China's Oil Industry, Strategic Cost Management Study

With the advancement of its profound level of recombination and reform, the petroleum exploitation industry of our country is actively implementing the "Go-Out"strategy. Namely, based upon domestic resources, develop overseas resources, implement the strategic plan of international operation, go abroad actively, and launch transnational operation. The competition of the petroleum industry is finally the competition of the cost. In the turbulent market competitive environment since entering into the WTO, the petroleum exploitation industry of our country has been facing the unprecedented opportunities for development, and both the severe challenges, thus, on the foundation of accelerating the reform and reorganization, it should effectively implement the low cost development strategy, and strive to improve the international competitiveness.The current target cost management mode for the petroleum exploitation industry of our country, which regards the "horizontal method" budget as its core, though it has tentatively suppressed the ascendant trend of the cost of the petroleum exploitation industry of our country, its management efficiency is relatively low, and the short-term behaviors are very serious, which have already seriously influenced the profit and long-term development ability of the petroleum exploitation industry of our country. So, beginning with an understanding of the theories and methods for strategic cost management, through analyzing the current cost management mode of the petroleum exploitation industry of our country, summarizing and drawing experiences from the cost management innovation practices of foreign oil companies, this paper innovatively structures the strategic cost management theoretic system for the petroleum exploitation industry of our country, and also makes corresponding study on application innovation, which offer a set of brand-new thinking and method for perfecting the cost management system and promoting the international competitiveness of the petroleum exploitation industry of our country. The main research work of this paper is as follows:Firstly, this paper summarizes the research results of strategic cost management theories and methods, and points out the basic principles, the characteristics, management mode, and the main method tools of strategic cost management.Secondly, this paper uses the strategic environment analysis to carry on the overall strategy position of petroleum exploitation industry of our country, then it innovatively uses SCP mode to analyze the structure of world petroleum market, and proposes that the transnational competitive strategy for the petroleum exploitation industry of our country is the competition of the cost. On this basis, it structures the five levels framework of strategic cost management theoretical system for the petroleum exploitation industry of our country, which concretely includes the task, goal, principle, content, organization and procedure of strategic cost management for the petroleum exploitation industry, thereupon it carries on a systematic and deep study on the relations between each level; then it makes a positive analysis of the conditions of the petroleum exploitation industry of our country.Thirdly, based on the advance and perspective of the strategic cost management theories, this paper structures the content system and method system of strategic cost management for the petroleum exploitation industry of our country for the first time at home. This paper proposes that, the content system of strategic cost management for the petroleum exploitation industry of our country should include strategic cost prediction, strategic cost decision, strategic cost management implementation, and performance evaluation of strategic cost management for the petroleum exploitation industry; the method system of strategic cost management for the petroleum exploitation industry of our country should include strategic value chain analysis, strategic cost drive analysis and production cost drive analysis, and analyze the inner link among the three kinds of methods.Fourthly, according to the strategic cost management method system for the petroleum exploitation industry of our country, this paper uses the relevant strategic cost management methods and carries on a positive research of the current situation of the petroleum exploitation industry of our country. Through an analysis of value chains of its competitors and the cost competition status of each value link for the petroleum exploitation industry of our country, this paper sets up the quantitative model for both the industrial value chain and the internal value chain of the petroleum exploitation companies of our country, explores the optimization space that exists in each link of the industrial value chain and the internal value chain, and makes a positive research on the current situation of the strategic cost drive of the petroleum exploitation industry of our country. The strategic value chain analysis and the positive research on the strategic cost drive of the petroleum exploitation industry of our country, provide strategic information for the strategic cost management decision of the petroleum exploitation industry of our country, and points out the strategic way of implementing strategic cost management and fostering the cost competition advantage. In order to guarantee the concrete implementation of strategic cost management, this paper innovatively utilizes the production cost drive analysis to improve the present budget management method, and proposes "cost drive budget method".Fifthly, according to the strategic information that the value chain analysis and strategic cost drive analysis reveal and the application way of "cost drive budget method", this paper puts forward the countermeasures and guarantee measures for implementing strategic cost management of the petroleum exploitation industry of our country.