The Study Of Cost Control For Herbi-sky Chinese Medicine Company Based On Value Chain Theory

The changing economic situation and increasingly competitive market result inthe survival of the fittest. The long-term survival and development of an enterprisedepends on its core competitiveness. Cost is an important indicator of enterprisemanagement level, which affects its fate, especially manufacturing industry withcontinuing oversupply issue. As one of the high and new technology industry,pharmaceutical is not only a sunrise industry closely related to people’s health, butalso a capital intensive industry with the characters of high risk, high investment andhigh output. But with the change of operation environment in pharmaceutical industry,rapid development of information technology and constant convert of consumerattitudes, it becomes harder to save direct cost in the production with the traditionalcost control theory, which can not meet the needs of the burgeoning market. Costcomes form every link of production. There are more opportunities of cost controlfrom the perspective of value chain and it gives better control of cost by analyzing thevalue chain of enterprise.Cost control aims at optimizing the overall costs of value chain enterprise.Connecting with the practical situation of Herbi-sky Chinese Medicine Company, thearticle analyzes its upriver, internal and downstream value chain based on the valuechain cost control theory, and finds some weakness of existing cost control. It pointsout the limitations of traditional cost control method and the necessity of applyingnew cost control based on value chain theory. The paper states how to apply costcontrol to Herbi-sky by putting forward cost control strategy from purchasing,research-and-development and distribution. By case analysis, this study resultstretches the spatial and temporal boundaries of cost control, and finds a way suitablefor modern Chinese medicine company. Also it is designed to provide theoreticalbasis and practical experiences for the long-term development of the enterprise, so asto enhance Herbi-sky Chinese Medicine Company’s core competitiveness. Finally theauthor hopes that this paper will be beneficial to construct a resource saving andenvironment-friendly society.