Activity Driver Analysis

It's the deep rectal probing of what things cost to perform a given productive function.

Example: You've been hired to figure out why ChubbieWear, underwear for professional twerkers, has only 10% profit margins, whereas their competitor, CheekyMonkey, has 20% margins. You audit the books and add up the costs for what it takes ChubbieWear to produce a large pair of underwear, and note that it takes four human labor hours where the worker is paid $15 an hour, and overhead, pension, insurance, other benefits add $6 to that cost to the company.

So at $21 an hour and four hours to produce one pair of lovely but expensive underwear...it's a lot. CheekyMonkey, however, produces their product in Thailand at 1/3 the cost. And they are in the process of migrating to all-robot-labor in the U.S. The activity here is the labor of sewing together large glow-in-the-dark underwear, and that labor drives the cost of the product.

In order to get ChubbieWear to be competitive, you have to fix that core labor activity, such that the costs to ChubbieWear come into line with industry standards, or the company will soon be out of business. The process of presenting the numbers as to why the company now has to fire 1,100 union workers is activity driver analysis. You sure you have the stomach for this gig?