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Slicing the pie

How to Slice the Pie?

The amount of financial and quantitative data points in a company can be overwhelming for the managers, especially considering its multi-dimensional and abstract nature and complex information structure. Capability to “slice the pie”, or in other words, to visualize business finances, FTE, and other elements allows global corporations to better understand their value chains. Such visualization provides a big-picture of company’s international operation and with the right input of just a handful of data, it provides crucial insights into value chains, outliers, and trends.
This practical and quantitative approach can allow you to understand how the company:

  1. Operates on a global scale
  2. Utilize the functions of employees (FTEs)
  3. Allocates its intangible assets
  4. Allocate the profit margin within an MNE

The illustration below demonstrates 3 basic visualizations of MNE’s Gross Margin, Operating Margin and Full Time Employees across different locations. Slicing the pie based on these data points can provide important insights. For example, we can see that the gross margin of the UK and The Netherlands is almost equal, 31 and 33 respectively, while the operating margin and especially FTEs vary significantly. In this way, we could conclude that the employees working in the Netherlands are highly productive and create high value. On the other hand, the operating profit of 60% turns into Gross Margin of 33%, which could suggest that process hinder created value as opposed to the value creation generated by the UK employees.