Study Of Cost Management Based On Value Chain Theory

Along with the deepening of our economic reform, continuous development of the socialist market economy and entry into WTO, Chinese enterprises have faced more and more vigorous competition. Price is the main weapon used by Chinese enterprises in their endeavor for market competition so far. For the sake of winning competition, acquiring the cost advantage is the primary target of all the enterprises alike. In the current and new economic environment, traditional cost management method cannot fit, as it fails to provide accurate cost information and necessary support to decision making. The value chain analysis extensively employed in strategic management is a powerful tool for cost management, therefore, it is borrowed as a base in this thesis for further analysis. Divided into five parts, this paper focuses on the activity-based costing method based on the target costing method, which is currently the chief method in use in our enterprises.Based on the value chain cost management analysis and discuss, we hope to promote the enterprise reform.On the point of practical research, we offered a literature review on the methods for cost management based on Value Chain Theory. We first traced the prior theories of cost management and Value Chain and summarized their advantages and disadvantages respectively. And then we developed a framework model of cost management based on Value Chain theory by combining with the theories of financial accounting and management accounting. It includes extended concept, general procedures and specific techniques. Finally, taking WD company as an example, we discussed how to apply it to practice. At last, we analyse and estimate the effect of value chain cost management.