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Market Decisions and Cost Analysis for Business Growth

Explore key concepts like price taker versus price setter, skimming or penetration pricing, target costing, profitability analysis, and decision tree analysis for strategic performance and cost management. Learn to make informed decisions about capital investments for long-term growth.

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Market Decisions and Cost Analysis for Business Growth

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  1. Market DecisionsChapters 11 & 12 ME 2027 Performance and Cost Analysis ME 2605 Cost Management and Control (for IMIM) Håkan Kullvén, KTH, 2007 Hakan.kullven@indek.kth.se

  2. Example on page 420 Situations • The company's role in the marketplace • Price taker • Price setter • The situation for the pricing • Short-run • Long-run • The policy of the company • Skimming or penetration • The product life cycle, PLC

  3. Target costing • Determine target price by asking the customers • Deduct a target margin from this price • Estimate the actual cost of the product • If necessary; try to drive the actual cost down under target level • Kaizen costing

  4. Figure 11.4 page 426 Profitability analysis

  5. Figure 12.3 page 462 Decision tree analysis

  6. Next, we… are going to look at decisions about capital investments, e.g. when investing in machines, education or something else that is for a longer period of time Chapters 13 & 14

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