Analyses: Costs

These analyses help the company determine how it will reduce its cost structure in order to improve its returns on investment.

Low Cost Competition

Analysis 53: Return on Investment

Analysis 54: Operating Margin

Analysis 55: Capital Intensity

Analysis 56: Analysis of Rates of Cost Differential

Analysis 57: Cost Advantages and Disadvantages Due to Differences in Approach to Managing Functions

Analysis 66: Approach to Create the Customer Information Database

Analysis 67: Unit Price by Customer Size

Analysis 68: Relative Price by Customer

Economies of Scale

Analysis 58: Economies of Scale for Employees by Department

Analysis 59: Economies of Scale by Type of Employee

Analysis 60: Employees Economies of Scale by Department

Capital Employed

Analysis 8: Average Price Paid by Size of Customer

Analysis 30: Returns by Size/Role Segment

Analysis 61: Unit Equivalent Sales Price Needed to Justify Marginal Capacity Addition

Analysis 62: Sources of New Capacity

Analysis 63: Time to Win Acquiree’s Portfolio of Customers

Analysis 64: Customer Mix by Long Term Return of Customer Relationship

Analysis 65: The Investment In and First Year Margin on a New Customer Relationship

Analysis 67: Unit Price by Customer Size

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Over the years, we have written a number of Perspectives that cover a broad range of subjects in deteriorating and hostile marketplaces. We recommend that you review some or all of these articles before undertaking extensive analyses or delving deeper into the other Perspectives. These broad discussion Perspectives add important context to the Analyses, Symptoms and Implications and to the other Perspectives. These general articles include:
 “Use Subtle Strategy in Tough Markets”
A hostile market operates differently than a market with “normal” competitive conditions. But as difficult as a tough market can be, it can also present an astute management team with an unusual opportunity.
 “Rare Mettle: Gold and Silver Strategies to Succeed in Hostile Markets”
Managements of winning companies have common themes for success in hostile markets. They each follow five basic themes. While virtually all successful companies are aware of these themes, their implementation differs according to their market position at the onset of hostility.
 “Staying Alive in a Hostile Marketplace”
A few companies survive and even prosper during periods of hostility. How do these companies avoid being the victims of tough market conditions?
 “Success Under Fire: Policies to Prosper in Hostile Times”
A hostile market evolves through six predictable phases. Most companies fail, withdraw or become acquisitions before this evolution is complete. They fail because their management policies were not effective. The few who survive and prosper do so by making decisions that follow two rules: attract customers and discourage competition. Losers lose by not following the second rule.
 “The Wisdom of Salomon”
In the late ’80s, the investment banking firm of Salomon Inc. decided to leave the municipal bond market – a market the firm had lead. This withdrawal showed just how limited management’s options are when a market goes into overcapacity and how the best choice under such conditions may be the painful decision to leave the industry.