Profitability is an Ongoing Challenge
Corporations continually confront profitability issues and opportunities caused by competitors’ actions, shifts in demand, as well as changes in commodity prices and other factor costs. Companies that embark on a profitability management initiative to be able to deal with these issues more effectively often find their underlying processes and technology are too cumbersome to be workable. Most will find that today’s software tools enable them to manage profitability in increasingly compressed cycles using a deeper and broader set of data to make better decisions more consistently to achieve improved performance.
Build an Actionable Profitability Management Initiative
Companies typically set profitability objectives based on revenue targets and cost and expense limitations, but this approach does not deal with external challenges as effectively as profitability management. This is a discipline that dynamically addresses ongoing changes in the commercial landscape to achieve the optimum trade-off between maximizing profitability and market share objectives while respecting legal, regulatory and strategic constraints. By having a clearer picture of costs and cost drivers, executives and managers can measure economic profitability more accurately and then define, devise and refine the most appropriate strategy and tactics to optimize the trade-off between profitability, market share and other objectives within constraints.