Strategic

COST
MANAGEMENT
Three Themes to
Strategic Cost Management
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PILLAR 1: COST DRIVER ANALYSIS

▫ Cost driver analysis is concerned with Two Cost Drivers
determining what the actual drivers of
1. Structural Cost Drivers
activity costs are within your operations.
▫ The most popular type of analysis for this ▫ Scale 2. Executional Cost Drivers
is activity-based-costing (ABC) which aims ▫ Scope ▫ Workforce Involvement
to establish what indirect causes can be
related to specific activities. ▫ Experience ▫ Total Quality Management
▫ Technology ▫ Capacity Utilization
▫ Complexity ▫ Plant Layout

▫ Product Configuration

▫ Linkages with Suppliers or

Customers
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PILLAR 2: STRATEGIC POSITIONING
ANALYSIS
▫ Strategic positioning analysis is an
approach for researching what future
environments might be like in your internal Fairly Standard Strategic
corporate structure as well as your external
environment and determining how you can Management Tools
use the choice of business strategies to get 1. SWOT Analysis
from your current situation to these 2. Product/Market Matrix
desirable goals.
3. Portfolio Analysis
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PILLAR 2: STRATEGIC POSITIONING
ANALYSIS
▫ Strategic positioning analysis is an
approach for researching what future
environments might be like in your internal Fairly Standard Strategic
corporate structure as well as your external
environment and determining how you can Management Tools
use the choice of business strategies to get 1. SWOT Analysis
from your current situation to these 2. Product/Market Matrix
desirable goals.
3. Portfolio Analysis
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PILLAR 3: VALUE CHAIN ANALYSIS

▫ Value chain analysis (VCA) is a process where a firm identifies its primary
and support activities that add value to its final product and then analyze these
activities to reduce costs or increase differentiation.

▫ Value chain represents the internal activities a firm engages in when

transforming inputs into outputs.
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