Strategic Cost Management

  • 7-weeks
  • 1.5 credits
  • Prerequisite: MBA Core

This course provides students with the knowledge and analytical skills necessary to use accounting cost information as a basis for formulating and evaluating corporate strategies. A central theme of the course is that one of the primary functions of accounting information is to facilitate the development of corporate strategies. A superior accounting system provides an important tool for developing a sustainable competitive advantage by enabling a deep understanding of a company’s cost structure.

The course focuses on three principal tools in strategic cost analysis: strategic positioning analysis, value chain analysis, and cost driver analysis (activity-based costing). Strategic positioning analysis investigates the role of cost management and other management accounting tools in a firm's competitive strategy. Value chain analysis delineates the linked set of activities needed to make and deliver a product or service, focusing on whether activities provide value to customers. Cost driver analysis examines the costs related to the activities making up the value chain.

Many MBA students will accept job positions in which they make decisions affecting the profitability of products, services, and customers, or provide consulting services to companies on how to improve profitability. Thus, the materials covered in this course will be highly relevant to students planning careers in corporate finance, marketing, operations management, and management consulting.

  • Value chain analysis - identifying opportunities for cost management or revenue enhancement across the industry-wide value chain
  • Strategic positioning - determining information needed to support firm strategy
  • Internal Cost Management
    1. Cost-driver analysis
    2. Activity-based management
    3. Target costing - role of competitors, customers, suppliers, and firm processes
  • Managing Customer Profitability
    1. Activity-based management
    2. Life-cycle costing and economic value to customers

Background readings and course notes discuss course concepts, while cases and problems supply the foundation for class discussion about specific topics.  Case Packet. Grading for the course will be based on class participation, written case assignments, and a final examination.

Kelley School of Business

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