“The basic business analysis starts with an examination of the business as it is now, the business as it has been bequeathed to us by the decisions, actions, and results of the past.”
Products eventually become incongruent with market desires. This decreases business revenue and increases costs. Therefore, regular assessments are necessary.
The first step is to evaluate products, services, and accessories. Executives should ask questions. What are customers actually paying for? Do customers value the main product or an accessory? This evaluation will help executives promote the right product mix.
The second step is to assess distribution channels and markets. Are they in harmony with what is being sold? Product offerings need to be congruent with the desires and brand of the distributor. Distributors need to be in harmony with the market or else the products will fail.
Drucker told a story about a food manufacturing company that tried to sell a gourmet product to a mass audience in high-end grocery stores. It completely failed. The revenue generators–product, distributors, and markets–were incongruent.
All of this analysis should be led by an executive. If done well, leaders will understand the state of the business.
(Managing for Results, chapter 2)