Cost Drivers

Read the overview below and complete the activities that follow.

For a company to do a more cost$-$effective job of managing its value chain than rivals, managers must diligently search out cost$-$saving opportunities in every part of the value chain. No activity can escape cost$-$saving scrutiny, and all company personnel must be expected to use their talents and ingenuity to come up with innovative and effective ways to keep down costs. Particular attention must be paid to a set of factors known as cost drivers that have a strong effect on a company$$s costs and can be used as levers to lower costs. Figure $5\mathrm{.}2$ shows the most important cost drivers.