One of the realities of management information systems is that they only express what actually happened. In many instances, it is important to understand the financial and operating impact of what didn’t happen. This is especially important with regard to missed sales opportunities.

Given the severity of the recession many firms are making some major changes in their operations—lowering payroll, reducing inventory levels and tightening credit policies. Such actions have a very pronounced and very visible impact on financial performance. At the same time, all of these actions have the potential to decrease sales. Nowhere in the MIS is there a proper entry for the economic impact of sales that are not made.

This report will examine the impact of lost sales on industry profit performance. It will do that by addressing two key issues:

Understanding Sales Sensitivity—An examination of how even modest missed sales opportunities decrease profitability.

Rejuvenating Sales Results—A discussion of the alternative approaches available to management to drive higher sales volume without increasing operating expenses.

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