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Questions around profitability issue tree

Eugene

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)

Vlad replied on 04/03/2017
McKinsey / Accenture / More than 300 real MBB cases / Collected all Big 3 offers / Harvard Business School

Hi,

1) You proactively ask in the beginning, even before drawing the structure (something like "What kind of products / revenue sources do we have) and then split the structure into price, qty, product mix. Distribution and customers I usually check within qty part

2) Not sure if I understand the question. Your company does not necessarily replicate industry trend, so you have to look at it separately

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