Cost Analysis Outside The Organization

COST ANALYSIS OUTSIDE THE ORGANIZATION

Robin Cooper, Reqine Slaqmulder

Abstract (Summary)

A firm's strategic cost management programs should not restrict their attention to the cost structure of the firm or the supply chain within which it operates in today's business environment. There are two benefits that can be derived from such extra-organizational cost analysis. The first benefit is a steady stream of ideas that can be used to make a firm more efficient and its products more competitive. The second benefit is a comparison of a firm's own progress at becoming efficient with the progress of other firms. The comparative extra-organizational analyses that can be performed to obtain this benefit are benchmarking against best practices and competitive cost analysis. It is demonstrated how extra-organizational cost analysis can play a pivotal role in the strategic cost management process.

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