Final answer:
Profitability in consulting firms is driven by the availability of information on firm's performance, which attracts financial capital, alongside effective management of costs and sales and revenue analysis within market structures.
Step-by-step explanation:
The key drivers of profitability in consulting firms, as outlined by David Maister, involve a few important principles. As firms become established and their strategies are set to yield profits, the focus shifts away from the reliance on the personal knowledge of individual managers. Information regarding the firm's products, revenues, costs, and profits becomes widely available, attracting outside investors like bondholders and shareholders. This transition allows consulting firms to secure financial capital without the necessity of personal connections, thereby streamlining the process of scaling and growth.
Moreover, profitability is influenced by effective management of fixed and variable costs and understanding the average total cost, average variable cost, and marginal cost. Alongside cost management, firms must also consider sales and revenue analysis within the context of the market structure, which will inform the decision regarding the profit-maximizing quantity and pricing strategy. In the long run, these aspects combine to create a comprehensive approach to improving profitability in a consulting firm.