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Cost Savings Analysis
A comparison of cost structures between companies to identify areas where cost reductions could be achieved to improve competitiveness.
Implications
The process of identifying and quantifying potential cost reductions within a company, often used to improve profitability, efficiency, and competitive advantage.
Example
Example: A manufacturing firm conducts a cost savings analysis to explore the benefits of switching to a lower-cost supplier, estimating potential annual savings and impacts on quality.
Related Terms
Different from cost-benefit analysis, which compares the costs and benefits of a decision, cost savings analysis focuses solely on identifying and quantifying areas where costs can be reduced.
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