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At the beginning low-cost budget airlines chose "cost focused" strategies but later when the market grew, big airlines started to offer the same low-cost attributes, and so cost focus became cost leadership! [5] A cost leadership strategy may have the disadvantage of lower customer loyalty, as price-sensitive customers will switch once a lower ...
Following a matching principle of matching a portion of sales against variable costs, one can decompose sales as contribution plus variable costs, where contribution is "what's left after deducting variable costs". One can think of contribution as "the marginal contribution of a unit to the profit", or "contribution towards offsetting fixed costs".
In business strategy, cost leadership is a strategy aiming to establish a competitive advantage by having the lowest cost of operation in the industry. [1] Cost leadership is often driven by company efficiency , size, scale, scope and cumulative experience ( learning curve ).
Contribution margin (CM), or dollar contribution per unit, is the selling price per unit minus the variable cost per unit. "Contribution" represents the portion of sales revenue that is not consumed by variable costs and so contributes to the coverage of fixed costs. This concept is one of the key building blocks of break-even analysis. [1]
The efficiency ratio indicates the expenses as a percentage of revenue (expenses / revenue), with a few variations – it is essentially how much a corporation or individual spends to make a dollar; entities are supposed to attempt minimizing efficiency ratios (reducing expenses and increasing earnings). The concept typically applies to banks.
The break-even point (BEP) in economics, business—and specifically cost accounting—is the point at which total cost and total revenue are equal, i.e. "even". In layman's terms, after all costs are paid for there is neither profit nor loss.
Price proportion cost: The price proportion cost refers to the percent of the total cost of the end benefit accounted for by a given component that helps to produce the end benefit (e.g., think CPU and PCs). The smaller the given components share of the total cost of the end benefit, the less sensitive buyers will be to the components' price.
KPI information boards. A performance indicator or key performance indicator (KPI) is a type of performance measurement. [1] KPIs evaluate the success of an organization or of a particular activity (such as projects, programs, products and other initiatives) in which it engages. [2]