The Study Of Enterprise Strategic Cost Management Based On The Value Chain

The value chain cost analysis is the first procedure in strategic cost management, and its analysis approach offers a ground-breaking analytical instrument for enterprise strategic cost management. While the approach aims at the enterprise' internal part, it emphasizes placing the enterprise' value chain in the overall value system of the whole industry in the light of an expanded point of view from the interior to the exterior of the enterprise, paying much attention to the relations between the enterprise and its competitors and the relations between the upper reaches and the lower reaches, to the connections among the various activities in the enterprise' internal value chain, thus acquiring the enterprise' competitive advantage in a consistent readjustment and optimal process of these value chains. This paper is divided into six parts, centering round the value chain cost analysis theory for analysis and delineation in a view to being helpful to enterprises' strategic cost analysis. This paper is devoted to the research on the application of the value chain theory in enterprises' strategic cost management from the perspective of case studies. It first expounds the theoretic basis of this research, summarizes the status quo of the present domestic and international research of the value chain theory and strategic cost analysis; then illustrates with the help of the value chain theory in management accounting the content and approach of value chain cost analysis, and finishes with a set of procedures for cost analysis. The value chain cost analysis of the enterprise in the case studies starts from its investment in its production equipment for technical renovation. As for the problem of poor application of the renovation scheme of much feasibility based on the calculation in accordance with the conventional internal rate of return in practical production, we conducted an analysis on the enterprise in case studies of the profit rate and the rate of return on assets in various production links in the value chain by way of value chain cost analysis, thus tracking down the cause of poor application conclusion of the investment strategy based on the internal return rate approach, and advance an investment renovation plan based on the value chain cost analysis approach. Through value chain cost analysis, we may improve our understanding of enterprise strategic cost management, that is, enterprise analysis should not only consider profit, but also return rate on assets, i.e. efficiency. The objective of enterprise strategic cost management is to track down the existing problems in production and find low-cost but high- efficiency in production through value chain analysis. In consequence, this paper arrives at the role of value chain analysis in enterprise strategic cost management and the way of lowering production cost through value chain analysis via a theoretic exploration therein.