Finding the cause of a problem — Business Studies Level 3

Symptom, cause, root cause

The paper usually presents a symptom — sales are below forecast, stock is out on shelves, quality complaints are rising — and asks for a possible cause.

Three levels, and the marks are in the second and third:

Symptom — what the business has noticed. "Sales in Belgium are lower than expected."
Cause — the mechanism producing it. "Households there are spending more of their income on food, so they have less for discretionary items."
Root cause — why that mechanism was allowed to operate. "The business built its Belgian forecast on New Zealand consumer behaviour without testing local spending conditions."

Restating the symptom in different words is the single most common Not Achieved answer. "Sales are low because customers are not buying" says nothing.

Where causes come from

Use the resource, but organise your search. Causes of a complex problem in a global business come from a small number of places:

Source	Typical causes
The market	Falling incomes, inflation, changed tastes, a new competitor, seasonality
The supply chain	A supplier failing, congestion, freight delays, intermediaries adding time
Production	Design compromised by cost cutting, substandard manufacture, capacity limits
Distance and culture	Time zones, language, misread expectations, distributors not managed
The business's own decisions	An over-optimistic forecast, a location chosen on cost alone, an investment made without appraisal
Regulation and politics	New rules, tariffs, sanctions, consent conditions

Source

Typical causes

The market

Falling incomes, inflation, changed tastes, a new competitor, seasonality

The supply chain

A supplier failing, congestion, freight delays, intermediaries adding time

Production

Design compromised by cost cutting, substandard manufacture, capacity limits

Distance and culture

Time zones, language, misread expectations, distributors not managed

The business's own decisions

An over-optimistic forecast, a location chosen on cost alone, an investment made without appraisal

Regulation and politics

New rules, tariffs, sanctions, consent conditions

Look for the business's own decisions. Papers reward candidates who see that a problem the resource presents as external — a distributor underperforming, a port delaying stock — often traces back to a choice the business made.

Writing a cause

The shape:

name the cause in the first sentence
explain the mechanism — the steps between that cause and the symptom the paper described
anchor it in the resource — quote the figure, the fact or the statement it comes from

Worked, on an invented resource:

Resource fact. Rāwhiti Tools (invented) ships from Tauranga to a single distribution centre in Hamburg, which then supplies eleven European countries. Stores in France and Spain report frequent stock-outs.
Cause. "One possible cause is the distance between the distribution centre and the southern markets. Every order for a French or Spanish store is picked in Hamburg and then trucked more than a thousand kilometres, so the lead time between a store ordering and receiving stock is several days longer than for a German store. Because the stores order only when their shelf stock is low, that extra transit time is enough for the shelf to empty before the replacement arrives."