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Performance management in cost leading environments

Studying ACCA APM? Here is a tip for the day. The ACCA has recently posted an article written by Graham J Morgan concerning performance measurement in cost leading environments. It is well worth a read (

A supporting and brief outline of the concept follows below. You may well be familiar with the Generic Strategy model in the picture.

Porter argued that you could achieve a sustainable competitive advantage in various ways and one of those was cost leadership.

Suppose your business has gone down the route of cost leadership. What does that mean for your CSFs and KPI's?

For a cost leading supermarket it would need, amongst other things, to:

Control costs and keep to the budget (This would be a CSF)

KPIs would then be needed to monitor this new CSF. Perhaps setting a maximum tolerance for variances (no more than 2% and less than $1,500 in a month for a cost category say?)

CSFs and in particular KPIs are critical to your exam success - you need to be very good at them.

Tuition and revision material available now for ACCA APM at for March and June 2021

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