P2 overview - managing the costs of creating value

In this lesson

1. 0:00 Managing the costs of creating value overview
2. 1:33 Analysing and managing costs with Activity-Based Costing
3. 4:00 Quality management and competitive advantage
4. 5:55 Costs of quality classification and balance
5. 7:03 Just in time and Theory of constraints
6. 8:35 Business process re-engineering fundamentals
7. 9:23 Target Costing and value management approach
8. 10:42 Value chain and Lifecycle Costing applications

About this lesson

You'll discover how organisations build competitive advantage and increase profitability through cost control, quality improvement, and strategic pricing approaches. The analysing and managing costs section builds on concepts you've met in earlier studies, including Absorption Costing and Activity-Based Costing, but applies them at an advanced level. You'll explore direct product profitability and customer profitability analysis—practical techniques used by real businesses to drill down into which products and customers genuinely drive returns. This section is predominantly calculation-based, though the logic behind the techniques matters just as much as the numbers. Quality management introduces philosophies pioneered by Japanese manufacturers like Toyota, including Total Quality Management, Kaizen, and the costs of quality framework. These are largely knowledge-based areas that test your understanding of how businesses balance quality investment against customer expectations. You'll also encounter Just in Time principles, Theory of Constraints, and Business Process Re-engineering—all strategic approaches to operational efficiency. The value management section covers Target Costing (a reverse approach to traditional cost-plus pricing), the value chain (a concept that appears across almost every CIMA paper), and Lifecycle Costing for high-tech industries. Together, these three areas equip you with the frameworks successful organisations use to create value, improve margins, and make strategic decisions about products, customers, and operations.

Duration: 13m