Framework for Analyzing Cost Drivers and Value Creation PPT

This PPT slide, part of the 18-slide Cost Drivers Analysis PowerPoint presentation, presents an overview of various analytical techniques used to assess cost drivers within a business context. It categorizes these techniques into 3 main areas: Financial Ratio Analysis, Value Chain Analysis, and Cost Drivers Analysis, each with distinct focuses and methodologies.

Financial Ratio Analysis serves as an entry point for understanding a company's economic standing. It emphasizes 3 critical performance metrics: current profitability, sustainability of profits, and financial risk. However, the slide notes that conducting this analysis at the business unit level can be challenging, suggesting that broader organizational insights may be more accessible.

Value Chain Analysis is described as a framework for evaluating the value-adding activities of a company. This approach necessitates a deep dive into the company’s processes, highlighting how these activities interact with customer value delivery and the competitive environment. The slide indicates that mapping the industry value chain is essential for identifying cost drivers at each stage, allowing for a comparison with competitors to pinpoint potential advantages and areas for improvement.

Cost Drivers Analysis is closely linked to Value Chain Analysis. It identifies structural causes of costs associated with business activities. This analysis begins with a high-level overview of the company's value chain, focusing on quantifying cost drivers to gain insights into both the company's and competitors' cost structures. The slide emphasizes the importance of identifying cost drivers with the highest potential impact on industry cost structures, suggesting that this analysis can guide strategic decision-making.

Overall, this slide underscores the need for a structured approach to cost analysis, highlighting the interconnectedness of various analytical techniques and their relevance in strategic planning.

This slide is part of the Cost Drivers Analysis PowerPoint presentation.

This presentation is created by former McKinsey, BCG, Deloitte, EY, and Capgemini consultants. It explains the approach to Cost Drivers Analysis utilized by global strategy consulting firms.

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Costing Strategic Planning Value Chain Analysis Value Chain Cost Analysis Financial Ratio Analysis Financial Risk Sustainability

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