Cost accounting is one of the most important factors of recognition. Of course, one entrepreneur will not initiate a new business without cost analysis. With other measures, such as the structure and size of industry and market, growth rate, market capacity and market share, cost accounting becomes a key factor in examining opportunities. So what's up to cost research?
There are two important things to keep in mind – the industry's cost requirements and the company's cost-saving capability.
Costs in the industry determine whether it is a good opportunity to enter the industry or not. An industry that is constantly faced with the costs of declination may prove disastrous for the new entrant. For example, in the telecommunications industry, cost conditions are down forever, while estimated cost of production and operations are quite high. Strict competition forces companies to keep their market share at the lowest possible cost. In such a scenario, organizations such as Reliance or Airtel are able to market because the costs are low, but it would be extremely difficult for a budding entrepreneur.
The second consideration to consider is the cost the company offers its products. An enterprise that can become a low cost service provider is attractive. In cost analysis, be sure to look at production costs, fixed costs, variable costs, etc., then determine the desired product or service. A fast-food like McDonald's, like McDonalds, is extremely popular and has a very favorable market share due to its low-cost capacity. However, while Pizza Hut is popular, its success is not as high as McDonalds, because its cost structure is not as low as McDonalds.
Next series: The Company's ROI Potential.
Source by sbobet