлении отклонений фактических затрат от нормативных с целью осуществления дальнейших действий по управлению отклонениями. Ключевой фразой в данном определении является, на мой взгляд, «действия по управлению отклонениями». То есть недостаточно ежемесячно фиксировать постоянное несоответствие фактических затрат плановым, как это иногда встречается даже на современных заводах. Необходимо проводить работу по минимизации отклонений. При этом работа должна быть направлена не только на анализ затратной части, но и на регулярный пересмотр норм.

Для того чтобы нормативный метод работал, необходимо в первую очередь выделить единицу калькуляции затрат. Это может быть не только конкретное изделие, но и, к примеру, заказ покупателя, если по нему можно посчитать нормативные затраты.

Во-вторых, нормативные затраты должны быть представлены с указанием всех ресурсов (в количественном и суммовом выражении), которые потребуются для производства одной единицы продукции. Данная информация необходима для проведения анализа отклонений. При этом сами затраты могут быть рассчитаны как с использованием метода полного поглощения затрат, так и с помощью маржинального.

Под анализом отклонений понимают изучение суммарного отклонения затрат с целью разделить его на ту часть, которая связана с отличиями в объемах использованных ресурсов, и ту, которая связана с ценой ресурса. Такое разделение необходимо для того, чтобы понять, кто отвечает за данное отклонение: например, за количественное использование ресурсов несет ответственность директор по производству, а за цену материалов - начальник отдела закупок.

Пример 1.

Допустим, нормативы на производство одной единицы продукции составили (табл. 1):

Таблица 1.

Статья	Нормативы, руб.	Факт, руб.
Материальные затраты	250	300
Зарплата	150	120
Итого	400	420

Получилось, что продукция по факту стоит на 20 рублей дороже, чем должна. Однако только из одной этой оценки совершенно непонятно, что послужило его причиной: то ли отдел закупок некачественно спрогнозировал цену сырья на рынке, то ли производство допустило большой процент брака при производстве, то ли закупленное сырье оказалось некачественным, и потребовало большего объема использования.

Ответы на эти вопросы и должен дать анализ отклонений, который является частью факторного анализа хозяйственной деятельности.

Виды отклонений

Все отклонения разделяются на благоприятные (обозначаются буквой «Б») и неблагоприятные (обозначаются буквой «Н»). Благоприятные отклонения — это отклонения, которые приводят к тому, что фактическая прибыль оказывается выше бюджетной, неблагоприятные — соответственно, приводят к снижению фактической прибыли по сравнению с бюджетной.

При использовании нормативного метода затрат анализируются отклонения переменных производственных затрат и отклонения постоянных производственных затрат (в случае использования метода полного поглощения затрат).

По переменным производственным затратам производится анализ:

• отклонений по материалам;
• отклонений по зарплате;
• отклонений по прочим переменным накладным расходам.

Отклонения по материалам бывают двух видов:

1. Отклонения по цене материалов. Рассчитываются, как:
фактическое количество использованного материала УМНОЖИТЬ на нормативную цену МИНУС фактическая себестоимость материала.

2. Отклонения по объему использования материалов. Рассчитывается как:
(фактический выпуск УМНОЖИТЬ на нормативный объем использования материалов МИНУС фактический объем использованных материалов) УМНОЖИТЬ на нормативную цену материалов.

Пример 2.

Допустим, что производство одной единицы продукции требуется 5 кг материала по цене 14 руб./кг. Предположим также, что в июле 2012 г. предприятие выпустило 100 ед. продукции и при этом потратило 510 кг материала на сумму 6885 руб.Рассчитаем отклонения по материальным затратам.Отклонения по цене материалов (табл.2):Таблица 2

Должны были потратить	510 кг х 14 руб. = 7140 руб.
Потратили	6885 руб.
Отклонение	7140 руб. - 6885 руб. = 255 руб. (Б)

Отклонение по объему использования материалов (табл.3):Таблица 3

Должны были потратить	100ед. х 5 кг = 500 кг
Потратили	510 кг
Отклонение (кг)	10 кг
Отклонение (руб.)	10 кг х 14 руб. = 140 руб. (Н)

Итоговое отклонение получилось: 255 руб. (Б) + 140 руб. (Н) = 115 (Б) руб.

Проанализировав данные в комплексе, можно сделать вывод: производство потратило материалов сверх нормативов, однако, одной из причин такого увеличения могла стать закупка более дешевых (как это видно из отклонения в цене), и, возможно, менее качественных материалов.

В целом, отклонение получилось благоприятным, так что использование более дешевых материалов в данном случае было оправдано.

Отклонение по зарплате бывают двух видов:

1. Отклонения по ставке оплаты труда. Рассчитывается, как:
   оплаченные фактические часы УМНОЖИТЬ на нормативную ставку оплаты труда МИНУС оплаченные фактические часы УМНОЖИТЬ на фактическую ставку оплаты труда.
2. Отклонения по производительности труда. Рассчитывается как:
   (фактический выпуск УМНОЖИТЬ на нормативный объем часов на производство МИНУС фактический объем часов на производство) УМНОЖИТЬ на нормативную цену материалов.

Расчет таких отклонений очень похож на расчеты по материалам.

Пример 3.

Добавим к примеру 2 следующую информацию: допустим, что по нормативам на производство одной единицы продукции требуется 2 часа по ставке 25 руб./час.

Фактически в июле было потрачено 210 часов, оплата которых составила 5250 руб. Рассчитаем отклонения (табл. 4):

Отклонения по ставке:

Таблица 4

Должны были потратить	210 час. х 25 руб. = 5250 руб.
Потратили	5250 руб.
Отклонение	0

Отклонение по объему использования материалов (табл. 5):

Таблица 5

Должны были потратить	100 ед. × 2 час. = 200 час.
Потратили	210 час.
Отклонение (час.)	10 час.
Отклонение (руб.)	10 час. × 25 руб. = 250 руб. (Н)

Проанализировав данные, можно сделать вывод, что производственное подразделение потратило на производство продукции больше времени, чем было установлено нормативами. Этот факт требует объяснения со стороны директора по производству.

Отклонение по прочим переменным накладным расходам обычно считается без деления на количественный и ценовой компонент, поскольку очень сложно выделить количественную норму накладных расходов. В литературе часто можно встретить расчет нормы накладных расходов на нормо-час, но, как мне кажется, анализ такого рода отклонений не несет в себе существенной информационной составляющей.

Суммарное отклонение по прочим переменным накладным расходам рассчитывается как:
фактический выпуск УМНОЖИТЬ на ставку накладных расходов на единицу продукции МИНУС фактически понесенные переменные накладные расходы.

Взаимосвязь между различными видами отклонений

Разбиение суммарного отклонения на виды позволяет комплексно анализировать влияние различных управленческих решений на эффективность работы предприятия. Например, если посмотреть на расчетные данные в приведенных выше примерах, то можно проследить взаимосвязанную цепочку:

• отдел закупок приобрел более дешевый материал (благоприятный фактор);
• производству потребовалось больше этого материала, чем предусмотрено нормативами (неблагоприятный фактор);
• рабочим потребовалось больше времени на работу с этим материалом (неблагоприятный фактор).

И если проанализировать решение в комплексе, то его цена составила:

225 руб. (Б) + 140 руб. (Н) + 250 руб. (Н) = 165 руб. (Н).

То есть, в целом решение закупить более дешевый материал отрицательно сказалось на прибыли предприятия.

Таким образом, проведение факторного анализа отклонений, позволяет оценить эффективность управленческих решений.

Поскольку процесс анализа отклонений при всей своей важности является довольно трудозатратным, то прежде, чем начинать исследования, необходимо учесть ряд факторов:

•  существенность. Понятно, что на любом производстве всегда есть отклонения от норм. Необходимо определить пороговое значение, в пределах которого отклонения являются допустимыми, и не анализируются;
•  контролируемость. Тут руководство предприятия может опираться только на свой опыт, поскольку до начала анализа отклонений сложно предсказать, будет ли оно подконтрольно менеджменту, или это неблагоприятный внешний фактор;
•  трудозатраты на исследования. Если предприятие не имеет качественной ERP-системы, то затраты на исследования отклонений могут быть в разы выше самой суммы отклонений;
•  повторяемость. Если одно и то же отклонение повторяется из периода в период, то это является сигналом для его анализа. Возможно, что причина отклонения заключается в неверных нормативах.

Причины отклонений

Понятно, что отклонение фактических затрат от нормативных может быть вызвано множеством факторов, потому что производственный процесс — это сложно организованная система с большим количеством вовлеченных в нее участников. При этом можно выделить следующие группировки факторов и ответственных лиц:

•  неэффективность деятельности — фактор, за который несет ответственность менеджмент предприятия;
•  неадекватные нормативы — зона ответственности конструкторского отдела;
•  ошибки при отражении фактических данных. Этот фактор присутствует всегда, но качественная информационная система должна содержать в себе перекрестные проверки, которые позволяют минимизировать количество ошибок;
• случайные или неконтролируемые факторы.

Нередко в качестве критики нормативного метода учета затрат можно услышать, что данная система противоречит концепции непрерывного совершенствования. Что она создает климат, при котором целью является достижение нормативов, а не максимизация прибыли предприятия.

Однако, как мне кажется, этот метод не содержит в себе ничего, что противоречило бы концепции непрерывного улучшения. Наоборот, установка нормативов является своеобразным внутренним бенчмаркингом. А анализ отклонений, в свою очередь предоставляет менеджменту комплексную информацию по эффективности управленческих решений, а также позволяет определить место возникновения проблем на предприятии.

В статье использованы материалы подготовки к экзамену CIMA P1

«Управление эффективностью операций» (Автор Боб Скарлетт, перевод PwC).

https://upr.ru/