The marketing manager received the reports on the profitability of the company and wondered whether the business is on the right direction. The manager was happy that the company generated a record 100M EGP in revenues in 2015; but found a net profit of 5M EGP quite low (just 5% net profit margin).
Below are important input data to guide the analysis:
Market Size = 1M units in 2015
Market is expected to remain constant with possible limited growth in 2016
Market Share = 80% with stable and relatively weak competition
Revenues = 100M EGP
Variable Costs (COGS) = 90M EGP
Overheads = 3M EGP
Marketing Expenses = 2M EGP
You have been appointed by the manager to analyze the situation and recommend actions for the future.