The Research Of Cost Management Based On Value Chain Analysis

Situation of accelerated economic globalization and increasingly fierce competition in the market caused profound impacts on the internal management of enterprises, and caused significant changes in lots of enterprises in their ways of management and operation. The strategic cost management emerged on the traditional cost management limited to the internal organizations has become increasingly unable to meet the needs of the development of modern enterprise whether in management concepts and methods.According to the strategic cost management theory, it integrates the enterprise into the industry, not only analyze the enterprise itself but also the upstream suppliers', the downstream customers' and the competitors' cost information. Value chain analysis is an important approach of strategic cost management. It studied the value chain which constitutes and every value activities' status and correlatives were analyzed. The value chain analysis includes the enterprise internal value chain analysis, the industry value chain analysis and the competitor value chain analysis.In this paper, we built a cost management model based on value chain analysis on the basis of referring to the advanced cost management theory and the value chain analysis, and discussed it in the approach of usage, the contents and processes of cost management based on the value chain analysis. This article specified the cost management based on value chain analysis mainly through broadening the scope of the value chain, embracing the concept of costs, choosing the correct cost driver, and analyzing the value chain. In this paper, we deeply discussed the cost strategic management which realized the long term cost preponderance through case analysis from two aspects: internal value chain analysis and industry value chain analysis. In the internal value chain analysis, this paper introduced the ABC which was used to analyze the value chain, and perform enterprise management from optimizing the cost driver and value chain. In the aspect of industry value chain, for discussing the "self-manufacturing" or "outsourcing" decision, whether subcontract business, it translated them to upstream value chain of enterprises or decomposition down the value chain. And provide constructive comments for realizing enterprise cost predominance from a strategic management perspective.