Hi Raf,
Even though I do like the way it was structured in Case in Point, I think it just assumes that the client hypothesis is correct from the beginning (assuming that it is a cost cutting case), while it might not be a cost issue, but rather a revenue one. Therefore, I would still structure it like any other profitability case: following the revenue and cost framework, but since the client already has a hypothesis on cost (because of vertical integration), I would investigate the cost branch first. Looking at the cost, I would look at fixed and variable and then I would look at trends (how did cost change over time) and I would compare this info to what our competitors are doing and why.
Once we do realize that it is a cost problem (i.e. our profits are down because the costs are higher than competitors), then the framework in Case in Point works quite well considering strategic value, alternatives, and potential exits if necessary.
I hope this helps.
Best, Abdelrahman
Hi Raf,
Even though I do like the way it was structured in Case in Point, I think it just assumes that the client hypothesis is correct from the beginning (assuming that it is a cost cutting case), while it might not be a cost issue, but rather a revenue one. Therefore, I would still structure it like any other profitability case: following the revenue and cost framework, but since the client already has a hypothesis on cost (because of vertical integration), I would investigate the cost branch first. Looking at the cost, I would look at fixed and variable and then I would look at trends (how did cost change over time) and I would compare this info to what our competitors are doing and why.
Once we do realize that it is a cost problem (i.e. our profits are down because the costs are higher than competitors), then the framework in Case in Point works quite well considering strategic value, alternatives, and potential exits if necessary.
I hope this helps.
Best, Abdelrahman
