Hi Umberto,

it would be helpful to get information about the client and the specific issue to be addressed in the case. Since I don't have additional information, I am providing you with a generic answer. The key difference between profitability and revenue growth cases lies in their objectives and focus areas. 

Profitability 

1. Identifying the problem

• Main goal: You need to figure out why a company's profits are declining or not meeting expectations and provide recommendations to improve profitability
• Typical problem areas: You may be asked to analyze why a client's profit margins have been decreasing, how to increase profit margins, or how to improve the profitability of a specific product or organizational practice within the organization

2. Elements to consider in your framework 

• Analysis of the costs (fixed and variable), price (evaluate pricing strategies), and assessment of the sales volume and product mix
• Your recommendations may involve cost-cutting measures, pricing adjustments, improving operational efficiency, or entering new markets/products

Revenue Growth

1. Identify opportunities and strategies to increase a company's top-line revenue

• Main goal: Help the client generate more sales or enter new markets 
• Potential initatives: Boosting sales for a particular product, expanding into new customer segments, or entering new geographical markets

2. Elements to consider in your framework 

• The key components: Market, Product, Pricing, and Distribution analysis
• Assess the market size, market share, customer segmentation, product portfolio, pricing strategy, and distribution channels
• Recommendations may involve product diversification, market expansion, pricing optimization, marketing and advertising strategies, or distribution channel improvements

I hope this helps and consider booking a session with an expert to get familiar with these nuances and practice on selected cases.

Best of luck and kind regards

Margot

Your structure for differentiating between a profitability case and a revenue growth case is a good starting point. However, there are a few additional aspects you may want to consider to ensure a comprehensive analysis:

Cost Structure: In a profitability case, it's important to analyze the company's cost structure to identify potential areas for cost optimization or efficiency improvements. This can include analyzing fixed and variable costs, cost drivers, and potential cost-saving measures.

Pricing Strategy: Assessing the company's pricing strategy is crucial in both profitability and revenue growth cases. In a profitability case, you would analyze the company's current pricing strategy and evaluate its impact on profitability. In a revenue growth case, you would explore potential pricing strategies to maximize revenue, such as price optimization, bundling, or promotional offers.

Customer Segmentation: Understanding the company's customer segments and their specific needs and preferences is essential in both types of cases. Analyze whether the company is effectively targeting the right customer segments and if there are opportunities to expand into new segments or tailor offerings to better meet customer needs.

Marketing and Sales Channels: Assess the effectiveness of the company's marketing and sales channels in both profitability and revenue growth cases. Evaluate the company's marketing strategies, distribution channels, and sales force effectiveness to identify potential areas for improvement or expansion.

Operational Efficiency: Consider the company's operational efficiency and capacity to support revenue growth. Analyze the company's production processes, supply chain, and operational capabilities to ensure they can meet increased demand without compromising quality or incurring excessive costs.

Risk Assessment: In both types of cases, it's important to consider potential risks and challenges associated with the proposed strategies. Evaluate the potential risks, such as competitive responses, regulatory changes, or economic factors, and develop mitigation strategies to address them.

By incorporating these additional aspects into your analysis, you will have a more comprehensive and well-rounded structure for both profitability and revenue growth cases. Remember to adapt your approach based on the specific case prompt and ask clarifying questions to gather more information as needed.

I hope this helps! If you have any further questions or need additional guidance, feel free to ask.

Hi there,

First of all, remember that profitability cases aren't generic.

Revenue cases aren't generic.

A different prompt requires a different solution…

Just like how BCG would not walk into a client site and say “Ah? Profit problems? I've got a project plan I can copy-paste and apply to you!” you should NOT copy-paste a generic list of questions.

Each profitability and revenue case needs a customized, tailored framework based on the clues given (for example, what if there's no competition? What if the prompt says they just launched a new product? What if it says they are seeing supply chain issues? What if it says there's an economic crisis? New entrant? What if they sell planes? Versus lollipops? What if they're a small regional shop? What if they're a multinational corp?)

Please stop using a pre-determined set of questions/framework and throwing it into every case - if you do this you won't pass your interviews.

Here's some more reading:

https://www.preplounge.com/en/articles/how-to-shift-your-mindset-to-ace-the-case

https://www.preplounge.com/en/articles/candidate-led-cases-what-to-expect-and-example-cases

=========PROFITABILITY=====================

GENERAL PROFITABILITY APPROACH
 

You need to understand the industry + company context from the prompt itself to figure this out...cases and case types cannot be memorized...you have to adjust every single time!

Example: LOOKING FIRST at Economy/Industry

In my Hot Wheels case, you're a Korean OEM with falling profits. You operate in the US and Japan. The FIRST thing you have to look at here is the general market AND how competitors are doing. Otherwise, you will never learn that US OEMs are doing well in the US while Korean OEMs are NOT doing well in the US. Then, you'll never solve the crux of the case which is that transport times+costs are prohibitively like (Just in Time delivery is the #1 product characteristic).

If you don't look at economy/industry first here, you will not solve the case in a time effective manner.

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/hot-wheels-186

Example NOT looking at Economy/Industry

Take my "Chinese Airline During Covid" case example. We know that the airline is in trouble due to covid. We can make the deduction that this is caused by a reduction in demand. As such, we don't really need to look into rest of market/industry

So, we want to "repair" existing revenue streams as much as possible. So, first let's see what we can do. Then, whatever "gap" is remaining, we want to fill it with alternative revenue streams. Finally, whatever we can't make up for, we have to fix through cost cutting (ideally cutting unused capacity). See the logic here?

And it'll change every time based on the case itself...think critically!

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/chinese-chess-airline-business-during-covid-19-191

GENERAL PROFIT DRIVERS

Volume Down: Competition reduced prices or improved their product (outcompeting you), competition just launched effective marketing, regulation has slowed you down, economic decline, environmental disaster, tarrifs, suppliers disrupting your production, your product no longer applies to the customer (i.e. decline has been happening for a while)...and so on and so forth...

Price Down: We're in a price war, costs have gone down so we're realising this, regulation has created a price cap, we ran a discount program

Variable Costs Up: Raw materials costing more, inefficient contracts, ageing workforce, deteriorating workforce, regulations, quality control

Fixed Costs Up: Recent large investments

================================================

REVENUE ISSUES/IMPROVEMENTS
 

Remember, you need to apply your revenue improvement ideas to the specific case at hand. You cannot be generic.

That said, some major ways companies boost sales include:

• SAAS (software as a service)
• (Relatedly) Subscription revenue
  • Get people onot subscription plans (i.e. Netflix)
• Behavior-changing "memberships" - i.e. Amazon Prime
  • When people enter Prime membership, they actually actively spend more than they did before
• Bundling
  • I.e. sell a few things together
• Radiation
  • Sell products similar to the current one
• Low-price entry
  • Get someone in with a super cheap/good deal, then, now that you have them as a customer, sell additional, higher-margin products (insurance companies do this, for example)

==================================================

COST ISSUES
 

In general, for determining cost issues, you need to break down the problem into a tree/root-cause analysis and ask the highest level (but specific) questions first! In this way, you essentially move down the tree.

How do you identify where to look? Well, you need to look into whichever of the following 5 make the most sense based on where you are:

1. What's the biggest? (i.e. largest piece of the pie...most likely to change the end result)
2. What's changing the most? (I.e. could be driving the most and most likely to be fixable)
3. What's the easiest to answer/eliminate? (i.e. quick win. Yes/No type of question that eliminates a lot of other things)
4. What's the most different? (differences between companies, business units, products, geographies etc....difference = oopportunity)
5. What's the most likely? (self-explanatory)

https://www.preplounge.com/en/consulting-forum/structure-breakdown-for-costs-7963

https://www.preplounge.com/en/consulting-forum/inventory-costs-how-to-segment-6861

https://www.preplounge.com/en/consulting-forum/direct-and-indirect-instead-of-fixed-and-variable-6272

https://www.preplounge.com/en/consulting-forum/when-should-i-break-down-costs-as-fixed-and-variable-as-opposed-to-over-the-value-chain-5990

(editiert)

Hi Umberto,

I would be happy to share my thoughts on your question:

• First of all, "profitability" is not a case study question type. Identifying why profits have fallen and what to do about it, however, is. I hope this is what you mean by "profitability".
• Moreover, unfortunately, the presented structure is just a list of different areas to look at. It's not actionable and isn't specific to the case study. Except for very few instances, an initial structure should always be a set of activities and analyses to perform.
• Lastly, the core difference between profitability issue and revenue growth case studies is the following: For profitability issue case studies, you need an initial structure that first dissects where the issue for the decline in profitability lies, while for revenue growth cases, you first want to look at various growth avenues.

If you would like a more detailed discussion on how to best structure any case study question type, please don't hesitate to contact me directly.

Best,

Hagen

(editiert)

Hi,

The driver trees for each of these 2 concepts are not entirely the same. 

• Profitability and revenue are related, but there is a difference
• Revenue is a driver of Profitability, but Profitability also has another key driver which is Cost

Not sure what specific case question/prompt your structure is meant to answer, but based on what I see, the concepts mentioned are not ‘wrong’ per se, but it comes off as formulaic, not really MECE (on the same level) and devoid of logic. 

A better framework structure would be tailored to the specific question, so e.g. if the question is how to improve profitability, then you would logically want to have an answer that sheds light on how to improve the drivers of profitability. 

You have a structure… but I have no idea what is the problem you are trying to solve.

A structure MUST be tailored to a specific problem.

Additionally, cut out the risks/next steps. Risks are inherent to all of your analysis, they are not a specific topic of analysis. Next steps are only relevant when a complete analysis is unfinished, or there are still questions to answer. In a structure you lay out what you need to provide a recommendation, therefore in general there are no “next steps”.

Hi there!

High-level, the areas that you're looking at make sense for profitability / revenue growth. 

But at best, it's an average answer. 

What firms look for is proof that the candidate is thinking through the problem and coming up with a structure that is customised specifically to the problem of the client. 

So your structure should be a starting point and from there you'd need to calibrate it further until it reflects as much of the information you have about the client as possible.

Sharing with you a guide here on different structuring techniques:

• Expert Guide: Mastering Structuring & Brainstorming

Best,
Cristian

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