Closing the gap

In this lesson

1. 0:00 Closing the target cost gap
2. 0:33 Introduction to value analysis
3. 1:33 Four key elements of value
4. 2:17 Value analysis process steps
5. 4:06 Selecting and implementing alternatives

About this lesson

Rather than simply raising prices, organisations must redesign products or implement cost-saving measures while maintaining quality and competitiveness. Value analysis examines four key elements of a product: cost value, exchange value, use value, and esteem value, then systematically identifies opportunities to reduce costs without compromising what customers actually value. The lesson walks you through the complete value analysis process step by step. You'll start by selecting a product for investigation, then gather and record relevant data about its costs, market position, functionality, and perceived value. Next, you'll analyse each value element to understand where improvements are possible, explore alternatives that could enhance value or reduce costs, and select the option offering the best balance. Finally, you'll present your recommendation to management, implement approved changes, and measure the impact to confirm cost savings have been achieved. This practical methodology is directly relevant to Performance Management and shows how real organisations bridge the gap between what they need to charge and what they can actually produce for. By mastering value analysis, you'll be able to tackle exam questions confidently and apply this technique in your own workplace to drive genuine cost improvements.

Duration: 5m