Our prior cases have focused in on our client companies ability to cost their own products. Each of the cases mentioned in passing the pricing/costing of the competition. The Tork case dives deeper into the analysis of our clients competition. As you may have gleaned from the Competition Analysis articles assigned for this module, costing out competitors products is done on a regular basis. This process leads to possible opportunities for companies to make strategic and tactical managerial decisions. In the fourth paragraph of the Tork case, we see the strategic dilemma Lerner faces. The case forces you to look deeper than the previous cases. You must consider all the variables available and maybe even some that are not. We have focused on overhead in the last cases, but consider ALL of the costs and compare them between the companies. The Competitive Cost Analysis: Cost-Driver Framework does a great job in explaining the whats, the whys, and the hows of a cost analysis. As for the Competitive-Cost Analysis: Cost-Modeling Techniques and Scale and Utilization articles, keep a Big Picture approach. Going into the muck of complicated regressions and models goes beyond the scope of this course (but if you want to have fun, by all means.). Try to pick up the gist of the importance of factors such as economies of scale and capacity utilization.

Question: What is the purpose of a Competitive Cost Analysis? How would you perform one at your job?