| Cost Component | Description | Details and Factors |
|---|
| Purchase Price | The initial cost of buying the car | Dependent on the make, model, trim, and optional features. |
| Financing Costs | Interest on auto loans or lease payments | Interest rate, loan term, and down payment. |
| Depreciation | The decrease in the car’s value over time | Resale value, age, mileage, and condition. |
| Insurance | Premiums for auto insurance coverage | Type of coverage, location, driving history, and age. |
| Fuel | Cost of gasoline, diesel, or electricity | Fuel efficiency, local fuel prices, and driving habits. |
| Maintenance and Repairs | Regular servicing, repairs, and replacement parts | Vehicle reliability, make/model, and driving conditions. |
| Taxes | Sales tax, registration fees, and property tax | Local tax rates and regulations. |
| Depreciation | The decrease in the car’s value over time | Resale value, age, mileage, and condition. |
| Financing Costs | Interest on auto loans or lease payments | Interest rate, loan term, and down payment. |
| Depreciation | The decrease in the car’s value over time | Resale value, age, mileage, and condition. |
| Insurance | Premiums for auto insurance coverage | Type of coverage, location, driving history, and age. |
| Fuel | Cost of gasoline, diesel, or electricity | Fuel efficiency, local fuel prices, and driving habits. |
| Maintenance and Repairs | Regular servicing, repairs, and replacement parts | Vehicle reliability, make/model, and driving conditions. |
| Taxes | Sales tax, registration fees, and property tax | Local tax rates and regulations. |
| Depreciation | The decrease in the car’s value over time | Resale value, age, mileage, and condition. |
| Financing Costs | Interest on auto loans or lease payments | Interest rate, loan term, and down payment. |
| Depreciation | The decrease in the car’s value over time | Resale value, age, mileage, and condition. |
| Insurance | Premiums for auto insurance coverage | Type of coverage, location, driving history, and age. |
| Fuel | Cost of gasoline, diesel, or electricity | Fuel efficiency, local fuel prices, and driving habits. |
| Maintenance and Repairs | Regular servicing, repairs, and replacement parts | Vehicle reliability, make/model, and driving conditions. |
| Taxes | Sales tax, registration fees, and property tax | Local tax rates and regulations. |
| Depreciation | The decrease in the car’s value over time | Resale value, age, mileage, and condition. |
| Financing Costs | Interest on auto loans or lease payments | Interest rate, loan term, and down payment. |
| Depreciation | The decrease in the car’s value over time | Resale value, age, mileage, and condition. |
| Insurance | Premiums for auto insurance coverage | Type of coverage, location, driving history, and age. |
| Fuel | Cost of gasoline, diesel, or electricity | Fuel efficiency, local fuel prices, and driving habits. |
| Maintenance and Repairs | Regular servicing, repairs, and replacement parts | Vehicle reliability, make/model, and driving conditions. |
| Taxes | Sales tax, registration fees, and property tax | Local tax rates and regulations. |
| Licensing and Fees | Vehicle registration, renewal, and other fees | State-specific fees and regulations. |
| Parking and Tolls | Costs for parking and toll roads | Location-dependent and frequency of use. |
| Depreciation | The decrease in the car’s value over time | Resale value, age, mileage, and condition. |
| Financing Costs | Interest on auto loans or lease payments | Interest rate, loan term, and down payment. |
| Depreciation | The decrease in the car’s value over time | Resale value, age, mileage, and condition. |
| Insurance | Premiums for auto insurance coverage | Type of coverage, location, driving history, and age. |
| Fuel | Cost of gasoline, diesel, or electricity | Fuel efficiency, local fuel prices, and driving habits. |
| Maintenance and Repairs | Regular servicing, repairs, and replacement parts | Vehicle reliability, make/model, and driving conditions. |
| Taxes | Sales tax, registration fees, and property tax | Local tax rates and regulations. |
| Licensing and Fees | Vehicle registration, renewal, and other fees | State-specific fees and regulations. |
| Parking and Tolls | Costs for parking and toll roads | Location-dependent and frequency of use. |
The total cost of ownership (TCO) estimates the total cost associated with purchasing and operating an asset. TCO is a more comprehensive way to understand the real cost of ownership. Thus, how much it really costs in the long-term to own something, with all its related direct and indirect purchase costs.
Connected Business Concepts
Vertical Integration
In business, vertical integration means a whole supply chain of the company is controlled and owned by the organization. Thus, making it possible to control each step through customers. in the digital world, vertical integration happens when a company can control the primary access points to acquire data from consumers.
Backward Chaining
Backward chaining, also called backward integration, describes a process where a company expands to fulfill roles previously held by other businesses further up the supply chain. It is a form of vertical integration where a company owns or controls its suppliers, distributors, or retail locations.
Supply Chain
The supply chain is the set of steps between the sourcing, manufacturing, distribution of a product up to the steps it takes to reach the final customer. It’s the set of step it takes to bring a product from raw material (for physical products) to final customers and how companies manage those processes.
Data Supply Chains
A classic supply chain moves from upstream to downstream, where the raw material is transformed into products, moved through logistics and distribution to final customers. A data supply chain moves in the opposite direction. The raw data is “sourced” from the customer/user. As it moves downstream, it gets processed and refined by proprietary algorithms and stored in data centers.
Horizontal vs. Vertical Integration
Horizontal integration refers to the process of increasing market shares or expanding by integrating at the same level of the supply chain, and within the same industry. Vertical integration happens when a company takes control of more parts of the supply chain, thus covering more parts of it.
Decoupling
According to the book, Unlocking The Value Chain, Harvard professor Thales Teixeira identified three waves of disruption (unbundling, disintermediation, and decoupling). Decoupling is the third wave (2006-still ongoing) where companies break apart the customer value chain to deliver part of the value, without bearing the costs to sustain the whole value chain.
Entry Strategies
When entering the market, as a startup you can use different approaches. Some of them can be based on the product, distribution, or value. A product approach takes existing alternatives and it offers only the most valuable part of that product. A distribution approach cuts out intermediaries from the market. A value approach offers only the most valuable part of the experience.
Disintermediation
Disintermediation is the process in which intermediaries are removed from the supply chain, so that the middlemen who get cut out, make the market overall more accessible and transparent to the final customers. Therefore, in theory, the supply chain gets more efficient and, all in all, can produce products that customers want.
Reintermediation
Reintermediation consists in the process of introducing again an intermediary that had previously been cut out from the supply chain. Or perhaps by creating a new intermediary that once didn’t exist. Usually, as a market is redefined, old players get cut out, and new players within the supply chain are born as a result.
Scientific Management
Scientific Management Theory was created by Frederick Winslow Taylor in 1911 as a means of encouraging industrial companies to switch to mass production. With a background in mechanical engineering, he applied engineering principles to workplace productivity on the factory floor. Scientific Management Theory seeks to find the most efficient way of performing a job in the workplace.
Poka-Yoke
Poka-yoke is a Japanese quality control technique developed by former Toyota engineer Shigeo Shingo. Translated as “mistake-proofing”, poka-yoke aims to prevent defects in the manufacturing process that are the result of human error. Poka-yoke is a lean manufacturing technique that ensures that the right conditions exist before a step in the process is executed. This makes it a preventative form of quality control since errors are detected and then rectified before they occur.
Gemba Walk
A Gemba Walk is a fundamental component of lean management. It describes the personal observation of work to learn more about it. Gemba is a Japanese word that loosely translates as “the real place”, or in business, “the place where value is created”. The Gemba Walk as a concept was created by Taiichi Ohno, the father of the Toyota Production System of lean manufacturing. Ohno wanted to encourage management executives to leave their offices and see where the real work happened. This, he hoped, would build relationships between employees with vastly different skillsets and build trust.
Dual Track Agile
Product discovery is a critical part of agile methodologies, as its aim is to ensure that products customers love are built. Product discovery involves learning through a raft of methods, including design thinking, lean start-up, and A/B testing to name a few. Dual Track Agile is an agile methodology containing two separate tracks: the “discovery” track and the “delivery” track.
Scaled Agile
Scaled Agile Lean Development (ScALeD) helps businesses discover a balanced approach to agile transition and scaling questions. The ScALed approach helps businesses successfully respond to change. Inspired by a combination of lean and agile values, ScALed is practitioner-based and can be completed through various agile frameworks and practices.
Kanban Framework
Kanban is a lean manufacturing framework first developed by Toyota in the late 1940s. The Kanban framework is a means of visualizing work as it moves through identifying potential bottlenecks. It does that through a process called just-in-time (JIT) manufacturing to optimize engineering processes, speed up manufacturing products, and improve the go-to-market strategy.
Toyota Production System
The Toyota Production System (TPS) is an early form of lean manufacturing created by auto-manufacturer Toyota. Created by the Toyota Motor Corporation in the 1940s and 50s, the Toyota Production System seeks to manufacture vehicles ordered by customers most quickly and efficiently possible.
Six Sigma
Six Sigma is a data-driven approach and methodology for eliminating errors or defects in a product, service, or process. Six Sigma was developed by Motorola as a management approach based on quality fundamentals in the early 1980s. A decade later, it was popularized by General Electric who estimated that the methodology saved them $12 billion in the first five years of operation.
Read Also: Vertical Integration, Horizontal Integration, Supply Chain, Backward Chaining, Horizontal Market.
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