Research On Cost Management Based On Value Chain Theory

With the rapid development of globalization, knowledge and informatization, enterprise management environment has changed dramatically. The competition has become fierce among enterprises. The core of competition has changed from providing customers with high quality products with low prices to providing customers with the maximum satisfactory services. The competitive range is expanded from the individual enterprise to the entire enterprise value chain. The content of competition is changing from the price of product to the value of customer. If companies want to gain competitive advantages, the key is to create and maintain a comprehensive cost advantage. However, the traditional cost management has been difficult to meet the requirements of enterprise management in the new environment. The cost management based on value chain meets the needs of enterprise management. It has a lot of great practical significance in reducing cost, realizing the value of the entire value chain alliances to maximize value-added and improving core competitiveness of enterprises.This paper researches the application of value chain theory in cost management. The research approach is mainly to use normative research methods, case analysis and qualitative analysis methods. Firstly, this paper analyzes the background, significance, the development of domestic and foreign research about cost management based on value chain theory. So we can draw the conclusion that the theory in our country is at the initial stage and the related theory is not mature. Secondly, describes the theoretical framework of cost management based on value chain from the content, subject, mission, goals, principles and other aspects. In the meaning time, compare the differences between cost management based on value chain and traditional cost management form thought, objectives, scope, motivation and other seven aspects. On the basis, this paper analyzed the enterprise costs mainly from internal value chain, vertical value chain and horizontal value chain, using activity-based costing, cost driver analysis and category management of enterprise, and proposed optimization measures. Thirdly, take Galanz Group as an example, analyzed the framework of cost management on value chain specifically and listed the condition and problems of cost management based on value chain in practical application. Concerning to the problem, put forward to some constructive suggestions, such as the establishment of accounting regulations and accounting system based on value chain, using indirect estimation method to obtain industry information and so on. Finally, the conclusions of this paper are as follows: For the enterprise's internal cost management based on value chain,we can eliminate non-value-added activity, low efficiency and low effectiveness activity to reduce enterprise's costs by using activity-based cost; We can effectively control the cost of the enterprise by using cost drivers analysis to mine the various tangible or intangible drivers which affect the cost of the enterprise. For the management of horizontal value chain, benchmarking methods can be used, it is conducive to the management of innovation, and it can enhance the core competitiveness of enterprises. For the management of vertical value chain, we can manage suppliers, customer, etc. by category, and then choose the right supplier, vendors and customers to establish good strategic partnership. It can effectively reduce the cost of purchasing, sales and after-sales and other aspects; it can optimize the cost of the entire value chain alliance; each enterprise node in the value chain can achieve win to win.