Logic trees allow you to spell out logically possible actions that could be taken to solve a problem. For example, you recall the Task Structure shown in Exhibit 40 on page 146. One of the costs identified as too high was indirect labor.

To determine how the client should go about cutting the cost of his indirect labor, the consultant used a logic tree to make a systematic and logical breakdown of the mutually exclusive and collectively exhaustive possibilities for doing so. Exhibit 48 shows a portion of the tree.

To explain the breakdown in Exhibit 48:

- Break direct labor cost into its elements

Primary Preparation Process

Cigarette Making Department

Packing Department

Other

- Break cost per cigarette into cost per hour and hours per million cigarettes, since

- State the ways cost per hour can be reduced

Reduce overtime

Use cheaper labor

Minimize wage awards

- State the ways hours per million cigarettes can be cut

Reducing people per machine

Increasing machine speeds

Increasing machine efficiency

- Continue to the next level

Once the logical possibilities are laid out in this way, the consultant can calculate the benefit and estimate the risk of taking each action, in order to arrive at the recommended final set of actions.

You can use the same logic tree approach to lay out strategic opportunities. Exhibit 49 explores some of the strategic opportunities for growth in a small European comry, and what would be required to achieve each. Again, you try to be as collectively exhaustive as possible.