Want FREE Templates on Digital Transformation? Download our FREE compilation of 50+ slides. This is an exclusive promotion being run on LinkedIn.

We have categorized 20 documents as Company Cost Analysis. All documents are displayed on this page.

As Greg Hayes, CEO of Raytheon Technologies poses a critical reminder, "In any organization, cost is a parameter that can make or break the balance sheet." C-level executives of Fortune 500 companies are constantly grappling with the key challenge of Company Cost Analysis—an integral component of Strategic Planning and Risk Management. The importance of gaining actionable insights from a careful scrutiny of company costs cannot be overstated.

  Open all 20 documents in separate browser tabs.
  Add all 20 documents to your shopping cart.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.




Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab




Flevy Management Insights: Company Cost Analysis


As Greg Hayes, CEO of Raytheon Technologies poses a critical reminder, "In any organization, cost is a parameter that can make or break the balance sheet." C-level executives of Fortune 500 companies are constantly grappling with the key challenge of Company Cost Analysis—an integral component of Strategic Planning and Risk Management. The importance of gaining actionable insights from a careful scrutiny of company costs cannot be overstated.

Understanding the Cost Structure

At the crux of Cost Analysis is the understanding of a company's cost structure. An in-depth knowledge of Variable Costs (directly linked to output levels) and Fixed Costs (consistent irrespective of output) can deliver vital insights into Operational Excellence and scalability. Overheads, especially in larger organizations, can creep up seemingly unnoticed and significantly dent profit margins if not kept in check.

Activity-Based Costing

Traditional price costing methods can lack acuity and blur the line between different cost categories. Instead, consider deploying Activity-Based Costing (ABC), a granular approach that follows the journey of overhead costs to the final product. ABC goes beyond simple allocation, tracing costs back to "Cost Pools" or groupings of overhead expenses associated with specific processes. It provides an accurate basis to assign costs to the end product or service. Management Accounting Research suggests that this approach significantly enhances budgeting, product costing, customer profitability analysis, and Performance Management.

The Significance of Marginal Costs

The concept of Marginal Cost serves as the compass for production-related decision-making. This metric indicates the cost change associated with a unit change in output volume. "Marginal Costing" can guide businesses in setting optimal price and production levels, particularly in competitive markets, and can be an instrumental tool in driving Digital Transformation in access to real-time data.

Linking Cost Analysis with Strategy

Company Cost Analysis needs to be considered within the framework of a company's broader strategic plan to ensure alignment and avoid the dangers of "cost myopia". There is little point in reducing costs in one area if it incurs greater costs or reduces value in another.

Embracing Technology for Cost Analysis

The advent of cutting-edge technologies such as Artificial Intelligence (AI), Machine Learning (ML), and Big Data Analytics have added unprecedented sophistication to Company Cost Analysis. These techno-analytical capabilities can empower companies with real-time insights for rapid decision-making and implementation.

Project management software solutions offer cost estimation and tracking functionality, reducing manual errors and facilitating more accurate forecasting. Similarly, cloud-based financial management solutions provide real-time visibility into expenditure and allow for automated budget tracking. Embracing these technological offerings can prove instrumental in achieving Operational Excellence and driving long-term company growth.

Company Cost Analysis is a powerful, yet often underutilized tool in the arsenal of C-level executives. Its implementation demands an intricate combination of analytical skills, business acumen, and strategic foresight. Notwithstanding the challenges, when effectively executed, it can provide a competitive edge, drive Operational Excellence, and fuel sustainable growth.

For effective implementation, take a look at these Company Cost Analysis best practices:


Explore related management topics: Digital Transformation Operational Excellence Strategic Planning Artificial Intelligence Performance Management Risk Management Machine Learning Big Data Customer Satisfaction Management Accounting Financial Management Cost Analysis Customer Profitability Product Costing Strategic Foresight Costing Cost Reduction Assessment Activity Based Costing Business Case Development Pricing Strategy Supply Chain Analysis Lean Six Sigma Black Belt




Additional Flevy Management Insights

Receive our free presentation on Operational Excellence

This 50-slide presentation provides a high-level introduction to the 4 Building Blocks of Operational Excellence. Achieving OpEx requires the implementation of a Business Execution System that integrates these 4 building blocks.