First, analyze current costs, categorizing them into fixed, variable, and semi-variable. Align expenses with strategic goals, focusing on digitization, infrastructure, and customer experience Leverage technology for automation and data-driven decisions Optimize variable costs through economies of scale, dynamic pricing, and sustainability. Outsource non-core functions, maximize asset utilization, and build flexibility into fixed costs. Regularly review costs using metrics like cost per unit and revenue per square meter, integrating these insights into strategic reviews. Contingency plans and employee incentives, such as ESOPs, ensure alignment with long-term profitability while maintaining agility.

I think integrating the cost structure analysis while building a long term plan, requires 3 steps. First defining and understanding the cost driver per business unit Second separate the variable cost from the fixed cost. Third Conduct a CVP analysis to be able to measure the impact of the scalability in each BU. These steps will assure understanding, effective planning outcomes, and business sustainability.

In developing long term strategy we need to identify our core value to increase productivity and sustainability, mainly identify strength and weakness, fixed cost and variabel cost, analysis contribution margin and the most important makesure our working capital secure.

Para essa integração é importante mapear os custos, analisar seu comportamento e comparar com a concorrência o que permite identificar oportunidades de redução, otimizar operações e tomar decisões estratégicas mais assertivas.

"I agree with the 3 tips mentioned in the article. Additionally, here are 2 tips from me: focus on cost efficiency for your variable costs and maximize your effectiveness by exceeding your production output beyond your fixed capacity."-Iwano Afan (Accountant)

When developing my company’s long-term strategy, I integrate cost structure analysis to ensure financial sustainability and alignment with goals. I start by breaking down fixed and variable costs, identifying drivers, and assessing their contribution to value creation. Benchmarking against industry standards highlights inefficiencies, while scenario analysis evaluates potential cost impacts on profitability. Leveraging data analytics enables real-time monitoring for proactive adjustments. Investments focus on growth and customer value, with cost controls in less critical areas. This ensures the cost structure evolves with strategic priorities, supporting operational efficiency and sustainable growth.

Consider a model to identify Fixed Costs, identify opportunity for passive or non-core business revenues to apply to fixed costs. An ideal scenario is a net zero position. Make your business a smaller target when economic times / demand isn't as strong.. A separate focus on increasing marginality of your core business offering against the variable costs. Makes for a dynamic sustainable operation.

1. Understand Your Business Model Identify Key Activities: Map out the critical activities. 2. Classify Costs Break down costs into categories to understand their nature: •Fixed Costs: Expenses that do not change with output. •Variable Costs: Expenses that fluctuate with production or sales volume 3. Analyze Cost Drivers Identify and evaluate factors that cause costs to increase or decrease: 4. Benchmark Costs •Compare your costs with industry standards or competitors to identify areas of inefficiency. 5. Map Costs to Revenue Streams •Evaluate how each cost contributes to the generation 6. Evaluate Cost Reduction Opportunities. 7. Implement and Monitor • Develop action plans to address inefficiencies or high cost areas.

Identify Cost Drivers: Determine key factors driving costs. Categorize Costs: Break down into fixed and variable costs. Analyze Cost Behavior: Understand how costs change with activity levels. Benchmarking: Compare with industry standards and competitors. Cost Allocation: Allocate costs accurately to departments/products. Scenario Planning: Model financial impacts of strategic decisions. Efficiency Improvements: Identify areas to streamline and reduce costs. Strategic Investments: Invest in areas that reduce long-term costs. Regular Review: Continuously monitor and adjust the cost structure. Communication: Ensure stakeholder understanding and buy-in.