Translating Strategy into Shareholder Value: A Company-Wide Approach to Value Creation

Here are some of the weaknesses of ABM:

• It may create confusion over unit costs in the short run. Once costs are fully loaded into products, activities, and channels, executives may make knee-jerk decisions about abandoning initiatives because of their high cost. It is important to understand the trends in cost and profit before taking action.

• This method does not take into account nonfinancial measurements. It is important to be cost-and profit-conscious, but not at the expense of quality and service. Driving your costs to zero is a going-out-of-business strategy.