Study On Application Of Strategic Cost Management In Steel Enterprise

With the trend of economic globalization and the growing competition of steel enterprises, the business and competition environment of steel enterprises changed dramatically. Facing the rapid change on outside and inside, the steel enterprise reform the traditional cost management on one hand, and keep on seeking the right way of cost management that can survive in the competition. During the constant evolution, the strategic cost management emerged. Steel companies are facing keen competition and huge cost pressures, so it is very necessary for them to introduce the strategic cost management. From the strategic perspective, steel enterprises can solve the practical problem by using the advanced methods of management which can improve the efficiency and standards of cost management as well as create their competitive edge. At the same time, due to the complex process and multi by-products, the theory of strategic cost management applied in China’s steel industry should be workable and practical. Over all, strategic cost management is an inevitable choice for steel enterprises in China.Firstly, this article makes the theory study of strategic cost management from status of home and abroad, content, principles, characteristics, three management models and fundamental analysis tools. Second, combining status of strategic cost management at steel companies in China, the article discusses the problem in the application of strategic cost management in steel industry and analyzes the causes. While this paper focuses on studying how Baosteel Group Corporation use three strategic cost management analysis tools strategic positioning analysis, value chain analysis and cost driver analysis to implement the cost management effectively. At last, on the basis of a comprehensive theory and practice, the paper proposes some measures against the existing problems to improve the steel company strategic cost management. Based on the system theory analysis and the case study on Baosteel Group Corporation, the result indicates that in order to be the competitive for a long term, steel enterprises in China need to control the cost from strategic perspective. The purpose of writing this article is to help steel enterprises solving problems in the application of strategic cost management, to let them obtain sustainable competitive edge.