Strat

• Strategic Decision Making


  Choosing among alternative strategies with the goal of selecting a strategy, or strategies, that provides a company with reasonable assurance of long-term growth and survival.
• Strategic Cost Management


  The use of cost data to develop and identify superior strategies that will produce a sustainable competitive advantage
• Competitive advantage


  Creating better customer value for the same or lower cost than offered by competitors or creating equivalent or better value for lower cost than offered by competitors.
• Customer Value


  Difference between what the customer receives (customer realization) and what the customer gives (customer sacrifice)
• Total Product


  The complete range of tangible and intangible benefits that a customer receives from a purchased product.
• Postpurchase Costs


  Costs of using, maintaining, and disposing of the product
• Three general strategies to achieve competitive advantage

  • Cost leadership
  • Product Differentiation
  • Focusing
• Cost leadership


  Provide the same or better value to customer at a lower price
• Product Differentiation


  Increase customer value by increasing what the customer receives (customer relaization)
• Focusing


  Selecting or emphasizing a market or customer segment in which to compete
• Strategic Positioning


  Process of selecting the optimal mix of the three general strategic approaches
• Strategy


  Choosing the market and customer segment the business unit intends to serve
• Industrial Value Chain


  Linked set of value-creating activities from basic raw materials to disposal of the finished product by end-use customer
• Value-chain Framework


  A compelling approach to understanding the firm's strategically important activities.
• Internal linkages


  Relationships among activities that are performed within a firm's portion of the value chain.
• External linkages


  Describe the relationship of a firm's value chain activities that are performed with its suppliers and customers.
• Executional activities


  Activities that define the processes and capabilities of an organization and are thus directly related to the ability of an organization to execute successfully.
• Organizational cost drivers


  structural and executional factors that determine the long-term cost structure of an organization.
• Structural Activities


  determine the underlying economic structure of an organization
• Executional Efficiency 


  Continous improvement and its many faces
• Operational Activities


  Day-to-day activities performed as a result of the structure and processes selected by the organization.
• Employee or worker involvement


  culture, degree of participation, and commitment to the objective of continuous improvement.
• Operational Cost driver


  factors that drive the cost of operational activities
• Value chain analysis


  identifying and exploiting the internal and external linkages with the objective of strengthening a firm's strategic position
• Internal Value Chain


  Sound strategic cost management mandates the consideration of that portion of the value chain in which a firm participates
• Exploiting Internal Linkages


  means that relationships between activities are assessed and used to reduce costs and increase value
• Industrial Value Chain


  Each firm belongs to a broader value chain
• Exploiting external value chain


  managing linkages so that both the company and external parties receive an increase in benefits
• Total Quality Control


  Approach to managing quality that demands the production of defect free products
• Functional based costing


  servicing customers either costs nothing or they all appear to cost the same percentage of their sales revenue.
• Data warehousing/business intelligence environment


  provides information about costs, quality, cycle, time, drivers, and outputs
• Life cycle cost management


  Related approach that builds conceptual framework which facilitates management's ability to exploit internal and external linkages
• Product life cycle


  time a product exist
• Marketing Viewpoint


  general sales pattern of a product as it passes through distinct life cycle stages
• Introduction stage


  production and startup activities
• Growth stage


  sales increase more quickly
• Maturity stage


  sales increase more slowly
• Decline stage


  product loses market acceptance and sales begin to decline
• Production viewpoint


  defines stages of the life cycle by changes in the type of activities performed; emphasizes life cycle costs
• Life cycle costs


  all costs associated with the product for its entire life cycle