Profit Pools

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What are profit pools? Description

The Profit Pools method of Orit Gadiesh and James L. Gilbert is a strategy model that can be used to help managers or companies focus on profits, rather than on revenue growth. The idea behind it is: managers need to look beyond revenues to see the shape of their industry's profit pool. In this way strategies can be created which result in profitable growth.

Orit Gadiesh and James L. Gilbert, consultants at Bain & Co. presented the following definition of Profit Pools in their HBR article "Profit Pools: A Fresh Look at Strategy" (May 1, 1998): the total profits earned at all points along the value chain of an industry. Companies that see what others do not see, will be best prepared for capturing a disproportionate share of the profits in an industry.

Although the concept is simple, the structure of Profit Pools is usually quite complex. The pool will be deeper in some segments of the value chain than in others, and depths will vary within an individual segment as well. For example, the profitability of a segment may vary widely by customer group, product category, geographic market, and distribution channel. Moreover, the pattern of profit concentration in an industry will often differ from the pattern of revenue concentration.

Usage of the Profit Pool model

• Identify new sources of profit.
• Rethink the role of a company in the Value Chain.
• Refocusing a company on its traditional sources of profit.
• Make product decisions, pricing decisions and operational decisions.

Forum Forum discussions about Profit Pools. Below you can ask a question about this topic, share your experiences, report a new development, or explain something. Start a new topic about Profit Pools Share your knowledge here (or ask a question)   Profit Pool versus Centre Is a profit pool the same as a profit centre?... 19   1 comments What is Profit ? FIT Profit is all about being FIT enough to run the business. FIT Stands for: F - Financial Fitness I - Intellectual Fitness T - Technological Fitness In Hindu culture we have 3 godes... 13   🔥 NEW Where Can I Find a List of Current Industry Profit Pools? Many people speak of profit pools, but where can I find them in the U.S. and internationally? Is there a list some place? I would be especially interested in time dated snapshots by geographic lo... 6   1 comments

Expert Tips Advanced insights about Profit Pools. Here you will find professional advices by experts. How to Challenge the Existing Strategic Logic Discovering Uncharted Profit Pools A Blue Ocean Strategy-tool Kim and Mauborgne are describing is the "Four Actions Framework". This Four Actions Framework... Identifying Profit Pools Profit Pools, Increasing Profitablity, Horizontal Diversification Examples of Profit Pools can be found in various industries: - The U.S. automotive industry encompasses many value chai...

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Compare with Profit Pools: Relative Value of Growth  |  Business Process Reengineering  |  GE Matrix  |  BCG Matrix  |  ADL Matrix  |  Core Competence  |  STRATPORT  |  SWOT Analysis  |  Benchmarking  |  Product Life Cycle  |  Bass Diffusion Model  |  Industry Change  |  Positioning

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