I have a question regarding profitability frameworks - how to understand the drivers (the 'why') in a profitability case.
It strikes me that the standard profitability framework (Profit = Revenue [Price*Volume] - Costs) is great for identifying the 'what'.
By this I mean the the framework will allow me to diagnose (for example) that volumes have fallen, which has reduced revenue, which has reduced profits.
However, in my practice cases I can't seem to use the framework to dive into why volume is falling (at least, not in a way that feels MECE).
For example, if volume has fallen because of a competitor entry, I don't think I would identify this point in a structured manner from the P = R - C equation.
So, my question is: how can I draw a profitability issue tree that allows me to consider the 'why' of a change in profitability?
To continue my example, maybe I could create another level on the issue tree and breakdown volume into competitive dynamics, customer preferences, external factors etc. but I'm not sure I could be collectively exhaustive in this approach?
Any thoughts much appreciated