Study On Strategic Cost Management From The Value Chain

With the more and more intense competition among the enterprises, the external environment asks for more on the cost management. It urges the companies to seek a way of cost management to reduce the cost constantly, and the strategic cost management of value chain can achieve it, which makes it become more and more significant in the business management. The competition patterns between enterprises have been changing. Due to the individuation of the user needs, the growing enterprise cooperation and global economic integration, the competition no longer limits to the price, cost and quality of the product and service, but lays its emphasis on the competitive advantages of enterprises. The strategic cost management of value chain can provide a cost advantage to enterprises, and this superiority roots in the integration of value chain activities and the inter-coordination between internal resources and external environment. Based on value chain, the strategic cost management has gradually become a new mode of cost management.Combined with the basic ideas of the strategic cost management, this thesis discusses the strategic ways of cost advantages the companies seek, expounds the active function of value chain in the strategic cost management, and puts it into actual business management from the perspective of value chain. Five research methods are adopted here, including induction, deduction, method of comparative analysis, and case study. This thesis takes An Yang Iron&Steel Inc.(AYIS for short) as an example, and applies the theory of value chain into the specific strategic cost management in iron and steel enterprises to help increase the value in value chain. The focus will be laid to how each link in the value chain can achieve the optimal resource allocation to improve the production profits and the efficiency of resource use. This meaningful reflection can exert a positive influence on the optimization of the strategic cost management. This thesis first evaluates the concept of value chain, the value chain analysis, and the content of it. And then, the application of value chain analysis into the strategic cost management is introduced, based on which the practical operation of it is promoted. The analysis of the theory about value chain on the strategic cost management, the author proposes that the utilization of strategic cost management is an inevitable tendency to improve modern cost-management system, and it is in favor of improving and reinforcing the enterprise operation and management. It adapts to the sustainable development demand, secular, global, extroversive, competitive and dynamic. The starting point of the strategic cost management is the value chain analysis, as well as cost drive analysis and strategic orientation analysis. According to the analysis of value chain, the application of it into the strategic cost management expands the space of reducing costs, making enterprises achieve competitive advantages better and understand their own characteristics of cost behaviors. Due to the conservative idea of cost management, high cost of logistic industry, inauthentic cost information with a particular stress on the cost analysis of the internal production, and the lack of competitors, the author believes the application of value chain in the strategic cost management is a basic and efficient way to maintain and create steel enterprises competitive. This thesis analyzes the framework of the strategic cost management based on value chain from the principles and structure of the strategic cost management. The enterprises can adopt the SWOT analysis and benchmark learning approach to enhance competitive advantage. Building on the above, this thesis first provides an introduction of AYIS, and then makes an analysis on its background about the implement of value chain to the strategic cost management, resulting that the performance of value chain can both save cost and improves the enterprise competitiveness.The enterprises should pay attention to the manufacturing technique, technological innovation, logistic management and human resource management in the process of development. AYIS should apply the strategic cost management into each employee’s work, set up proper customer management system, and strengthen the enterprise independent innovation ability in order to obtain the competitive advantages of cost in the increasing competition. The cost management experience on the basis of value chain in AYIS is concluded. While other enterprises want to implement this management model, a comprehensive strategic cost management should be set up, as well as the account system management. The implementation of the strategic cost management of value chain cannot do without the innovation of products and technology. With the change of marketing environment, the application of the strategic cost management on value chain has turned into an inevitable trend.The novelty of this thesis is the promotion of value chain in the strategic cost management, which can provide not only useful information of the value activity, but also that of contact between the value activities. Combined with the example, the solutions of high logistics cost and inauthentic information in the development of steel enterprises. The researchers at home and abroad have done little concerning the quantitative analysis of value chain. It remains to my further studies to ascertain the relation between each value activity accurately.