PROFITABILITY FRAMEWOR| iit GF Units Seay) into its component parts, | te NERO orc the seis coming rom 2) ISOLATE the key driver causing bulk of problem | Revenue/ 3) EXPLORE possible resolutions | Unit | Possible Segments to get data for, isolate & explore: | By product / product line | roe + By dstrbution channel | 7 8y region | # Units By customer type (new/old, big/small | Sold» By industry vertical | | ‘Once you know mathematically what's causing the problem, you need fo understand WHY the number has declined inthe context of the marketplace. This may be a "compound framework® problem Fequiring you to use a general market analysis famework If 50, oo mast often you will want to start with the customer (demand side) | analysis and potentially may have to use the entire framework, | For problem branch (e.g, fixed or variable cost) — [— Fixed Cost BEGMENT into ts component parts | Segment cost by logical components | Cay F Segment coats by value chain i o: | iable | Hdentty xed coms in each of te folowing i Variable | fritanan Seas Olseictee “>Customes | # Units L a Eonparet stra Fi he rel cmganet feep “triling down" by finding the problem segment, Tips: 3nd dril down on THAT segment until you ISOLATE 1) Keep driling down unt you isolate the problem SSR n ccmeitaci oo 2) If you realize a branch (or sub-branch) is NOT the problem, whats mathematical causing the major | ‘come up a level and work the remaining branches pei 3) The name of the game is PROBLEM ISOLATION LL 44) When “units sold" decline, i's useful to compare the company's numbers to Its competitors to determine ift's an Incustry-wide or companiy-specfic issue ‘faurhour pron ase ree debut rely to ots proved content and tution kt unaltered