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Our revenue and market share are good but we are not able to make the profit. What are the factors behind it?
- If you are not making profit despite good revenue and market share, the obvious reason is almost always the costs. You just don’t know your costs.
- You may be penalized by emergency purchase and you just don’t know it. You may produce a lot, sell a lot, but you also pay a lot. There is no warning bell from the system that you are bleeding. But you will see it in the cash flow.
- You may be over investing in R&D expenses, marketing expenses, maintenance expenses, and equipment investment. Much more investment do not give you much more results. The simulation game follows this law of economics called diminished return.
- Also, you could be missing out on the market potentials created by your investment because you are not producing enough to fully capitalize the potential.
- Again, plan well. Align production request/allocation with inventory, align investment with sales and market share desired.
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