The 3 steps - What is the problem? - Decompose the gap by drivers

7 important questions on The 3 steps - What is the problem? - Decompose the gap by drivers

How can you decompose the result gap by result drivers?

By using a hierarchical analysis or an issue tree.

What is the general structure of an issue tree?

Starts with result gap, go down and focus on drivers. (It should be MECE).

What does the decomposition of the result gap into a hierarchy of lower levels allow consultants to do?

It makes diagnosis of the result gap easier, it helps you get to the step to see where the problem is.
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If there is a profit gap, what does this mean?

A firm's achieved profits are lower than the desired profits.

What can a profit gap be decomposed into?

A profit is a revenue minus costs. Thus the profit gap is decomposed into a revenue gap and a cost cap.

To get more fine-grained insights the revenue gap can again be decomposed into what?

A volume gap (difference between products or services actually sold by client and desired number) and a price gap.

To get more fine-grained insights the cost gap can again be decomposed into what?

A variable costs gap and a fixed costs gap.

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