The Starting Point - Costs and Prices - Comparing Slopes
3 important questions on The Starting Point - Costs and Prices - Comparing Slopes
At what rate should the costs of the company decline to keep our company competitive?
The organisation should reduce costs faster than the price decline in the industry.
When looking at your own costs position, what is most important if you want to compare it to the costs of the competitors?
Decompose! Look at the most detailed level (variable and fixed costs), and focus on your activities (as opposed to traditional costs, book values etc.)
What should the relationship between prices and costs be?
Your costs need to be decreasing over the long term, regardless of what prices are doing.
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