271 Strategic Cost Management

This class examines how firms use organizational design and cost management to achieve a sustainable cost structure as a basis for superior profit performance. A value chain framework is used to explore how firms design and structure business processes for strategic advantage. We start with an overview of how modern product costing systems work and their limitations as a basis for strategic cost management. We then study how firms manage costs during product design and development, production and/or service delivery, and after the sale. Competitive cost structures are increasingly obtained, not through technical efficiencies of a single firm, but through innovative collaboration among firms – what has been termed the extended enterprise. Thus more than half of the course examines  cost management at the boundaries of the firm – where the firm interacts with suppliers, strategic alliance partners, customers and society.

Prerequisite: 202A