Client
A Fortune 50 telecom vendor.
Challenge
Find out why large business unit is losing market share because of pricing.
Background
This leading telecom equipment vendor was losing share in the PBX market at an unacceptable pace. Their equipment quality,
service and reputation were second to none. They were losing share more rapidly in some product and size segments than others.
The consulting team analyzed the company’s cost accounting system, which distorted costs of many projects in attempts to
get better returns during years of regulation. When the PBX market was deregulated, the company could not accurately measure
its cost and profit on many types of equipment and installations. Therefore it was severely overpricing some products and
did not know it was doing so.
Solution
Apply cost accounting methods used in investment banking. Identify distortions in cost accounting that drove poor pricing
decisions, particularly excessive capitalization of certain expenses.
Client Impact
Client adopted new cost accounting methods, reduced prices, and reduced stated book value by 20%.
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