Strategy Driven

NOVEMBER 28, 2019

It’s something that can make or break your business in these tough times, and this infographic perhaps describes it in the best detail: No, you shouldn’t be targeting those locations which are faring the best during these tough times, but you need to be shrewd about how your potential market is going to react.

Tips 50

Tips Fixed Costs Marketing Cost 50

Strategy Driven

JULY 31, 2019

Your marketing plan and SWOT analysis are interesting – but they don’t mean a thing if you don’t have realistic figures on your bottom line. This allows you to demonstrate gross margin: sales revenue less sales costs. Your financial forecasts and statements make up the most essential section of your plan.

Finance 10

Finance Planning Development SWOT 10

Harvard Business Review

JULY 2, 2014

It’s a simple calculation to determine how many units must be sold at a given price to cover one’s fixed costs. Assume she must incur a fixed cost of $25,500 to produce and sell a kite. What if we want to make an investment and increase the fixed costs? That’s the breakeven point.

Analysis 18

Analysis Fixed Costs Price Cost 18

Harvard Business Review

AUGUST 16, 2011

Secondly, expecting a business to be profitable quickly forces it to keep its fixed costs low. Because a business's cost structure determines which customers it finds profitable, keeping these fixed costs low preserves strategic options for the company when it is choosing which customers to target.

Christensen 22

Christensen Fixed Costs Metrics Business Model 22

Harvard Business Review

MARCH 28, 2011

Companies keep costs down by building supply chains that generate economies of scale. That was effective when companies made products in their home markets using locally produced components. Variabilizing costs. Companies can lower their fixed costs and increase those that fluctuate with the market.

Supply Chain 15

Supply Chain Fixed Costs Price Crisis 15

Harvard Business Review

AUGUST 11, 2011

When stock markets gyrate and growth prospects darken, it's tempting to rein in innovation programs and hoard cash. Management has made promises to senior executives about what a project will achieve, and fixed costs have built up because they looked prudent in comparison to planned revenues.

Innovation 15

Innovation Fixed Costs Airlines Business Model 15

Harvard Business Review

NOVEMBER 30, 2018

And the same applies to the affected workers: The tight labor market means there are opportunities for those who go through retraining. Capital-intensive factories have a high-fixed-cost, low-variable-cost operating model. Another issue involves reallocating resources in the face of fundamental market shifts.

Restructuring 14

Restructuring Fixed Costs Operations Consensus 14

Harvard Business Review

JULY 2, 2014

It’s a simple calculation to determine how many units must be sold at a given price to cover one’s fixed costs. Assume she must incur a fixed cost of $25,500 to produce and sell a kite. What if we want to make an investment and increase the fixed costs? That’s the breakeven point.

Analysis 10

Analysis Fixed Costs Price Cost 10

Harvard Business Review

DECEMBER 21, 2011

Early in my career I was fortunate to help a large manufacturer and distributor of construction and agricultural equipment change the way it went to market in North America. Within the first year of our effort net sales increased 27 percent while fixed costs were reduced by 40 percent. Not all fixed cost reductions were people.

Offshoring 16

Offshoring Fixed Costs Outsourcing Construction 16

Harvard Business Review

JULY 22, 2011

To appreciate the truth of this claim, it's vital to understand one of Clayton Christensen's theories on marketing and product development: Jobs-to-be-done. It was in your home, had no shelf space limiting its inventory, and could beat Tower on price because of its lower fixed costs.

Christensen 19

Christensen Price Disruptive Innovation Business Model 19

Harvard Business Review

AUGUST 17, 2012

It has doubled its market cap in the five years and sales reached almost $1.5 What's more, these are markets that traditional developed market firms are increasingly targeting for their own growth goals. and other traditionally developed markets. and other traditionally developed markets.

Company 14

Company Pharmaceuticals Business Model Fixed Costs 14

Harvard Business Review

JULY 20, 2011

A succession of CEOs prior to Rick Wagoner (who fought heroically to overcome the dreadful hand he was dealt) allowed all manner of legacy costs to build up (retiree health, Jobs Bank, etc.) and those largely fixed costs were more painful and debilitating if GM shrank in the U.S. market: small and mid-car. And in the U.S.

Company 14

Company Franchising Fixed Costs Banking 14

Harvard Business Review

MAY 8, 2012

Skype , for example, competes with fixed-line carriers by offering free mobile Skype calls. Google has its own contender in the market, Google Voice. Bharti's innovative business model converted fixed costs in capital expenditure to a variable cost based on usage of capacity. The trend is spreading.

Outsourcing 12

Outsourcing Wireless Telecommunications Core Competence 12

Harvard Business Review

MARCH 16, 2017

But how does the presence of climate skeptics affect the market for climate-related innovation? A drug company must incur a large fixed cost to do the basic research, so it has strong incentives to predict what the demand for the drug will be if its research succeeds. Suppose that there was only one bald man in the world.

Entrepreneur 12

Entrepreneur Aggregate Demand Incentives Real Estate 12

Harvard Business Review

OCTOBER 6, 2014

In the last three years, these two companies have rapidly gained share and now account for more than 8% of the market, while Tesco has lost more than 2% share, down to 28%. The hard discount format accounts for as much as 40% of the German market, and for some good reasons. and spends it in international markets. billion to $8.6

Retail 15

Retail Merchandising Discount Price 15

Harvard Business Review

JUNE 22, 2015

Marketers often have to make the call on whether a certain marketing investment is worth the cost. Can you justify the price tag of the ad you want to buy or the marketing campaign you’re hoping to launch next quarter? The variable costs to make each pair of flip flops are $14.00. First, look at fixed costs.

Payback Period 8

Payback Period Fixed Costs Analysis Price 8

Harvard Business Review

OCTOBER 29, 2015

Size is perhaps the most neglected marketing tool. On a search of EBSCO’s Business Source Complete , I counted no less than 1,890 articles published in marketing journals in the past 10 years about price, but only 22 addressing package or service size issues. The New Tools of Marketing. Insight Center. drink at $4.75.

Fixed Costs 8

Fixed Costs Price Constraint Cost 8

Harvard Business Review

SEPTEMBER 4, 2013

For example, a decade ago, it''s unlikely that small-business owners would have told you that they needed a flexible way to host data and applications, one that preferably turned the fixed cost of computer hardware into a variable cost of renting capacity. When the company rides an enabling trend.

Industry 8

Industry Fixed Costs Trends Health Care 8

Harvard Business Review

DECEMBER 17, 2014

Eden McCallum, thus, manages to keep its overhead and other fixed costs at a minimum. The only thing the consultants (usually ex-McKinsey, Bain, or BCG) are responsible for is to execute these projects to the best of their abilities. Could an approach like theirs work in other industries?

McCallum 15

McCallum Competitive Advantage McKinsey Consultative 15

Harvard Business Review

JUNE 24, 2013

When through our venture investment arm we seek to evaluate the profitability prospects of a young business, we look to see whether its team can credibly answer two questions: How will you charge enough for a transaction to cover the costs related to producing and delivering a good? There are times when a company chooses to be unprofitable.

Venture Capitalist 11

Venture Capitalist Supply Chain Long-term Christensen 11

Harvard Business Review

FEBRUARY 6, 2018

Consider its decision to pursue the market for pharmaceutical distribution, or the recent announcement that it will be teaming up with Berkshire Hathaway and JP Morgan Chase to create joint solutions for reducing the health care spending of more than 1 million employees and their families. .”

Health Care 15

Health Care Retail Operations Insurance 15

Harvard Business Review

JULY 12, 2018

A second important deficiency arises from the fallacy that a cost-plus price is guaranteed to cover costs. Cost-plus prices provide no guarantee of covering costs or earning a profit. If the major competitors in a market use cost-plus pricing, it stabilizes price levels.

Price 12

Price Cost Tactics Retail 12

Harvard Business Review

MARCH 28, 2014

Disruption is an explanation of how small nimble companies unseat industry giants – but it is simultaneously a story of market expansion and the provision of ever cheaper and more accessible goods and services. Virtual reality is not a disruption to the computing market, instead it stands poised to disrupt content consumption.

Disruptive Innovation 9

Disruptive Innovation Automotive Software Fixed Costs 9

Harvard Business Review

AUGUST 8, 2014

So to cover his monthly fixed costs of student loan payments (on more than $100k in debt), rent, and health care he was driving for Uber. As a result he was now competing against much more experienced people for each new gig that came up, and he hadn’t had a lot of success since graduating.

Long-term 14

Long-term Short-term Fixed Costs Technology 14

Harvard Business Review

MAY 28, 2018

He asked one former major investor for a reaction to the company’s prediction (accompanying poor quarterly results): “that the [current] market contraction will bottom out soon and our profits will improve.” I assumed you had some further cost reduction up your sleeve.” What he heard was uncomfortable.

Company 11

Company ROIC CFO Restructuring 11

Harvard Business Review

NOVEMBER 10, 2016

By tapping into that excess capacity and making it available on a network they generated new market demand, which led to UberX and a thriving community of 160,000 drivers conducting one million rides a day. On any given day in America, 40% of hospital beds lie empty, their enormous fixed costs weighing heavily on the system.

Health Care 12

Health Care Power Hotels Transportation 12

Harvard Business Review

NOVEMBER 18, 2013

For instance, larger scale has enabled many hospital systems to lower their per-patient operating costs significantly. However, reform and other market changes are altering the scale equation for hospital systems, so some of the traditional advantages that larger scale has traditionally brought them may no longer apply.

Health Care 9

Health Care System Cost Price 9

Harvard Business Review

MAY 21, 2015

Over the past two decades, there have been many attempts to reform the electric utility market. Consider how Uber opened up the transportation market. In both cases, the two goods (car and real estate) are given value-creating potential through a process of market fragmentation and consumer empowerment.

Energy 8

Energy Transportation Software Price 8

Harvard Business Review

APRIL 5, 2017

However, firms can efficiently increase margin growth without much revenue growth by managing to squeeze out their fixed costs to service the same level of output. What if concentrated market power of a few companies in an industry has made these companies more profitable than usual? Are all share repurchases myopic?

EPS 11

EPS Metrics Short-term Depreciation 11

Harvard Business Review

DECEMBER 1, 2017

You have to consider salaries, marketing budget, office size, technology services, and on and on. Too often, assumptions about the potential market and its clients can cloud our judgement about expenses. In fact, he began to notice that prospects would react negatively to the extravagance of his office, décor, and furnishings.

Strategy 10

Strategy Budgeting Cost Price 10

Harvard Business Review

MAY 19, 2015

That gave it a steadier cash flow to cover the costs of its large fixed cost investments, but did not eliminate the unused capacity of plants dedicated to one kind of product. These regional production centers would reduce transportation costs and currency risks, while developing closer ties to their customers.

Engineering 8

Engineering Learning Curve Fixed Costs Finance 8

Harvard Business Review

DECEMBER 25, 2013

Further, sales variation can get widened much more when it comes to financial variation because of fixed costs. Along the same lines, a 5% drop in revenue can result in a 50% drop in market cap. It is not uncommon for a 5% drop in revenue to result in a 30% drop in profitability.

Business Intelligence 9

Business Intelligence Information Technology Uncertainty Course 9

Harvard Business Review

FEBRUARY 24, 2015

The first category is exogenous factors over which the business has little control: the growth of the markets into which it sells; the competitive intensity and thus the average profitability of the industry in which it operates; or the fragmentation of its industry and thus the scope for a growth-by-acquisition approach.

Chemicals 8

Chemicals How To Kahneman Reputation 8

Harvard Business Review

MARCH 1, 2018

Consequently, if we want new medical innovations to be financially viable for the patients who need it most, health insurance markets need to be regulated to eliminate the perverse financial incentives that limit patients’ coverage. Insurance markets are failing to deliver. First, a little background. Problems may get worse.

Cost 8

Cost Insurance Incentives Policies 8

Harvard Business Review

JULY 27, 2017

And the fixed cost from “touchpoint-to-pilot” are immense. For example, in the case of a $100 million CVC fund, which can close five to 10 investments a year, these costs typically range from $1 to $2 million per startup — not including the administrative and variable costs of the pilot itself.

Venture Capitalist 8

Venture Capitalist Meyer Innovation Fixed Costs 8

Harvard Business Review

JUNE 4, 2015

Since theme parks are high fixed cost/low variable cost entities, revenue from discount-enticed new customers is virtually all profit… free money. Restaurants, for example, often charge “market price” for seafood entrees to reflect varying supply conditions. This would result in growth. I think so.

Price 8

Price Course Discount Fixed Costs 8

Harvard Business Review

SEPTEMBER 9, 2015

During an economic crisis, the exaggerated decline in orders can be especially damaging to upstream suppliers that have high fixed costs tied to production assets. It reached a peak on June 12 and then proceeded to lose over 40% of its value by the end of August despite efforts by the Chinese government to prop up the market.

Supply Chain 8

Supply Chain Retail Crisis Operations 8