The New Leader’s Guide to Diagnosing the Business

Executive summary

There has been a decline in the average term of departing chief executive officers in America. The decline was from 10 to slightly more than eight years from 1999 to 2006. Thus, general managers and CEOs are required to identify ways of boosting profitability within a few months of service (Gottfredson, Schaubert & Saenz, 2008). The article discusses four principles that define a successful program for performance improvement and they include; cost and prices, competitive position, customers and profits pools, and simplicity.

The article discusses experience curves and show how much costs and industry prices have fallen whenever the industry’s experience doubles. The slope of the curve gives the percentage of the original cost or price remaining after every doubling experience. Understanding experience curves helps in knowing the relationship between cost and prices which also helps in determining your top priorities.

            In diagnosing the business, it is also important to know costs relative to the competitors so as to know how effective your company is in relation to competitors (Gottfredson, Schaubert & Saenz, 2008). It is also vital to assess the profitability in your product lines. This helps you to know the products that are making money and why. The company also has to know its position at the market place, understand the industry’s profit pool and her, the firm must study customer needs and behaviors, track their retention and loyalty.

Recommendation

Therefore, leaders need to follow the above criteria in order to diagnose their businesses effectively. This is most especially the CEO and the general manager. Since most businesses are aimed at profit making, using these criteria they can be able to identify the ways of boosting their profits for a successful business performance.

References                  

Gottfredson. M, Schaubert. S, & Saenz. H. (2008). The New Leaders Guide to Diagnosing the Business.