Topics
growth, strategy, profits, franchising, analysis
Review the activity below or download the PDF student worksheet
Student Worksheet: Are These Good Growth Results
Student Discussion Activity
The following food retailer has experienced significant top-level growth over the past few years. But underpinning their results is a significant increase in franchised stores/outlets, so are the results as good as they appear?
Here are some top-level financial figures for a food retailer growing primarily through a franchise system:
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
|
| Revenues |
$1.00b |
$1.10b |
$1.21b |
$1.33b |
| Profits |
$200m |
$220m |
$242m |
$266m |
| No. of Stores |
2,000 |
2,400 |
2,880 |
3,450 |
| Advertising Spend |
$100m |
$105m |
$110m |
$115m |
Student Discussion Questions
- What percentage growth has the firm achieved in revenues and in profits over the period above? Has the firm improved these two metrics each year?
- Therefore, based on your response in Q1 only, are these generally good growth results?
- What is the firm’s revenue and profit on a PER store basis for each year? How has this metric been tracking?
- What has been the contribution of the additional 1,450 stores in terms of extra revenue and profit? (That is, profit per store in year one versus increased profit/additional stores by year four.)
- Therefore, based on your responses in Q2 and Q3, how well is the firm growing?
- How insightful is ‘drilling down’ slightly and becoming more analytical?
- Given their overall store numbers and their franchising model, can you think of any logical reasons why these results are being delivered?
Related Activities
Financially-driven Marketing Strategy
From Situational Analysis to Marketing Strategy
External Information
Marketing and Finance: A Match Made in Heaven!
