Analyzing Strategic Cost in a High‐Inflation Economy

The high, volatile inflation forecast for the 1980s will make costs difficult to manage. Price increases will be necessary, but they invite market share raids from growth‐hungry competitors. Without price increases, cost inflation will destroy margins. A strategic cost analysis can identify the effect of inflation on a company's own costs and on its competitors' costs. Company planners can then formulate an explicit strategy for coping with the decade's slow, cyclic growth and high, volatile inflation.