Low margins can yield greater returns

11/4/2009 | Harvard Business Review online

Lower profit margins usually lead to greater profits, but most companies don't heed this counterintuitive advice, pricing strategist Rafi Mohammed writes. He asks skeptics: "How do you explain Wal-Mart -- with its anemic 3.3% net margin -- ranking number 2 in the Fortune 500?" He advises that companies focus instead on growth opportunities as a way to increase profit.

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