Costing, Investment & Strategic Controls



Executive Summary

Being a small technological company, we are concerned about varying lifecycles of our products. To overcome this, our company has been planning to launch new technological products in the market. In this report, we will analyse and evaluate different options we have as our new products. The report will discuss different costs associated with a technological company like ours. We will also discuss different capital investment techniques which can be used, and in light of the results from those techniques, we will evaluate which option of the two options suits us more. As for any company, sustainability is as important as initial success, we will also recommend different strategic control measures which can be used by us to make sure our new product remains successful and sustainable in the marketplace for a longer term.

Cost Techniques3

Capital Investment Techniques6

Strategic Controls10

Conclusion13

References14

Costing, Investment & Strategic Controls

Cost Techniques

Most of the technological products have their own distinct cost structures. This is due to the nature of technological products being different from other non-technological products. Technological products are often found to have high initial cost of production. On the other hand, they have very low variable cost of production once a product is fully developed. Technology companies spend lots of their resources to research and develop new innovative technological products. And that is one of the reasons why technological companies incur most of their costs in this phase. But once this phase is completed, producing additional units of the same product is often found not to be too costly. For example, Microsoft may spend huge amounts of money to develop a new version of operating software, but once they are done with the completion of the first copy of the new operating software, producing additional units of the same operating software will be not too costly. Although, we have given an example of Microsoft, a technological giant, we can translate the same concept of high initial cost of production and low subsequent costs for producing additional units to small technological companies as well. From this, we can deduce that the technology company we are dealing with in our case study, despite being operating at a small scale, will also have a high initial cost of production and a lower subsequent cost for producing additional units.

From our discussion above, we can conclude that most of the costs which will be incurred by the company will be in the research and development phase. Costs incurred during this phase can be further broken down by the nature of costs and the timing at which they incur. The nature of costs may have a wide range, depending on the products and resources needed to develop them. Technological companies are lucky in the aspect that they do not need to spend heavily on materials (Johnson, 2009, pp.605-608). The direct cost of material used in producing technological products will not be too high. In our case, as a small technological firm, the management will not be ...