Activity-Based Management - ABM
Categories: Accounting, Metrics, Company Management
The practice of applying ABC (Activity Based Costing) to optimize resources in a company.
That is, it inspects the amount of effort in cash and time and risk going into a project...to produce a given product which then produces a given amount of profit.
ABC asks whether it's all worth it, like a hippie dippie film from the '70s or a Boston song. ABM pre-supposes that management doesn't act rationally all the time, or at least that it acts myopically and with emotion guiding some of its decisions, with the notion that making everything cold and neutrally mathy will find a better or more optimal solution in the end goal...which is to produce profits and value growth for companies over long periods of time.
The focus here kind of ignores intangibles like brand equity enhancers and the emotional connection that customers might have with one product that drives purchase of another product. Think about the reason that Toyota enters very-expensive-to-run cars in NASCAR...but then sells Grandma Kettlestone (aka Leadfoot) a Prius.