Improve Your Ability to Manage Costs

Manage your cost structure to create Economies of Scale while offering good value to Core customers. This activity identifies the gap you have to close in your financial performance. It looks at the advantages or disadvantages that you have with visible costs compared to your lower cost competitors. The changes you make to improve your products and services should improve your mix of customers. This closes part of your financial gap. The remaining steps in the activity help you quantify and improve Productivity and Economies of Scale.

The diagnosis of the potential that your current cost position offers occurs in Steps 24 through 29 in the Basic Strategy Guide.

Step 24
: Identify current shortfalls in financial results.

Step 25
: Evaluate the Company's advantages or disadvantages in visible costs compared to low-cost competitors.

Step 26
: Identify the profit increase from the improvement in the mix of customers that the Company serves.

Step 27
: Create countable measures of Productivity.

Step 28
: Evaluate Economies of Scale in each functional cost department.

Step 29
: Measure Economies of Scale by type of employee.

Return to Improve Your Ability to Manage Costs