How to Use the Profit Framework for Business Case Analysis (Part 6 of 12) | caseinterview

Summary

本视频脚本深入探讨了利润分析框架，通过逐步分解利润问题，指导观众如何识别和解决企业盈利能力下降的问题。首先，脚本介绍了利润由收入减去成本得到，并强调了在分析利润问题时，通常需要关注收入驱动或成本驱动的问题。接着，通过具体示例，脚本展示了如何将问题分解为不同的分支，并逐步深入到问题的核心。特别强调了在分析过程中，需要对固定成本和变动成本进行细分，以及如何利用80/20规则来集中精力解决主要问题。此外，脚本还提到了在面对复杂情况时，如何灵活运用框架，并根据给定信息做出决策。最后，脚本通过一个案例，说明了如何将利润问题与行业背景结合起来，使用波特五力模型等工具来全面分析市场情况，从而提出有针对性的建议。

Takeaways

• 📈 **利润框架的起点**：利润由收入减去成本得出，然后通过不同的分支进行深入分析。
• 🔍 **问题识别**：首先确定问题是收入驱动还是成本驱动，这决定了分析的路径。
• 📊 **单位销售分析**：如果是单位销售问题，需要进一步细分市场，找出影响销售的主要因素。
• 💡 **情境依赖性**：分析过程中要根据给定的信息灵活调整，没有一成不变的规则。
• 📐 **成本分解**：在成本方面，将成本分解为单位销售成本和每单位成本，进一步分为固定成本和变动成本。
• 🔑 **80/20规则**：应用80/20规则来识别和专注于造成大部分问题的因素。
• 📏 **价值链分析**：通过价值链分析，检查产品从创建到最终客户的各个环节中固定成本的变化。
• 🧩 **问题隔离**：关键在于隔离问题，找到造成问题的主要原因，而不是仅仅停留在表面。
• ❌ **避免跳跃性思维**：不要基于先前的知识或假设跳跃性地解决问题，而应遵循框架逐步深入。
• 📝 **记录与标注**：在分析过程中，记录和标注数据是非常重要的，这有助于清晰地理解和沟通问题。
• 🔄 **迭代分析**：如果初步假设不正确，应返回框架的上一层，从另一逻辑分支重新开始分析。
• 🔮 **市场环境考量**：在利润分析中，还需要考虑市场环境和行业趋势，这可能影响成本和收入。

Q & A

什么是利润和盈利性框架的起点？

利润和盈利性框架的起点是利润，它由产品的收入减去成本得到。这个框架会进一步分解成不同的分支，帮助分析利润问题。

如果面临一个利润问题，首先应该考虑什么？

如果面临一个利润问题，首先要确定是收入驱动型还是成本驱动型的问题。如果是收入驱动型，需要关注销量和单位收入；如果是成本驱动型，则需要深入分析成本结构。

在分析利润问题时，为什么需要进行市场细分？

进行市场细分是为了隔离出问题的特定部分，识别出导致销量下降或成本上升的具体因素。这有助于更精确地定位问题，并为解决问题提供方向。

在处理单位销量下降的问题时，应该采取哪些步骤？

首先，要将单位销量分解为其组成部分，然后寻找驱动销量的各个组成部分的信息。接着，根据这些信息进行市场细分，找出哪些细分市场的销量下降是问题的主要原因。

如何使用80/20规则来解决利润问题？

80/20规则用于识别和集中精力解决造成问题的主要原因。在利润分析中，如果发现某个因素（如原材料成本上升）占据了成本增加的大部分，那么应优先解决这个因素，以期获得最大的效益。

在分析固定成本和变动成本时，为什么要按照价值链进行分解？

按照价值链分解固定成本和变动成本可以帮助我们理解整个业务流程中的成本分布，从而更准确地识别和定位成本增加的环节，无论是原材料、制造、销售还是客户服务。

如果发现利润下降主要是由于成本上升导致的，接下来应该分析什么？

接下来应该分析成本上升的具体原因，包括固定成本和变动成本的增加，并进一步分解这些成本以识别出成本上升的主要驱动因素。

在解决利润问题的过程中，为什么需要避免使用先验知识？

使用先验知识可能导致忽视框架和数据，从而跳过重要的分析步骤。这不仅可能导致错误的结论，而且可能使客户难以跟随分析过程，影响解决方案的质量和可信度。

在分析一个公司的利润下降问题时，为什么要考虑竞争对手的情况？

考虑竞争对手的情况有助于了解整个行业的趋势和问题。如果发现成本上升是整个行业面临的问题，那么解决方案可能需要考虑行业层面的因素，如供应链变化、原材料市场价格波动等。

如何使用波特的五力模型来分析一个公司的业务状况？

波特的五力模型可以帮助分析公司在行业中的竞争地位，包括供应商的议价能力、买家的议价能力、潜在新进入者的威胁、替代品的威胁以及现有竞争者之间的竞争程度。这有助于全面理解公司面临的市场环境和潜在的盈利性问题。

在解决利润下降问题时，为什么要关注行业趋势和市场环境？

行业趋势和市场环境对公司的利润有直接影响。了解这些外部因素可以帮助公司识别非内部可控的问题，如市场需求变化、法规变动、技术进步等，从而制定更有效的战略来应对利润下降的问题。

Outlines

00:00

📈 利润与盈利能力框架概述

本段介绍了利润和盈利能力框架的基本概念，强调了利润由收入减去成本得出，并指出了分析利润问题的常见分支。提出了在解决利润问题时，需要区分是收入驱动还是成本驱动的问题，并分别查看单位销售量和每单位收入。此外，还讨论了如何通过分割市场细分来识别问题驱动因素，以及如何使用常见的市场细分模式来深入分析问题。

05:01

🔍 成本细分与问题隔离

这段内容深入讨论了如何通过细分固定成本和变动成本来进一步分析利润下降的问题。提到了咨询师常用的80/20规则，即集中精力解决造成大部分问题的因素。通过价值链分析，可以识别出问题最大的成本部分，如原材料、制造、销售和市场或客户服务等。此外，还强调了问题隔离的重要性，通过实例说明了价格下降和成本上升对利润的影响，以及如何通过分析找到问题的真正原因。

10:05

🚫 避免跳跃性思维，坚持框架

这一段强调了在分析案例时避免跳跃性思维的重要性，即不应该基于先前的知识或假设而跳过框架的步骤。提出了即使面对不熟悉的行业或情况，也应该坚持使用框架来逐步分析问题。还提到了在没有明确框架的情况下，如何通过思考和逻辑推理来解决问题。

15:06

📉 成本上升导致的利润下降

本段通过一个具体的例子，展示了如何分析由于成本上升导致的利润下降问题。通过将成本分解为固定成本和变动成本，并进一步细分变动成本的组成部分，可以识别出造成成本上升的主要因素。讨论了如何通过比较历史数据和行业数据来理解成本变化的原因，并根据这些信息提出相应的建议。

20:10

🔄 行业分析与市场环境考量

最后这一段讨论了在分析了公司内部的成本问题之后，如何将视角转向整个行业和市场环境。提到了使用波特五力模型来分析整个商业生态系统，以及如何通过理解行业背景来为公司提供战略建议。强调了在没有足够信息的情况下，如何通过进一步的分析和研究来找到问题的根源，并据此提出解决方案。

Keywords

💡盈利性框架

盈利性框架是一种分析企业盈利问题的方法论，它从利润开始，通过分解收入和成本来识别盈利问题的原因。在视频中，这个框架被用来系统地分析企业的盈利问题，首先区分问题是由收入还是成本驱动的，然后进一步细分以找到问题的根源。例如，如果是一个收入驱动的问题，会进一步分析销售单位数和单位收入。

💡收入

收入是指企业在一定时期内通过销售产品或提供服务所获得的总收入。在视频中，收入的分析是通过比较销售单位数和单位收入来进行的，以确定收入是否为盈利问题的原因。如果销售单位数下降或单位收入减少，那么收入可能就是导致盈利下降的问题所在。

💡成本

成本是指企业在生产产品或提供服务过程中所发生的各种费用。视频强调了成本分析的重要性，特别是固定成本和变动成本的区分。固定成本不随生产量变化而变化，而变动成本则与生产量成正比。在分析盈利问题时，理解成本结构对于识别和解决成本增加的原因是至关重要的。

💡单位销售

单位销售指的是在一定时间内销售的产品数量。视频中提到，如果盈利问题是单位销售驱动的，那么就需要进一步分析哪些因素影响了单位销售，如地理区域、产品线、分销渠道等。通过这种细分，可以更精确地定位问题并找到解决方案。

💡成本驱动

成本驱动是指盈利问题主要是由于成本增加引起的。在视频中，通过分析成本的增加是否导致了利润的下降，可以确定问题是否为成本驱动。如果成本上升而收入保持不变或增长不显著，那么成本增加可能就是盈利性问题的关键因素。

💡固定成本

固定成本是指不随产品生产量或服务量变化而变化的成本，如租金、折旧等。在视频中，固定成本的分析有助于理解在总成本中哪一部分是固定的，以及是否有固定成本的不合理增加导致了盈利性问题。例如，如果制造成本中的固定部分异常增加，可能表明存在效率问题或市场变化。

💡变动成本

变动成本是指随着产品生产量或服务量的增加而增加的成本，如原材料费用、直接劳动力成本等。视频中提到，变动成本的增加可能会导致单位成本的上升，从而影响盈利性。通过分析变动成本的各个组成部分，可以识别出成本增加的具体原因。

💡市场情况

市场情况涉及企业所在行业的整体状况，包括竞争、供需关系、价格趋势等。在视频中，当分析了企业内部的盈利性问题后，进一步探讨市场情况是理解问题全貌的重要步骤。了解市场情况有助于企业制定相应的战略决策，比如是否需要调整价格、改变产品线或退出市场。

💡波特五力模型

波特五力模型是迈克尔·波特提出的一种分析行业竞争结构的框架，包括供应商的议价能力、买家的议价能力、潜在新进入者的威胁、替代品的威胁和现有竞争者之间的竞争程度。在视频中，虽然提到了这个模型，但并未深入使用，而是将其元素融入到其他框架中，以便更全面地分析企业的市场环境。

💡价值链分析

价值链分析是一种分析企业内部活动如何创造价值和成本的方法。它涉及将企业活动分解为单独的价值活动，如原材料采购、生产、销售和分销等。在视频中，价值链分析被用来识别固定成本和变动成本增加的具体环节，从而找到成本增加的根本原因。

💡问题隔离

问题隔离是指在分析过程中逐步缩小问题范围，直至找到问题的根源。在视频中，问题隔离是解决盈利性问题的关键步骤。通过逐步分解收入和成本，咨询师可以更精确地定位问题所在，从而提供有效的解决方案。例如，通过分析不同地区或产品线的销售单位数，可以识别出销售下降的具体原因。

Highlights

利润框架的介绍，包括利润、产品、收入、成本等概念的讨论。

通过分支逐一展示利润问题的常见问题和解决方法。

如何识别是收入驱动还是成本驱动的利润问题。

数学上理解销售单位与每单位收入的关系。

当面临利润问题时，如何系统地分析和解决问题。

如何通过隔离不同的业务细分来识别问题驱动因素。

常见的业务细分模式，如产品线、分销渠道、地区和客户细分。

80/20规则在识别和解决主要问题中的应用。

成本分析中固定成本和变动成本的区分及其重要性。

如何通过价值链分析来理解固定成本和变动成本的变化。

在咨询案例中，如何避免先入为主，坚持使用框架进行分析。

案例分析中，如何通过提问和结构化思考来深入理解问题。

通过实际案例展示利润问题的解决过程和逻辑思考。

如何处理复杂情况，当利润问题同时涉及收入和成本。

如何使用波特五力模型来分析整个行业生态。

案例中提到的一个关于定价和市场策略的有趣案例研究。

强调在咨询案例中问题隔离的重要性以及如何实现。

如何通过框架和逻辑思考来避免在案例分析中走入歧途。

案例结束时，如何将分析转化为对客户的行动建议。

Transcripts

okay profits framework so refer to a

handout and we walk you through this

we'll go through we'll go through the

first framework I'll give you some

examples the one wants the next

framework that's another demonstration

and and so this would win the starter

because he's already seen a lot of it

okay and so that the profit and

profitability framework it starts with

profits products comprised of revenues

and minus costs and then it has these

branches and so I'll go through one

branch at a time and show you what the

common questions are and having what you

wanna be doing as you go through that

process so if you have a profit problem

you want to figure out which revenue

your cost-driven we showed you how to do

that earlier if it's revenue driven you

want to look at unions sold versus

revenue per unit so price times volume

you know mathematically equals sales

revenue okay

and usually if they're kind it's only

one of the two problems you know if

they're unkind it's like units shipped

have drops and prices have drop and then

you're thinking like that's a lousy

business okay well once you sort of got

down to this level you're not you're

nowhere near done okay so this is where

this I told you earlier the opening of

the case is very mechanical identical

systematic every single time and then

beyond that it's to us becoming sort of

situation depending depends on what

information you are given will drive

what you do next something to keep you

sort of the rules of that within the

branch what you want to do let's say

it's a unit sold problem what you want

to do next is you want to actually

isolate segments and isolate so that's a

to both segments isolate segments

segments that we isolate mathematically

computationally what's driving the bulk

of the mathematical problem okay so if

it's a unit sold issue you want to ask

what drives you in soul I'd like to

segment units sold into its component

parts do we have any information on the

components that drive units sold and

you're looking for a segmentation you're

looking for yes in Europe units sold or

up twenty percent in Asia the Downs

members have that kind of thing

sometimes segmentation pattern again the

trick here is there lots of ways to

segments don't guess

them tell them you want two segments and

then open the door to let them tell you

which way they are you want two segments

because usually they'll have one

preferred way and there's sort of no

there's no interview value and have you

go through that 15 ways you can segments

because you know and a live consulting

engagement you know you'll be doing a

plenty enough you'll be looking at

segments this way there's no

differentiation and numbers segment in

different waves no differentiation until

you find the right way and you break up

is ah okay

it's a geographical problem or it's a

channel problem you know the internet

channel is just sort of like growing

like a weed but face-to-face sales is

dying yeah so the key is segments and

then isolate when you've isolated say ah

okay this profitability problem is

really being driven by the by a decline

in sales volume in you know I don't in

the southwest look like that and then

the question then usually move on to the

next framework this is a situation

understand why I've also put here sort

of common segmentation patterns so by

product by product line my distribution

channel by region by customer segments

so new customers or customers big

customer small customers customers older

than a year a lot less than a year

customers from certain verticals so

those are very common ones and I I don't

think I've ever holiday like that ever

actually had the segment's I've just

said I need the segments and then that

you should tell me they usually give you

data ok so that's most common ok

so you want to basically drill down if

there's a dead end where clearly your

hypothesis is wrong you want to come

back up the framework go back to profit

and go down the other logical slide okay

it's very common

so what I give you is I will I will

oftentimes if I notice revenue problem

I'll tell you to start with cost okay I

wanna see how long it takes you to

figure out if you had you figure out

like in three minutes right if you're

not you're sitting there like looking at

cost looking at cost looking at cost

makes no freaking difference because

it's a revenue problem right okay

on the cost side what you're looking for

is you want to break down cost so this

is again this is how I do it lots of

ways to do it but I've always broken

down cost by units sold and then cost

per unit the other reason I do that is

because then I if I have to if it's a

complex problem where it's both both

sides of the branches are impacting

profits like prices are down and costs

are up that's like I pain the button

right because you guys going to do both

sides but if you have cost per unit it

allows you to compare versus revenue per

unit so you can look you can sort of

analyze things at a micro level not just

sort of in the aggregate so that's why I

like looking at cost per unit and then

within cost per unit I like breaking up

fixed cost versus variable cost and so

it's you can either look at fixed cost

variable cost in aggregate on a per unit

basis so it's a $20 product fixed cost

three ten bucks proportionately pro-rata

or alikum you sort of amortize it and

then rebel classical together ten bucks

okay and then within fixed cost and

variable cost you want to further

segment and keep drilling down until you

figure out the one thing that's sort of

driving the bulk of the problem there's

this rule that consultants use a lot

called the 80/20 rule and the 80/20 rule

just for review is it's it's finding

what's driving the bulk of the problem

okay it's not mathematically complete

which drives people who like

mathematical completes a little bit nuts

but it's what's driving most of the

problem so if you find that profits are

down let's say by twenty ten percent and

eight percent of that profit problem

comes from cost the consultant you

should say well geez we could solve the

whole problem but let's really focus on

classical's we nail that problem we

fixed eighty percent of the problem and

that's a good use of our time

all right okay segmenting fixed costs

and variable costs two different ways to

do it you can segment basically gist if

you want to want to break it up into its

pieces and the way such that when you

add all the pieces together it equals

the total okay you can do it by value

chain so a value chain is all the parts

of the business from sort of creation of

product - it needs Olmec customer so you

would look at fixed costs in raw

materials fixed cost and manufacturing

fixed cost and distribution sales and

marketing fixed costs and customer

service and a fixed costs have sort of

gone up a lot if you want to know of

those four parts of the business we have

fixed costs going up the most they might

save its manufacturing and if action

cost of gun by 20% 40% overall costs

have gone up by 10% and since since

manufacturing cost happens to be a

lender McMath way about a quarter of the

work cost cost base then it's really a

manufacturing cost problem okay what's

driving manufacturing costs let's look

at the PL where the components of

manufacturing cost there's labor there's

equipment there's this there's that

turns out labor concept on Oh

interesting

I don't know why that is oh there's a

union negotiation going on labor costs

have gone up interesting is that a

company specific issue or is that a

client issue all right so that's sort of

how things evolve you can look at vary

across the same way you look at variable

cost at each stage of the value chain

sometimes the cost doesn't lend itself

well to sort of within the value chain

so like for example once you've isolated

this manufacturing cost problem

sometimes you don't want to do it by

first part of the factory second part of

the factory if they're part of factory

so not a logical way to do it you might

do with more around sort of line items

in a pea now the general idea is how are

you break it up the toil better you add

up the parts to better equal the toll

and again NEMA game in this approach

particularly unprofitability

it's all about problem isolation it's

all about pom isolation if you half the

battle

frankly in consulting any cases it's

just friggin what's actually wrong it's

very confusing particularly it when it's

not just a profit problem like getting

onto the marketplace it's very very

confusing um I'll give you just an

anecdote so I had a client I was working

with for about a year and they were in a

business where like prices just like got

slashed in half

ten years ago slashed in half never

recovered business was bleeding cash

like what happened alright I could not

feel like me figure it out sort of no

logical reason I'm looking at all sort

of like all pricing guides from all the

competitors and it was an industry

problem right they all cut prices in

half you know ten years ago don't know

why and it took me like all the research

and illness and now so I could not

figure out why we ended up some of the

business for like a billion dollars as a

divestiture and I finally figured it out

what happened that year was the the guy

charged that business unit his

compensation plan changed his bonus was

huge based on units shifts not on net

profits because the headquarters wanted

to drive volume so what did he do he

hacked prices in half okay almost

literally half move the ton of volume

competitors followed let all

profitability out of that market it

never recovered span of twenty years

okay never recovered and my conclusion

someone so screwed up right and that was

what drove it not obvious I mean it took

me a year and I until I someone actually

sort of said nudge-nudge look at the

comp plan I like what you don't see that

every day so that's why the isolation is

important just because you know what's

driving the cost plot the problem you

don't always know the context all right

what I want to do now is give a

a couple variations on profits and then

we'll go on to the other cases I'm

spending a lot of time on this one just

because it really does best it's the

simplest kind of case to sort of master

it best shows the logic and thought

process and if you pseudo just drill

this process into your head you can you

can apply to situations where you have

to make up the framework okay and I've

had to do that a couple of times so

probably I don't know five to ten

percent of time there's like a case that

doesn't fall into any sort of known

category demand right and and so then

you have to sort of do Slovenian that's

interesting I told you this morning

really mean it start thinking out loud I

gosh this is a very interesting bum no

you guys I had a good time with this one

right and I shouldn't like what the hell

am i doing um okay so profitability let

me let me demonstrate again the wrong

way one way is all about jumping jumping

around okay so you're saying it's uh

oh it's particularly if it's a business

you

don't assume you know okay don't assume

you know it's actually it's um it can be

very dangerous if let's like for example

like if you if you're on the cutting

edge of the internet stuff okay and you

said well you would sort of you know you

have prior knowledge if you start using

a prior knowledge but they didn't watch

it - guess who's wrong one of the two of

you Nate the interviewer right um so you

wanted to get rid of that knowledge when

I give cases that are sort of based on

some real companies I'll use things like

you work for a fast-food joint called

almost McDonald's okay and I sort of do

that to always put the word almost

because even though it sounds like it's

McDonald's don't assume it is so don't

assume this because you went there last

time they had a promotion on Big Macs

it's a pricing problem right so you got

to ignore that and what often happens is

when you don't when you when you start

using prior knowledge you start ignoring

the framework and you start jumping

because you have to know that

instability well maybe you work from

that industry and you know what back to

your hand you have all the data in your

head but if you start jumping around

it's not what it's not quiet friendly

right there's a matter if you're right

if clients can't follow so so an example

is with ABC company is oh I know ABC

company yeah they're like the leader in

like XYZ industry prices have been

trashed in that business it's clearly a

pricing problem okay

could be right what is your love it okay

gotta stick to the framework all right

again the reminder of the right way is

you want to again open the case you have

this talk about this earlier stall think

if you need it

verify understand question and structure

so we open the profitable your framework

earlier analyze the case which will

demonstrate and then we talk about we

haven't done it yet but the conclusion

in action recommendation state what this

all means so particularly McKenzie we

use a phrase called so up okay sales are

down so what sales it okay prices are

down so what prices are down because

this new low-cost competitor in the

marketplace with a very high fixed cost

position but extraordinarily low

variable costs okay conclusion is so

what is you can't win this game anymore

you don't have low-cost position

variable cost position the more volume

they produce because they're very costs

are so low the more profits they make

the worse you get off you can't win the

skin you got to exit this business now

I'm making it up right but that would be

a clear conclusion so the question is

always so what so what what does that

mean what do I do about it and and so

you'll oftentimes here because people

say that a lot

all right so I actually have a question

for you guys I'm running a little behind

I can either sort of go through the

profit framework more with a demo or do

you feel like you guys got I can start

moving on to other things

I'm totally flexible don't care I'll do

well I'll do the putt from I'll just

I'll skip a couple of the variations

that have already covered and I will do

yeah I'll do one on the cost side cuz I

haven't done that a lot so again there

are a lot of variations to profitability

we talked a little bit sort of about

pricing and in units sold I'll give it

an example around on costs particularly

fixed versus variable because there's

some interesting relationships and

patterns that's you want to be aware of

so the the case again would open like

profits are down for ABC company by 20%

and Y revenues haven't changed so much

the across problem costs are down 20%

cost up 20% which is driving the

possibility issue and withdrawing all

this out which I should probably do yeah

this will be good idea actually let me

go back to just using your slide here so

I'm going to use a slide V here which

you guys don't have I'm just making

record for the video here and I'll draw

this thing out so you can kind of see

how it visually looks so we start off

talking about profits on the decline

by 20% revenues are flat at 0% costs

have gone up by 20% okay so it's

cost-driven profit problem looking at

units ships you know what actually it

often is just whatever happened in real

life so majority of time it tends to be

like one of the two if it's like both

it's a little more complicated because

then you got to go figure out like

what's the proportion

so if units shift of declined and fixico

end and unit cost of got up at the same

time then it's like okay which may move

more okay so and then you had like went

right on your numbers because really

like a lot of them in some cases I've

had like 35 numbers you know and

sometimes the numbers are useless but

they're giving to you so write it down

so you can go back to it and you might

want to practice taking notes because

you're in a stressful situation you're

driving down numbers an unfamiliar

situation you knew the number was given

earlier but you need to label it you

wrote it down which is good we don't

know what it means because you didn't

label it and you didn't label it on the

board because you were used to doing on

paper so those are all sort of important

things unit shifts and then cost per

unit so I'm going to just say it's a

cost per unit problem even though

mathematically doesn't sort of tie out

because I want to illustrate a

particular point and for cost per unit

you want to break out into let's say

it's you know it's ten dollars ten

dollars cost per unit and we want to

looked at fixed versus variable

and it could be that fixed cost is eight

dollars now let's make a $2.00

and then the question is sort of what's

what's what's change the most

so the dialogue goes cost per unit is

that ten dollars gone up to ten dollars

cost per unit is what the interviewer

said or you say in response to the

information it gives you next question

then is okay to understand why costs per

unit has sort of gone up so much we need

a break on splitting into its component

parts I'd like to look at fixed costs

and variable costs and you draw that

like what I just did

so draw that out say okay do we have the

information on how much fix caught what

of the ten dollars how much of that's

fixed cost versus variable cost and that

gives you information that's fixed

classes say 2 bucks the other cost is

eight bucks and then the next question

is okay again compared to historical and

compared to industry okay okay it's

interesting of these two what were they

the year before and so let's say again

the Mathieson tie out let's say last

year this was sort of today last year it

was at $6 okay so variable cost of

really gone out yes

how speaker oh yeah I'm sorry that's a

good idea so variable costs have gone

from 6 bucks a unit to 8 bucks unit

okay so stick so really we're isolating

the problem it looks like it's clearly

available class problem fixed costs

haven't changed much okay why have your

book costs gone up so what I'd like to

do now and I'm sort of talking to you as

the interview is I like to segment out

available costs and I make up an

industry so let's say it's so what's the

low fixed cost business with high

available cost services

okay we'll make it services now I'm

going to get manufacturing so I'm going

to expand out variable costs into its

component parts for this manufacturing

business and I assume this business has

raw materials in my correct yeah you're

right there's no materials great and I'm

not familiar with like widget

manufacturing after they get my

materials do they do anything it was a

good white manufacturing plant all I get

is some transportation class but it's

what if you lump that into into

manufacturing costs okay great so that's

the next step in the process is

manufacturing my right yes it is in fact

right great and then there's a activist

manufacturer this distribution cost is

that correct you have this distribution

clause and then there's like no customer

service let's say rate so out of the

eight box where does the eight bucks

come from so I'm making numbers up again

the interviewer says well then your wall

materials is is four bucks

Manufacturing is wamba cost of sales and

marketing is two dollars and customer

service is one dollar okay interesting

of those four numbers how have they each

changed over the past year it turns out

there's been no change in manufacturing

variable cost distribution customer

service and raw materials cost have gone

up by whatever would be mathematically

appropriate to match number above I'll

just put say a 20% increase okay great

interesting so we have only Tillich's

costs going up 20% and look like when

you do all the math that's really

driving the cost problem I'm curious to

know what the raw material costs for the

competitors are relative to this

particular company so you might say not

a good thing before this but this would

be sort of like no company

other competitors I probably actually

drawn on a clean sheet paper so look

because now we know the problem is

through so it's like a new case it's

actually go ahead and do that slide see

think so we have competitors a company

and manufacturing cost

so they were I don't through 25 last

year but now for box we have information

on the competitors turns out the raw

material cost is the same and it's

identical okay it's an industry issue

all right

so it's clear variable costs for raw

materials I've got four industry wide

now we don't know why and then this

would be like well now we need to do is

we need to understand the context of the

industry of that this company is in so

I'm going to sort of switch gears and

look at the business the market overall

and and and here I would probably switch

to the business situation framework I

might use I haven't talked about that

yet but I if you guys are familiar with

Porter's five forces are you guys from

the with that so forest by force is a

good framework for sort of looking at an

entire ecosystem or or chain of sort of

from supplier to company to his

customers and looking at power shifts in

between I don't actually personally use

it I sort of take those elements and

incorporate in my other framework cause

it's less one less thing to remember but

here I'll be very reasonable to start

looking at it

we've got Porter's five forces or

looking at a business situation either

would be fine and so that's sort of an

example of how far you would typically

get in in a profitability type case and

then usually it's like you know the math

but you still don't know the other state

you don't have understanding as to why

and more importantly you have enough

information to tell if client what to do

and that's when I would typically switch

over so you can follow this same process

so back on slightly again you see how

there's a stre and clearly I haven't

practiced a penmanship in a long time

you see the tree you're working down the

tree and you're trying to isolate the

problem and that's half the battle most

I don't know but a lot of interviews

never get there okay they never actually

isolate what the problem is and they

spend their time so a loss in all this

so they get confused on the math and

they get sort of deep on to a detour

you