Strategic Cost Management Application To Study In China

Today's global economy is fiercely competitive. To a large extent competitive means cost management for modern enterprises. Over the past decade, business enterprises have had to respond to increasing domestic and international competition with newer and better approaches to managing their organizations. Due to this changing environment, Strategic Cost Management method is put forward. Though SCM method is widely used in foreign countries these years, it hasn't been applied in our country.Strategic cost management can be defined as the use of cost information to do the following: help formulate and communicate strategic; carry out tactics that implement those strategies; and then develop and implement controls that monitor success at achieving strategic objectives. Management control systems are ultimately, tools to implement strategies. Since strategies differ in different types of organizations, management controls should be tailored to the requirements of specific strategies. One important role of internal accounting information in a business is to facilitate the development and implementation of business strategies. Under this view, strategic cost management is a continuously cycling process consisting of the following three stages: value chain analysis, formulating strategies and cost driver analysis.The paper firstly introduces the concept and connotation of strategic cost management, the processes and the application realms of SCM. On the basis of introduction, a case is provided to further explain the application processes of SCM in a manufacturing firm. Moreover the emphasis and innovation of this paper is that the case introduces not only the result of SCM but also the detailed processes of SCM. At the end of the paper, some problems and solutions are discussed and the further development of SCM is analyzed.