TRUMPET EFFECT - WHY PROFITS DROP AS SALES RISE
You may experience the Trumpet Effect if sales rise but profits decline. You may be scaling your business with aggressive marketing, over expansion and diversification. You may have reached your diseconomies of scale with too much volume, clients and markets you cannot efficiently serve. You may have reached your diseconomies of scope with too many products, variety, businesses and competitors. You may have reached your level of incompetence to handle too many people, departments and processes. Your profits start to rapidly drop or could even turn to losses because of uncontrolled costs, wasted resources and capacity, and a host of operational inefficiencies. The trumpet effect demonstrates that unmanaged growth can be a total waste of efforts. By managing your growth sustainably, your sales and profits should move in the same direction and form the shape of an elephant tusk instead of a trumpet.
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