Strategic cost management: the application of reverse engineering to analyze the costs of competitors

Abstract

This paper discusses how the technique of reverse engineering has been used in practice to analyze the cost of competitors. In the context of the strategic management of costs, it is important to emphasize that the analysis of the internal costs of a company must be complemented by an analysis of the costs of those companies with which it competes for the customers’ preference. By using the reverse engineering technique to analyze the competitors’ products, it is possible to identify ways to improve the features of the goods manufactured by one’s own company and to manufacture new products similar to those made by the competitors, with the purpose of enhancing competition. Besides, there is an additional benefit of cost reduction in the ordinary research and development processes. This research is a study of a single case and was developed in a footwear company in the state of Rio Grande do Sul by interviewing the people in charge of the specific departments and by analyzing documents. A qualitative treatment was given to the information related to the design and manufacturing process and a quantitative focus was used to describe the results of the research. It was possible to see how the company’s performance improved as a result of its increasing ability to compete. Key words: strategic cost management, competition ability, costs of competitors.