Cost Control Strategy Study For Petrochemical Industry

With the admission of China into the WTO, the Chinese petrochemical industry has experienced a fierce competition with international players in this field. What strategies the Chinese petrochemical producers should take to improve their competitiveness to accomplish sustainable competitive edges is significant to grow the Chinese petrochemical industry.This article elaborated the production characteristics of the petrochemical industry, business operation features, and cost characteristics; and also examined the status of the petrochemical industry, trying to identify the problems existing with the cost of Chinese petrochemical industry, and addressed the reasons behind it, and thereupon identify the strategy for development. The following conclusions are resulted:1. Based on examination of the climate of the Chinese petrochemical industry and application of the Port Five-Forces model theory, SWOT principle, it is suggested that though the Chinese petrochemical industry is in a highly competitive arena, it is still at a very good development phase. The Chinese petrochemical industry is quite strong with good market opportunity exceeding the risks present, and the internal advantages exceeding remarkably the downsides.2. The study by this article suggests that Chinese petrochemical industry should take aggressive strategy for its development so as to promote its sustainable growth to form the competitive edges for it to develop continuously and vigorously. With the outcome of the Five-Force Model analysis and the fact that Chinese petrochemical is technologically disadvantageous at present, the cost leading strategy shall be the core of and the natural selection by Chinese petrochemical industry. Only this way can the Chinese petrochemical industry obtain and owe its core competitive advantages in possessing the market sustained competitiveness.3. In accordance with the production and business operation characteristics and cost features analysis in the Chinese petrochemical industry, cost leading strategy shall be adopted as a result. Implementation of the strategy of acquisition and consolidation to attain the capital operation efficiency, and the growth of enterprises and improvement of productivity of the employees, would lower the management cost marginally; and implementation of integrated strategy, pluralistic strategy, globalization strategy, would reduce the cost of raw material procurement, transportation, and marketing expenses;...