Cost Control Based On The Modern Theory Of Value Chain

In Hoover's Vision, Gary . Hoover incisively points out that enterprise competition constitutionally is custo mer's competition. Thus we must set out from customers or their recognition for enterprises—they accept prod ucts or services supplied by enterprises. This requires that if enterprises are just going to be accepted by their cu stomers, they must create and supply the value satified by their customers. As a result, the cost—expenses paie d out by them for this—can not also leave from value chain—a succesion of the required activities for creatin g and supplying customer value. Cost control based on the theory of modern value chain (abr. as following, cos t control based on value chain) is the best embodiment just about this idea.Cost control based on value chain starts from creating value and ends in the maximum ofcustomer value— -spending cost for creating value and again cost must be spended for creating value. The change makes enterpri ses cost control should chiefly confirm their cost position from the analysis of value chain. And then cost contr ol is carried through from angle of view ofcreating and supplying customer value. Consequently, its fine circul ation can be achieved, that is to say, the creation of value—spending cost— creating value. Therefor, the prim ary study objective of the paper is following. First, by analysingthe theory of modern value chain and cost cont rol, the paper discussed and brought forward the cost and its control idea based on value chain, and accordingly established the theoretical base for cost control based on value chain. On the base of this, its fundamental princ iple and method was systematically analyzed. At the same time, the research on the concept of value chain cost established the theoretical base for constructing the fundamental frame of cost accounting based value chain; S econd, it was compared with traditional cost control and other typical methods of modern cost control, and sequ entially its fundamental characteristics was discussed, and then it is made to be better used as possible; Third, c ombining the enterprise practice of cost control, the paper still carried through necessary and adequate study for validating the correctness and efficiency of its fundamental principle and control method. At the same time, as an attempt, it also primarily discussed the fundamental thought and method of agricultural oast control based o n value chain.For realizing above objective, the paper primarily adapted normative and positive study method, and agilel y used other methods by the need of research on its parts. Firstly, fromlengthways point of view, using develop mental method it analyzed the development of cost control and the theory of value chain; Seondly, from transv erse point of view, using synthesized method itperspectived their study actuality. And then, on the base of expl oring their development law, the theoretical basis of cost control based on value chain is discussed so that it is t o attempt to establish their more integrated theoretical system and the basic applied thought Except for introdu ction, the primary contents of other chapters of the paper is briefly generalized as following.1. Research on the historical evolvement of cost control. Its law was systematically analyzed, for example, t he traditional cost control of using "product" as its center, the modern cost control of using "management"' as it s center, the activity cost control of using "activity" as its center and the value chain analysis & cost control of using "value" as its center. This process reflected the evolvement law of cost control method, that is to say, the change from the cost control of discussing cost with cost to cost control of using"achieving advantage" as its o bjective.2. Research on the theoretical base of cost control based on value chain. On the base of analyzing thetheory of modern value chain, the paper primarily discussed and put forward the idea of threedimension cost based o n value chain. It involves three meanings: first, resources invested for creating customer value; second, resourc es expended for providing customer value; third, time resources invested for maximizing customer value and ti me resources saved for making the time of creating it least. And then it still discussed and brought forward the i dea of double three-dimension cost control based on value chain. It involves two meanings: firstly,controlling t he necessary and enough investment of resources so as to create customer value (behaving as larger price and h igh quality product); secondly, controlling the consumption of resources so as to supply as much customer valu e as possible (behaving as more profit and less cost).3. Research on the fundamental principle of cost control based on value chain and its method. Its fundament al procedure chiefly includes five procedures: firstly, determining the value chain and its cost position of enterp rises; secondly, from the cost behavior of value chain, thoroughly analyzing the cost drivers of value clain in or der to efficiently control the cost behavior of value chain; thirdly, it is necessary to prepare the standard of oast control based on value chain for easy to efficiently control of value chain costjfourthly, in according to the stan dard, carrying out the control of the process of the formation of value chain cost by controlling the cost drivers of value chain; fifthly, starting from cost control, reconstructing value chain so as to the effect of cost control b ased on value chain. Its fundamentalmethods primarily include four aspects: cost control based on the point of view of the cost of resource investment and its consumption, cost control based on the point of view ofthe cost of exterior and inner value chain, cost control based on the point cf view ofthe cost of physical and virtual valu e chain and optimizing value chain based on cost control and so on. In according to the cost control idea based on value chain, its final objective is not to control whether cost does or not happen and its quaitity. But on the base of this, the unique value chain is going to be constructed, and then it is necessary to optimize (or reconstr uct) value chain.4. The comparison research on cost control based on value chain. In order to make it has betterfeasibility, f rom the point of view of comparison and the five aspects of cost control, it was systematically compared with o ther cost control methods, and then its emphasis and key are explored. These aspects are cost idea, cost control idea, the procedure of cost control and its method. And other cost control methods primarily are traditional cost control, activity cost control, cost design and strategic cost control.5. Research on the agricultural cost control based on value chain. In according to the fundamentd principle of cost control based on value chain and its method, and the analysis ofthe characteristics of agricultural cost c ontrol and its value chain, the paper primarily discussed and put forwardthe thought ofthe agricultural cost con trol based on value chain. They primarily involve to expand the agricultural industry chain based on creating va lue, to aggregate the agricultural industry chain based on supplying value and to select the agricultural develop ment model based on the reconstruction of value chain.In a word, starting from creating, the objective of cost control based on the modern theory of value chain is to establish and cultivate the competitive advantage of enterprises by using the modern theory of value chain. It always determines the cost position of enterprises from the point of view of wholly optimizing value chain, an d then implement cost control based on creating and supplying value.In according to the cost control idea base d on value chain, it selects the methods of cost control from different range, arrangement levels and point of vie w so that it is possible to achieve the fine circulation ofthe creation of value—spending cost— creating valu e". In some way, as an attempt its fundamental thought and method is a breakthroughand innovation ofthe met hod of modern cost control. And it also is a new thought ofthe modern cost control of industries involved in ag riculture and so on.