STRATEGIC COST MANAGEMENT - BA122B – Fall 2010Slide 11-1 Environmental Activities n Prevention activities n Assessment activities n Control activities n Failure activities

STRATEGIC COST MANAGEMENT - BA122B – Fall 2010Slide 11-2 Measuring and Reporting Environmental Costs n Traditional systems must be augmented by interviews n Schedule costs into hazardous & non- hazardous categories n Classify the costs by activities n Report and analyze routinely

STRATEGIC COST MANAGEMENT - BA122B – Fall 2010Slide 11-3 Managing Environmental Costs n Product design n Process design n PP&E acquisition n Operational venue n Encourage value chain participation n Routinely integrate MMEC into the decision making process n Checklists n EC Summaries n Post-mortem reviews

STRATEGIC COST MANAGEMENT - BA122B – Fall 2010Slide 11-4 MMEC—TBC Impact n Technical n Improved decision relevance n Insight contrary to common beliefs n Better process identification n Environmental cost insight n Behavioral n EC visibility: what gets measured; gets done

STRATEGIC COST MANAGEMENT - BA122B – Fall 2010Slide 11-5 MMEC—TBC, continued n Cultural n Societal value sharing n Changing environmental mindsets n Compliance and control vs. avoidance n Role of finance as “facilitator” n Can bring focus to this important issue

STRATEGIC COST MANAGEMENT - BA122B – Fall 2010Slide 11-6 MMEC—Strategic Implications n Quality: consumers drawn to environmentally concerned companies…green issues n Cost: environment costs are huge n Time: unexpected “events” are time consuming and defocusing n Think about the movie “Erin Brocovich”