At a fundamental level, the decisions managers make about revenue and profits fall into two categories—those related to growth and those related to cost reduction. Both types are meant to increase margins. But how data are used in each decision-making process is completely different.
Cost reduction data are precise. Firms know their cost structure very well and can compute with a reasonable level of certainty the savings each alternative being considered will generate. Managers use cost-related data as an objective input for decision making, since they consider it both reliable and reasonably predictable.