The Role of Drivers Analysis Approach in Conducting Strategic Orientation of Cost Management: With a Case Study

Due to competitive pressures, a lot of changes should be made to cope with rapid developments and requirements of modern environment that should be related to firm strategy to create competitive advantages and achieve its long-term objectives. Therefore, it is necessary for firms to have a strategic orientation in their cost management practices and achieving better Ex-ante control over value-creation and cost throughout the Total Value Chain (TVC), to continually improve performance toward creating the maximum value for the customer at the lowest possible cost. Drivers Analysis Approach can be recognized as a valuable and effective Strategic Cost Management (SCM) techniques, it is also considered among the important Ex-ante control approaches of value and cost, through controlling their drivers. It provides a distinct approach to studying the trade-off between value-creation represented by value drivers and cost represented by cost drivers for the purpose of selecting and providing information on best drivers. The main goal of this research is to construct a Drivers Analysis framework as an Ex-ante approach for conducting the strategic orientation of cost management. This research provides substantial insights into the importance of drivers` analysis and how to apply it in a better way by dealing with the area of value creation to achieve competitive advantages. In addition to Cost Drivers Analysis, the research considered the value drivers analysis based on the Critical Success Factors (CSFs) to select best value drivers and best cost drivers using Analytical Hierarchy Process (AHP). The researcher adopted the Constructive Approach to develop the proposed framework that serves the research objectives. A case study was caried out as a research method using AHP tool on the National Bank of Egypt (NBE) branches in Gharbia to clarify the applicability of the proposed framework based on a set of proposed and updated criteria for applying the Drivers Analysis. In addition, the researcher relied on interviews, observations, documentary analysis and a questionnaire to collect the necessary data for the case. Accordingly, some recommendations have been suggested to improve the utilization of the bank’s resources in a way that maximizes the value of its clients at the lowest possible cost and to guide and improve the strategic performance in NBE toward achieving sustainable competitive advantages and enhance its competitive position.