Strategic Cost Management: Basic Concepts:
Strategic Cost Management: Basic Concepts Strategic decision making is choosing among alternative strategies with the goal of selecting a strategy, or strategies, that provides a company with reasonable assurance of long-term growth and survival. The key to achieving this goal is to gain a competitive advantage . Strategic cost management is the use of cost data to develop and identify superior strategies that will produce a sustainable competitive advantage.
Strategic Cost Management: Basic Concepts:
Strategic Cost Management: Basic Concepts Competitive advantage is the process of creating better customer value for the same or lower cost than that of competitors or creating equivalent value for lower cost than that of competitors. Customer value is the difference between what a customer receives (customer realization) and what the customer gives up (customer sacrifice). The total product is the complete range of tangible and intangible benefits that a customer receives from a purchased product.
General Strategies:
General Strategies There are three general strategies that have been identified: cost leadership product differentiation focusing
General Strategies:
General Strategies A cost leadership strategy happens when the same or better value is provided to customers at a lower cost than a company’s competitors. Example: A company might redesign a product so that fewer parts are needed, lowering production costs and the costs of maintaining the product after purchase .
General Strategies:
General Strategies A differentiation strategy strives to increase customer value by increasing what the customer receives (customer realization). Example: A retailer of computers might offer on-site repair service, a feature not offered by other rivals in the local market.
General Strategies:
General Strategies A focusing strategy happens when a firm selects or emphasizes a market or customer segment in which to compete. Example: Paging Network, Inc., a paging services provider, has targeted particular kinds of customers and is in the process of weeding out the nontargeted customers.