\"The Cost of Complexity\" In a globalized economy with many business complexiti
ID: 2530500 • Letter: #
Question
"The Cost of Complexity" In a globalized economy with many business complexities, speculate the major ways that these complexities might impact a business and suggest two (2) actions that a business can take in order to minimize these consequences. From the previous discussion, recommend one (1) approach that an accountant could take in order to measure the types of complexity you identified for a specific business or industry and determine the insight that the measure will provide in relation to business performance. Reply Quote
Explanation / Answer
The cost of complexity can significantly impact the bottom line of manufacturing companies.
Complexity can appear in different parts of industry. Probably most relevant is the product portfolio, also influencing the supply chain, raw materials, the number of processes, brands, and packaging.
However, don’t forget about other areas causing complexity, including market segments, customer portfolio, technologies and IT systems used, and different organizational structures.
Complexity has impacts across your business Cost & Operations Business & Operational Risk Growth & Innovation • Hidden costs • Exponential growth • Grows exponentially with complexity • Slows new product development • Overwhelms • Cross subsidization • Most products are unprofitable • Cannot anticipate all points of failure customers • Distracts sales force Complexity Cost
Costs arise from the interactions between the 3 types of complexity The Complexity Cube: • Complexity exists along the Non-value add Value add dimensions of the cube ? Can be good or bad ? Too much is bad ? Companies almost always have too much •
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.