Strategic Cost Management Based On The Theory Of The Value Chain On Dairy United Ltd.

After the Melamine incident, Dairy Industry were aware of the milk station to collect retail breeding cows milk neither guarantee the quality, nor be traceable in the event of a problem, so the large-scale pasture gradually replace the milk station. But high quality, standardization pasture administration accompanys highly cost problem. Ranch infrastructure, high-quality cows, investment in foreign advanced milking equipment, high feed costs, pasture immunization costs, rising wages and salaries, etc., which means the Dairy began to enter the high-cost era.The government has introduced policies to encourage large-scale pasture breeding cows in order to ensure the milk quality, and make a certain limit on retail farmers. The number of milk stations is smaller, and will be further reduced. But what about the farmers feeding cattle? Dairy United Ltd call for farmers who own cattle joining in the company,and to give a fixed return. Its innovative mechanisms and philosophy of science consistent with both the present and the future trends in the development of China’s dairy industry,also in line with the interests of dairy farmers in line with market requirements.The Dairy has begun to enter the high-cost era. Dairy United is no exception, but it expands Strategic Cost Management, upgrading from the company’s core competitiveness and cost improvement through the value chain management. This article is researching on its internal value chain, vertical value chain and horizontal value chain, analyzing its strategy of cost control, and provide a reference for the competition.This paper is divided into five parts.Part I, introduces the research background of this paper to study the definition of innovative research ideas and papers point. Part II, defined the Dairy United in the value chain and discussed its cost control and characteristics.Part III, on the internal value chain, the Dairy United use activity-based costing to control costing and improve basic procedures.Part IV, on the vertical value chain, analyzing the relationship between the Dairy United and its key suppliers and customers.Part V, on the horizontal value chain, analyzing and proposing solutions to the problems which find out through SWOT analysis.Part VI, outlines the Dairy United’s value chain model on cost control. Finally, a summary of the improvement of the program.In this paper, standard research method and case study method are combined. Through the description of the value chain management, understanding and validation, exploring an agricultural enterprise in ideas and methods of strategic cost management improvements. The innovation of this paper is:combine the specific theory and practice, and confirm each other; used value chain management and activity-based costing in agriculture, and enriched the theory of implementation in the field; more effective use of specific data on the vertical value chain to explain the cost control results.