Business and Profit Center Management

PDF Print E-mail

Business and Profit Center Management

The main objectives and advantages of dynamic profit center management in comparison to traditional profit center management are:

1) Business and profit forward management not only analyzes and manages present but also future profits through the business pipeline perspective (Brand & Customer assets).  Brand & Customer assets correspond to future profits, which evidently cannot be estimated without effective profit center management, which incorporates business and market dynamics.

2) Joint return on action and investment management through the wider return on action (ROA) perspective, which also covers the impact of actions on action tangible assets in the business pipeline.  This is explained further in the “New Dynamic Asset Management World” chapter.

Business and profit forward management is the ability to manage capitalization of markets and Brand & Customer assets effectively in order to achieve long term stable growth.  This is becoming increasingly difficult and critical to success in today’s fast moving markets.  I recommend reading, “Managing on the Edge” in Fortune, October 2, 2006, which explains this major challenges for today’s top management.

Since 1985 there has been a sharp increase in the number of companies that Standard and Poor’s calls high risk and the trend seems to be accelerating.  In 1985 35% were classified as high risk and 41% as low risk.  In 2006 73%, more than the double, were in the high-risk segment and only 13% in the low risk segment.  These figures speak for themselves.

Joint return on action and investment management is indispensable for basic business management, which now covers the interlinked volume, timing and quality of the business.  All three are directly liaised with dynamic brand & customer asset management concepts, which I am explaining in this book.

Business quality can be subdivided into profitability, risk, and predictability / robustness and brand impact.  Profitability is straight forward, but hard to calculate.  Risk management is interesting, as pushing business volume and/or profits has a tendency to increase risk.  Predictability is at the heart of business dynamics, as it depends on pricing, customer relationships and competition.

Brand impact is a vital quality component and I like Bain and Company’s explanation of good and bad dollars, as presented in the Financial Times.  Good dollars stands for when we serve customers and build up the brand.  Bad dollars corresponds to destroying the customer’s image of the enterprise through bank penalties for example.

Business and enterprise piloting also requires dynamic, wider and deeper return on action management perspectives to see the market structure and business dynamics in order to be effective in today’s maelstrom of changing markets.  Management must simply be able to see and evaluate possible roads to success short and long term.

Dynamic profit center management
requires a new enterprise team focus and the biggest challenge is to change the mindset.  Yes, we also require new management methods, organizational structure and additional training but this is the easy part.




Manage Brand & Customer Assets

Manage Brand and Customer Assets“Dynamic-Tangible Brand-&-Customer Assets” are the major corporate assets, which require “Dynamic Profit Center Management” to cover both static and dynamic business models. Dynamic-Tangible market assets have direct impact on Profit-&-Loss Statements, which should be managed effectively.

Manage Corporate Power Chain

Bottom Promotion“Corp. Business Power Chain” bridges Static-Tangible and Dynamic-Tangible assets and is the kernel motor for creating cash flow and tangible business results. All departments and personnel are “Business Power Chain Contributors” and part of Corp. Performance Management, as explained in “Dynamic Balance Sheet and Profit-&-Loss Statements”.

Manage Business Timing and Change

Manage Business Timing and Change“Business Power Market Timing” and Corp. Change Management are critical in fast moving and ultra competitive global markets, which require “Dynamic Business-&-Profit Forward Management” with high management horizons in order to follow high market/business paces and secure future business.