Profitable Region Determination

Profitability of the firm in any of the region would depend on 4 parameters

Profit Margin, derived from operations (Industry data: Sport equipment industry growth rate (%CAGR) and Profit Margin (PM) in % (2015))
Market Popularity, externality (Regional data: Sport market popularity by region-2015 by %)
Challenges/risks involved, external as well as internal (Regional data: Sport sales split by region-2015 by %)
Core competencies, enhance the (Competitor data: Sales break-up by sport of top players in %)

The above four parameters have been used to derive a scorecard for assessing the firms
profitability. The scores are allotted on a 4.0 grading scale

Overview
Profitability = f(companys operations, marketing activities,
externalities)

1.

2.

Profit margin given in the case

is assumed to be derived purely
from the operations of the 1. Current
firm(almost standard for the
State Analysis
industry)
Higher profit margin in any
region would result in high
profitability for the firm

3. Update Strategic
Roadmap

1. Market popularity determines

the customers' affinity towards
buying the product
2. High popularity results in low
marketing spend for product
2. Analysis
promotions, hence spurting the
of Results
firm's profit

1.

Profit margin is one of the

important parameters which
can be used to explain the
managements decision of
promoting sales in one region
over other

2.

In this scenario, overall sales

is highly correlated to the
average profit margin of the
region. However, the picture
cannot be explained
completely with the available
information(90% correlation
has been observed between
sales & profit margin)

3.

Thus leading us to the

assumption that along-with
the profit margins, there is an
external incentive/risk in the
business environment which
promotes/deters sales in the
region

3. Statistical check has to be done

to ascertain that there is a
significant variation in
popularity of a sport across
regions basis which marketing
spend could be allotted
4. Chi square independence
test(p-value=0.007) proves that
popularity of the sport varies
from region to region
significantly

PROFITABILITY ASSESSMENT
Assumption :
1. Cricket products Core competency of
GameInCorp (69% sales contributor)
2. Returns on investment to promote cricket
Relatively high, brand image promotes sales

1.

Profit margin given in the case is

assumed to be derived purely from
the operations of the firm(almost
standard for the industry)

2.

Higher profit margin in any

region would result in high
profitability for the firm

OPERATIONS

1. Market popularity determines

the customers' affinity towards
buying the product

2. High popularity low

marketing spend for
product promotions, high
profit
3. Statistical check has to be done
to ascertain that there is a
significant variation in popularity
of a sport across regions basis
which marketing spend could be
allotted
4. Chi square independence test(pvalue=0.007) proves that

popularity of the sport

varies from region to

MARKETING

1.

Profit margin is one of the

important parameters which can
be used to explain the
managements decision of
promoting sales in one region
over other

2.

In this scenario, overall sales is

highly correlated to the average
profit margin of the region.
However, the picture cannot be
explained completely with the
available information(90%
correlation has been observed
between sales & profit margin)

3.

Thus leading us to the

assumption that along-with the
profit margins, there is an
external incentive/risk in
the business environment

EXTERNALITIES