Hi all + experts,
I have two nagging questions around the Profitability issue tree -
1) When splitting Revenue into Quantity Sold and Price, at which branch do I ask about segmentation (product line / customers / channels etc) since it affects one or both?
2) In general, if a case says overall industry revenue is growing at constant margins, can I cross out the Profitability branch since revenue and cost moving at the same pace? In other words, I should only worry if margins are negative or declining?
Thanks,
Eugene
(edited)
Hi Vlad, thanks for the insight. For (1), i should ask for revenue sources AND their sizes right?; (2) Sorry I didn't mention that industry AND client are growing revenue at same rate at constant margins - your answer still stands right? We only analyse client's profitability when its margins are declining / negative relative to industry?
(edited)
To me it rather seems like client has a concern with profitability at the first place and he assumes that this new bid in case of winning might improve profitability situation, is this correct? If so I would segment this problem into following steps: 1) I would like to look into current profitability in order to understand what is the root cause and expectation from the management 2) I would than identify the bid opportunity in sense of profitability in order to understand whether it will help to improve the situation 3) And If I still would have enough time I would also look into other ways to improve profitability for a client Does it make sense?