Remove Events Remove Fixed Costs Remove Revenue
article thumbnail

China’s Slowdown: The First Stage of the Bullwhip Effect

Harvard Business Review

Here’s a hypothetical illustration of the bullwhip effect: A retailer might experience an X% drop in sales owing to some external event. During an economic crisis, the exaggerated decline in orders can be especially damaging to upstream suppliers that have high fixed costs tied to production assets.

Sales 15
article thumbnail

How to Know If a Spin-Off Will Succeed

Harvard Business Review

A detailed roadmap should outline how it will become autonomous in terms of revenues and/or access to central services. The management team and owners should realize that the spin-off event is just the beginning of a journey that will be radically different from the past.

Assets 11
Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

Constraints on Health Care Budgets Can Drive Quality

Harvard Business Review

Working under a fixed-cost ceiling was, of course, difficult. We had little or no revenue-raising ability, and we had to meet a clear, challenging, and publicly reported set of quality objectives. The Parliament would vote on an expenditure limit and the NHS had to live within that limit. Get Care Right the First Time.

article thumbnail

Exclusive: Jim Collins on ‘Thriving In Chaos’

Chief Executive

The second thing that we also saw in our companies is that in an uncertain world, there’s this very weird paradox of, on the one hand, placing really big bets, and, on the other, protecting your flanks against downside events, and putting both of those together. And if we do that, we can’t help but grow revenues per fixed cost.

article thumbnail

The Get-Big-Quick Fallacy

Harvard Business Review

billion before it had even $20 million in revenues) or YouTube (which was sold 19 months after its founding to Google for close to $2 billion), or other companies whose hyper-growth attracted suitors before a viable business model emerged. Big events are endlessly discussed and analyzed. just acquired for $1.1

article thumbnail

4 Types of Activist Investors and How to Spot Them

Harvard Business Review

Based on my work studying activist strategies, I’ve outlined four hypothetical scenarios below (based on actual events) that demonstrate the different strategies an activist could pursue. In recent years, both companies exhibited compressed margins, flat revenue growth, and lagging returns. Example: Happy Co. more efficiently.

article thumbnail

21 Types of Employment: Your Hire-To-Retire Guide

AIHR

When to offer it: If your company has fluctuating workloads or seasonal needs or has to reduce fixed labor costs. Commission-based employment This arrangement bases a worker’s compensation primarily on the sales or revenue they generate. Salary format: Derived from revenue generated minus expenses.