I am having some problems with the profitability framework. I will present how I would structure a profitability problem today and what I believe is the problem with that structure, it would be great to hear your thoughts on this.
(Will make this generic, would of course tailor it to the specific case).
In general, in a profitability case I would first draw two branches for two overarching areas: Profits and Execution. Under profits I would then draw one branch for each revenue segment, to see if any of the segments are more profitable. Then I would drill further down in to costs, revenues and mix for the segments.
Under mix I am thinking e.g. Customer segments, product lines etc. The problem I am having is whether or not I should put mix here? Since the mix could also go both under cost and under revenues. Let´s say I start looking at the mix, I find out that one customer segment is more profitable than the others, what should I do with revenues and cost?
In which order do you think that I should look at this and is it Mece, as the mix could go under cost and revenues as well..?