Business consultants have a wide variety of tools at their disposal for analyzing and diagnosing potential problems with the business they are employed by. In the business consulting field, there are several tools which are widely viewed as important and useful in a wide degree of applications and industries. These are tools that every knowledgeable business consultant should be familiar with working with and explaining to their clients.
One of the easiest ways to measure how a business is performing is to compare it to its competitors. Comparing relevant metrics, such as revenue, costs related to production, and employee turnover to major competitors can help identify how strong a company is relative to its competition in the market. If there is a significant disadvantage in one or more categories compared to competitors, then it can be taken a sign of a potential place to improve. For instance, if employee turnover is unusually high for the industry, then steps can be taken to improve employee retention, which will likely reduce other negative metrics, such as cost of production caused by an unstable workforce.
Searching for and identifying what is known as ‘core competencies’ can be very beneficial for a company. Core competencies are areas in which a business has a competitive advantage over its competitors, which competitors would have a difficult time trying to duplicate. These advantages can be highly profitable if they are used properly to deliver maximum value to customers in a way that makes the company stand out in the market.
The BCG Growth-Square Matrix is a tool that was created to identify and categorize different product lines and quantitate their value to a company. Each product line that a company has is put into one of four categories, based on the overall strength of the market and how much profit can be reasonably expected to be extracted from the relevant market. By identifying and categorizing different product lines, a company can make educated decisions regarding which product lines to put additional resources into developing and marketing while cutting away those that aren’t performing as well as expected.