Research On Strategic Cost Management Of G Company Based On The Value Chain

In the increasingly competitive era,external environment of enterprise is changeable,strategic cost management came into being in order to help them to cope with the change of external environment better.Comparing with the traditional cost management,strategic cost management is dealing with the cost of enterprises in a higher and broader aspect,not just confining to the traditional cost control;Applying value chain concept to the strategic cost management,which will provide basis and methods of the cost management better for the enterprise.the competitive between enterprises is also happening the great changes because of the development of the economic,standardized product already can’t satisfy the needs of people,personalized products is the inevitable thing what come out the new era.therefore,the competition between enterprise is no longer just including the price of a product or service,cost,quality,etc.,the more important thing is the competitive advantage of enterprise.And the strategic cost management based on value chain can create the advantage for the enterprise through the integration of internal value chain and the coordination of internal resources and external environment what can make the enterprise gain a foothold in the fierce competition.Steel producers in China after the reform and opening-up policy expand rapidly,but that entered the last downturn later,the overcapacity of iron and steel industry,the declining of product prices and the high price of raw material imported,all of them make the profit of iron and steel enterprise squeeze,and even get a loss.So the application of the strategic cost management based on the value chain to the enterprise cost management is the inevitable trend.This article organizes the concept of value chain and strategic cost management in detail firstly,which provide theoretical basis for the case analysis;Then,the article introduces the basic information of the G company,and apply the strategic cost management based on value chain to G company.Though analysis the internal value chain(including research,purchasing,production,sales and after-sales service link)of the G company,found the existing problems in the internal management in each processes,and complete the optimization of G company value chain,to help enterprises to increase the value of the value chain,to optimize the distribution of resource and to improve the profit and the efficiency of the resource uses.Though the analysis G company’s external value chain(including vertical value chain and horizontal value chain)in detail,and establish strategic alliance with the upstream and downstream enterprises,through Participate in the product design each other and application guide,etc.,setting up perfect purchase and sales channels;Through the analysis of the relative value of competitor activities and using the method of benchmarking to improve cost management level,and pay attention to the effect of collaboration and the competitive aligned with the competitors to implementation and resource sharing among competitors,not only can it plays a role for the development of steel industry,but also can make their own competitive advantage strengthen.