Costing

Few, if any, articles on finance that have appeared in HBR have enjoyed the influence of the 1962 article reprinted here as a “Classic.” Gordon Donaldson’s analysis of how many companies haphazardly established their debt capacity, and his careful explanation of what he considered a better way, seemed to strike a chord among corporate administrative […]

The subject of transfer pricing doesn’t normally excite many people, but when your transfer pricing system is less than perfect, life gets interesting. We at Bellcore first got interested in transfer pricing in 1983. That’s the year before AT&T was broken up and Bellcore was being formed as the centralized organization supporting the seven regional […]

Employees are constantly in motion—making sales calls or taking service trips; visiting an international office for a few days or relocating there for a few years; soaring across oceans in the corporate jet or heading across town in the company car. Typically, these activities are administered by an assortment of departments and vendors. But we […]

Too many CEOs are penny-wise and pound-foolish.

This article presents the research findings of a leading U.S. corporation, AT&T, on a series of important economic questions and issues, with an interpretation of the material by one of the company’s top executives. The subject is corporate earnings patterns in different industries, investment trends, the relation of profits and investment to GNP, and other […]

A wounded-but-wiser AT&T veteran recounts how one of the world’s biggest and best-known companies became one of its most battered—and explains how others can avoid that fate.

In recent years, companies have reduced their dependency on traditional accounting systems by developing, activity-based cost management systems. Initially, managers viewed the ABC approach as a more accurate way of calculating product costs. But ABC has emerged as a tremendously useful guide to management action that can translate directly into higher profits. Moreover, the ABC […]

Many companies now recognize that their cost systems are inadequate for today’s powerful competition. Systems designed mainly to value inventory for financial and tax statements are not giving managers the accurate and timely information they need to promote operating efficiencies and measure product costs. In response, they have tried to redesign their present systems, but […]

Leading a large, complex organization like the U.S. Navy, which is interdependent with similar entities, calls for a certain approach. You begin with a narrow focus on your organization’s unique strength and role. For the navy, that is presence. U.S. naval forces—sailors and Marines—are constantly mobilized, don’t need an inch of foreign soil, and can […]

By now it’s well publicized—if not obvious—that many companies’ cost accounting systems are falling down on the job. They give managers incorrect product costing information, or they inundate managers with irrelevant cost information, or they fail to measure the things that really count. Strategies may be conceptually brilliant, but if they are based on faulty […]

Today’s technology can put adjusted present value into the arsenal of every general manager.

HBR's fictionalized case studies present dilemmas faced by leaders in real companies and offer solutions from experts. This one is based on the HBS Case...

A lot of companies in a lot of places these days have been struggling to cut costs. Most of them are discovering the hard way that they have for too long put up with too much redundant and wasteful activity. For many, the problem is only starting, largely because thus far they are simply “mandating” […]

Do we really need to switch to replacement-cost accounting to understand how companies have performed?

Investors prefer companies with less stuff.

Costs are going through the roof again. It’s time for you to act.

While many unknowns about this Medicare pilot program remain, its concept is crucial to making health-care-delivery reform work.

Easy credit means hard choices. The old consensus between lenders and corporate borrowers about what constitutes a prudent level of financial reserves has broken down. Today’s junk-bond financiers, merchant bankers, and “credit corporations” offer far more leverage than businesses have historically been comfortable with, and these venturesome lenders pose a difficult problem for management. Managers […]

Probably not, if your company is like most

This post was co-authored with Bret Schroeder and Tom Weakland Noncompliance with medical advice is one reason the U.S. health care is so costly. Yet it has received only cursory attention in the national health care debate — undoubtedly because politicians don’t want to risk offending their constituents. How bad is this problem? According to […]