Approach to Managing Cost Functions Examples

Example 1:

In 1994, Cooper's concentration on cost containment showed here: the company consistently maintained a low SG&A expense ratio. Its Research & Development expenditure, relative to sales, was an average of 1%, compared to Goodyear's 3%. Cooper's outside sales staff was roughly half the size of its larger competitors. Goodyear's SG&A expenses as a percentage of sales remained fairly constant over the years, reflecting Goodyear's continued expenditures for national advertising and sports promotions to push its brand name. (
Year 1994-SIC 3011)

Explanation: Cooper's approaches to the "Create" and "Sell" Cost Functions contrasted sharply with those of Goodyear.

Example 2:

JetBlue operates out of New York City, sending planes to five destinations in Florida, four in the Northeast, and five in the west. Like Southwest, JetBlue offers low-fare service. It flies mostly in secondary markets. It "turns" its aircraft quickly. JetBlue flies only new Airbus A320s. (
Year 2001-SIC 4512)

Explanation: JetBlue's approach to the market is very focused on a few routes and very tight operations. This focused approach is different than the approaches to managing costs employed by the larger Standard Leaders in the industry. JetBlue has a different "Create" approach by focusing on secondary markets. Its "Make" function approach is also different from that of the majors because it flies only one type of airplane and concentrates its efforts on very fast turn-a-round of the aircraft at an airport.

Example 3:

Office Depot and OfficeMax, like many other foreign national merchants who entered new countries, linked up with local partners who knew the lay of the land, a strategy that permitted quick expansion but limited operational control. (
Year 2000-SIC 5943)

Explanation: Office Depot and Office Max followed different approaches in their investments offshore than they followed in the United States. In offshore locations, both companies followed different approaches to the "Locate" and "Present" Functions than they followed in the United States.

Example 4:

Flex Flow eliminates the progressive assembly line common in the industry. The manufacturing process is structured in such a way that each worker puts together a complete motor from a tray of parts that is in front of him. Each tray comes with the instructions for the particular motor that is to be assembled. (
Year 1997-SIC 3621)

Explanation: Flex Flow is using a different approach to the "Make" Function than the other competitors in the industry.

Example 5:

Shalev developed a robot that can measure the shape and value of virtually all raw gems except diamonds. It maps a cutting strategy and carves. It is more exact than most humans. The automated approach reduces the amount of stone wasted by up to 10% and cuts costs by 70%. (
Year 1987-SIC 1499)

Explanation: Shalev uses a new approach to the "Make" Function in its industry.