Published by:
Harvard Business Publishing
Length: 8 pages
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Abstract
Many companies have used activity-based costing in onetime profitability studies. But when companies integrate ABC into critical management systems and use it to make day-to-day decisions--when they use it as activity-based management--it becomes a powerful tool for continuously rethinking and improving a business. Most managers do not realize that implementing activity-based management is a major organizational-change effort that involves a tremendous amount of work. The biggest obstacle is resistance from employees. The authors focus on two companies--Chrysler Corp. and Safety-Kleen Corp.--whose success in implementing activity-based management can serve as a model for other companies. The benefits they have reaped have been 10 to 20 times their investments in their programs.
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Abstract
Many companies have used activity-based costing in onetime profitability studies. But when companies integrate ABC into critical management systems and use it to make day-to-day decisions--when they use it as activity-based management--it becomes a powerful tool for continuously rethinking and improving a business. Most managers do not realize that implementing activity-based management is a major organizational-change effort that involves a tremendous amount of work. The biggest obstacle is resistance from employees. The authors focus on two companies--Chrysler Corp. and Safety-Kleen Corp.--whose success in implementing activity-based management can serve as a model for other companies. The benefits they have reaped have been 10 to 20 times their investments in their programs.