Knowledge

On a case

A Bengaluru coffee chain's profit fell 20% this year.

Sources and further reading

• OpenStax: contribution margin

  Explains how sales, variable costs and fixed costs connect through contribution margin.

Go deeper

• Cost BreakdownCosts have risen, or the client has to cut them.
• Internal / ExternalDiagnose a performance decline by separating internal and external causes. Compare evidence, rule out weak explanations and focus the next question.
• Price / Volume / MixExplain a revenue change through price, volume and product mix. Build a numerical bridge with consistent units and reconcile it to the total.
• Split by SegmentFind which customer segment explains a change in performance. Reconcile weighted totals, test mix effects and avoid counting the same sale twice.
• Short Term / Long TermTurn a recommendation into immediate and longer-term actions. Assign owners, metrics and dependencies, and distinguish stabilisation from structural repair.
• 4PsDiagnose falling sales through product, price, place and promotion. Use the 4Ps to choose the next question and test the most likely cause.
• Value Chain AnalysisTrace a cost or quality problem through the business's activities. Use value chain analysis to locate losses and test a focused improvement.
• 3CsUse company, customer and competitor questions to understand an unfamiliar case. Identify the key uncertainty and choose a focused structure.

How it is lost

• Numbers Without Benchmarks

  Instead: A figure means nothing alone. Compare it against history, competitors, or industry norms before calling it good or bad.

• Failing to Segment

  Instead: Narrow by time, geography, product or segment before hunting for causes. An average hides the thing you are looking for.

• Unquantified Recommendation

  Instead: Attach the expected impact to the recommendation wherever the case data allows it.

Words you will hear

• Contribution Margin
• Fixed vs. Variable Cost
• Price-Volume Tradeoff
• Unit Economics
• Segmentation
• Break-Even Analysis
• Competitive Benchmarking
• Value Chain
• Operational Efficiency
• Working Capital
• Sensitivity Analysis
• Benchmarking