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Brainstorming on increasing margins

Anonymous A asked on Aug 18, 2018

Book question:

"Your team has determined that margins must be increased in order to justify the costs of acquiring X. What are some ways that this can be achieved?"

In their answer, they only focused on increasing Revenues and/or decreasing Costs.

Can I be more holistic instead and say something like: ''In order to increase margin I can think to grow organically and therefore looking at increasing Revenues and/or decreasing Costs or to grow inorganically and evaluating opportunities of M&A''?

-->Will it be more exhaustive or will it just make non sense because they explicitly stated MARGINS and not more PROFIT in general?

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Benjamin replied on Aug 20, 2018
ex-Manager - Natural and challenging teacher - Taylor case solving, no framework
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Hi,

I think your idea is really good.

1. I would clearly state this is priority 2 compared to increasing revnue / decreasing cost

2. I would only add some specific example to make it concrete on why and how "M&A& could improve margins > synergies

Hope this helps

Best

Benjamin

Vlad replied on Aug 18, 2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School
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Hi,

It is fine to look at organic / inorganic growth (vertical or horizontal). However it says "in order to justify the costs of acquiring X". It would look at least strange to make another acquisition in order to justify the costs of the first one.

Best

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