Root-cause reason questions

What is it?

The root cause reason question type asks candidates to select from among the proposed answers the one that may actually constitute the reason behind the fact stated in the question.

Question formats

  • Which of the following reasons, if TRUE, best explains the reason why the CEO wants to proceed to cost reduction?
  • Which of the following does NOT help to explain why ...?
  • Which of the following, if TRUE, would best challenge the sales manager's decision?

Example

Zapclothing is a global fast fashion retailer catering to teenage girls, which owns shops all over Europe. Five years ago, the top management of Zapclothing decided to embark on an upmarket move, in order to cater to a slightly older and more affluent customer base. Leading Italian and French stylists were hired by Zapclothing to create bespoke and unique clothing designs. Prices were raised on the whole product line by 20%-30% and a series of events in all major global cities was launched in order to build a more upscale and sophisticated brand image.

Whilst initially the mid-market transition boosted profit margins without altering sales volumes, one year after the introduction of upscale clothing the company found itself with plummeting revenues and a decreasing profit margin. In order to bring back profit volumes to the previous higher levels, the marketing manager proposed a permanent price reduction of 10% across the board on all product lines.

Which of the following facts, if true, would best challenge the sales manager’s proposal for price reduction?

  1. Over the last year, due to higher commodity costs, prices increased on average by 15% for the whole fashion industry.
  2. Consumers quoted price consistently among the top 3 quality attributes for mid and high level fashion brands in surveys over the last 5 years.
  3. In a recent survey, over 80% of the existing customer base claimed that they would still buy more than 50% of their clothes from Zapclothing regardless of the price.
  4. Female teenagers aged 20-30 consider price among the top three criteria for deciding whether to make a purchase.

Method

  1. Read the question carefully and make sure you understand what is being asked.
  2. Scan the answers and underline key words. Do not spend more than 10 seconds on this step, the purpose is just to make sure you are then quicker in finding the right part of the introductory paragraph.
  3. Think carefully about how this proposal can be challenged. The most effective challenge is necessarily going to be that this proposal does not help to solve the company’s problems, i.e. it does not help to restore high revenues.
  4. Go back to the answers, crossing out the wrong ones:
    1. Not relevant. The fact that prices increased on average by 15% for the whole fashion industry does not tell us whether the decision to reduce prices will bring additional revenues from existing and/or new customers. FALSE
    2. If consumers consider a higher price to be a signal for superior quality for mid and high level fashion brands (among which Zapclothing is positioned), reducing prices could have a neutral or counterproductive effect on revenue growth. TRUE
    3. Not relevant. It is immediately understandable that this fact would be incomplete and thus not sufficient to challenge the sales manager's proposal: it focuses solely on revenues from existing customers. Even if nothing were to change in the purchasing behaviour of existing customers, there would still be the base of new customers to tap in. FALSE
    4. Opposite direction. This fact would not challenge the sales manager’s assumption, but reinforce it. FALSE

Tips & Tricks

Right answers for root cause reason questions have two elements in common:

  • They are relevant - they have an effect on the target stated in the introductory paragraph.
  • They are going in the right direction - their effect on the target should be going in the direction stated in the question (support or challenge).

There are usually three type of answer options for root cause reason questions:

  1. Not relevant. These are answers that have no or limited effect on the conclusion/proposal, such as answers A and C in the example above. By identifying what sort of fact would challenge the conclusion/proposal, you’ll be able to isolate answers that have simply no influence or only a partial influence. In the latter case, do not assume anything that is not mentioned or clearly inferable logically and cross the answer out.
  2. Relevant, but going in the wrong direction. These are answers that affect the conclusion/proposal, but the effect is going in the opposite direction. For example, answer D above is actually reinforcing rather than challenging the sales manager’s proposal. It is therefore essential that you always keep in mind what the question asks and what kind of facts would be effective in answering the question.
    One of the most common mistakes in root-cause reason questions is selecting answers that are relevant, but whose effect goes in a direction which is opposite to the one requested.
  3. Relevant and going in the right direction. These are answers that affect the conclusion/proposal in the right manner according to the parameters set by the question.

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