Cost Management Based On The A Corporation’s Strategy

As running the market economic system, Chinese enterprises is at a customer-oriented and dynamic business environment in 21 century. It is commonly faced problems of modern enterprises that how effective allocation of corporate resources and maintain long-term com-petitive advantage. The Strategic framework that combined the five forces model and Value chain explains that superior performance is created when a company is facing the competition. To achieve the mission, enterprises should build the tailored value chain by its own unique values. Based on the principle, the enterprises make decision making and strategic planning. In the processing of strategy formulation, implementation and control, enterprises should seek to coordinate the relationship between the various aspects of the value chain between the in-ner and maintain continuity of strategy in an uncertain environment. The right competitive thinking enables companies to discover, create and maintain long-term competitive advantage. The enterprise identify its strategic positioning only after analyzing and judging the macro business environment, industrial structure and resources that it has owned. Cost management based on the strategy is starting by the development of a niche market segments. And then to position the enterprise which strategy should be employed. Does it take a low-cost strategy, differentiation strategy or focus strategy, or a combination of the three strategies. The third step, companies began to make the strategic brand investments-is to invest the strategic brand building or extension. In researching and developing of product, product cost planning model is effectively implemented, with expanding the depth and breadth of product mix. In constructing the sales channel, enterprises should build a rational structure of sales channels. It will launch products faster and reduce the benefit sharing of channels. It will improve the operational efficiency of channels. Strategic cost management is the planning, controlling, analyzing the value point of enterprise value chain. It is to reduce the costs at each value point of value chain and improve the use of resource efficiently, which will maintain the long-term competitive advantage of enterprises.From the three levels, this article formulate that the Chinese enterprises how to apply cost management theory and methods to create long-term competitive advantages discussed over the strategic perspective. First of all, the corporation is applied the PEST analysis from a macro-level analysis in order to analyze the impact of politics, cultural, economic and tech-nological environment on the strategic positioning and cost management. Secondly, based on the view of the Micro-environment of industrial structure, the profitability of the enterprise is analyzed in order to formulate the game situation with the Five Forces. Thirdly, A company, for example, how to achieve higher than the industry average gross margin. Adhering to the corporate mission and core values in accordance with the strategic theory and cost manage-ment methods, the company formulates its strategy, plans, organizes and controls its business cost, formed the cost management levels from strategic positioning, value chain analysis, cost planning and annual budgets.