Implementation of design to profit in a complex and dynamic business context
Pesonen, Lasse T. T. (2001-07-25)
The objective of this thesis is to demonstrate a design to profit procedure and its implementation in industrial case environment. The procedure is demonstrated as a way to improve profits in a global company. The essential elements of the procedure are product business case calculations and profit consciousness of employees. This study utilizes a combination of product life cycle analysis, advanced costing methods and multidimensional data processing for the product business case calculations. The combination is necessary for solving the research task.
The need of proactive design is emphasized in the telecommunications industry due to shorter and shorter product life cycles. However, traditional accounting methods do not support proactive design work sufficiently during the life cycle of the products. The design to profit procedure has been created to help business managers to solve following problems:
1. How to proactively ensure the growth of business profits in the future?
2. How to prevent suboptimal decisions from being made in functional units and to promote overall profitability?
3. How to judge the profitability of new product programs within a company?
4. How can we ensure an adequate level of cost consciousness and profitability-driven targets for the company’s key employees?
This study presents and discusses the construction of the procedure and describes its elements, implementation and use in practice. The argumentation is illustrated by case studies. This method has benefits, especially when the product life cycles are short and the market competition strong.
The design to profit procedure is a proactive mind set or thinking pattern. This system makes the employees aware of the importance target profitability and especially target costing. There is no decision support system that could guarantee the profitability of business. Cautious utilization of the system results and common sense are required to achieve continuous growth of business profits.
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