On the importance of informed decision-making
Issues:
• How much information you actually need?
• The need for a professional system.
Finding good information that would allow proper decision-making is not easy. As much as decision makers try to do the right thing,
they are only humans, therefore they do have limits to the amount of information they can gather and process.
Many managers, when confronted with a given market challenge, say something like: “Just bring me everything you can about this
market.” That request is useless. It lacks focus, and even if it were possible to gather everything on a given market challenge, the end
report would generate more confusion than knowledge. The result would be a huge volume of unrelated, fragmented and conflicting
information that just adds to the confusion.
Proper decision making requires focus and requires that the decision makers understand the nature of the problem and ask the right
questions. By and large, decision makers are knowledgeable people, who are trying their best to do their job. However, without focus,
their effort will be fruitless.
For instance, a proper market analysis would require the decision maker to understand the current situation, the most likely evolution
and the implications for the business of several variables.
For example: suppose your firm is planning a sales strategy to another country – it could be Brazil, Nigeria or Switzerland. The
thinking process is the same:
“Understand your environment.”
Political / Legal – How is the political situation now, how will it evolve in the next years to come? How does that affect my business?
Is there a risk that the government introduces laws that will change the business environment? For example, increasing taxes or
introducing harsher regulations?
Economic – What do the Economy indicators say? What are the implications for the business? How is it likely to evolve?
Social/ Demographic – What is the social /demographic profile of the current and potential users of my product? Is there going to be
a change in the distribution in the future? When? Is the society changing? As a result, how will the demand for the product be
affected?
Technology – How the technologies evolutionary path could influence the demand for my product/service? Will the new technologies
make my products irrelevant?
Competition – Who are the main competitors? How do they operate? Is the competition kind and gentle or is it a cut-throat
competition? How is it going to evolve in the future?
New entrants - are there other players planning to enter the marketplace? Maybe companies from other countries or a supplier that
decides to integrate forward and start competing against you?
Substitute Products – what alternatives are available that would make your product irrelevant? For example, the new mobiles had
a very negative impact on the sales of amateur cameras, alarm clocks, watches and other products in Brazil.
Suppliers – is the supply chain changing in any way? For example, a merge of multiple suppliers increase their bargaining power,
thus taking away some of your profits; what about the entry of new suppliers? Is that going to allow you to pay less for their products?
Clients – how are our clients changing? Are they becoming more or less demanding? Are they rejecting my product because of some
social trend? Where is demand going?
For example, at the end of the 90’s the overall demand for beer in Nigeria was reduced due to the very intense demand for mobile
phones. At the time, the Nigerian consumers had to choose between beer and mobiles.
A good analysis must be comprehensive, and focus on more than the next client. Performing this kind of analysis is one of the factors
that will allow Sales to become more strategic.
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