Competitive cost analysis, a method to analyze the cost structure of two competing companies is a strategic use of cost modeling. The first note in this three part series on competitive cost analysis identifies the basic conceptual framework and principles for the development of accurate and comprehensive cost models with four categories of cost drivers – design, installation, geography and execution. The frame with cost modeling techniques can be coupled to the operations Analyst / c … Read more »

Competitive cost analysis, a method to analyze the cost structure of two competing companies is a strategic use of cost modeling. The first note in this three part series on competitive cost analysis identifies the basic conceptual framework and principles for the development of accurate and comprehensive cost models with four categories of cost drivers – design, installation, geography and execution. The frame coupled with cost-modeling techniques can help the operations analyst / consultant achieve the quantitative rigor required fixed operations to ensure decisions at strategic and tactical levels. This note contains a general discussion of four specific tools that will assist in the analysis of other cost drivers for competitive analysis. These techniques include teardown analysis, public data sources scale curve and use curve. The last remark in this three part series will provide step-by-step instructions for estimating scale curves and calculating utilization effects.
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from
Robert D. Landel,
Timothy M. Laseter,
Ken Heckel,
Angela Huang
6 pages.
Publication Date: Mar 08, 2001. Prod #: UV3558-PDF-ENG
Competitive Cost Analysis: Cost Modeling Techniques HBR case solution

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