Research On Application Of Cost Management In China Railway X Company Based On The Value Chain

From the very beginning of our country, the railway construction companies have beenassorted as institutions. The attachment of politics and business led to the ossification ofmanagement and the cost was lack of management as well. From March of2013, the ReformingProject of the Ministry of Railway was authorized and enacted by the National People’s Congress.The reform is speeding up and the railway construction entered a competitive era. Faced with thefierce competition, the construction companies have to adapt themselves to the new operatingsystem and market. That’s to say that they need to make great change on their administration,especially on the field of cost management, thereby improve their competitive power andsustainable development ability.Traditional methods of cost management mainly include the control over target cost,responsibility cost, and standard cost. Based on the management and control, the traditionaltheory only focuses on the interior of companies and ignores influence from the outside. What’smore, traditional means of accounting is too backward, and the cost management hasn’t wellassociated with the value-creation of the company, which brings a lot of limitations. However,the cost management based of the value chain aims to reduce the composite cost throughreducing the cost in every links of the value chain and practice sustainable development throughbuilding a value chain association. The value-chain cost management changed the former“nearsightedness” of companies and also helped companies to set up a lone-term mode for costmanagement, and therefore enhance their core competitiveness.Including variety of cost management theories from experts all over the world, this essay ismainly about the analysis of company X, which is a typical railway construction company. Itdesigns a set of value-chain cost management modes particularly for company X, including thestrategic target, value-chain analysis, job library building, value chain cost control, value chaincost management achievement evaluation, etc. based on this, this essay suggests a good way inwhich the value-chain cost management mode can apply to company X. And then shows howcompany X practices the value-chain cost management through raising, analyzing and solvingthe problem. These years, the study of value-chain cost management theory has become a worldwide discussed issue, but real practices of this theory on a single company or industry arestill rare. I hope this essay can provide some help for company X and provoke more goodmethod of value-chain cost management reformation.