Strategic Cost Management Based On Enterprise Value Chain Theory

The new environment and fierce competition situation force companies to take all the measures for the survival and development. The article discusses the principle and method of strategic cost management based on value chain. Strategic cost management is a new method of cost management. All enterprises should pay attention to the cost management because profit is a life of business. It is hard to win at modern times without the good cost management system. The article is to help enterprises diagnose the cost system and take actions for building up competitive advantage and having an excellent performance through the extensive analysis of internal and outer value chain study.Internal value chain analysis is mainly for the sake of realizing the production activities and improving the link of inner activity chains. In this part, the ABC is used as a tool for analyzing and optimizing the inner activity chains. The outer value chain analysis is mainly for the sake of enterprises' alliance partner choice strategy. In this part, the supplier and marketing channel choices are focused on. The integration model of value chain system is put forward after a comprehensive analysis. The WABCO vehicle company is an example for further elucidation of strategic cost management based on value chain.