Diagnosis Of Enterprise Cost Management

Cost management is not only an important means for enterprises toachieve profit targets, but also an important way for enterprises toestablish competitive advantage. Cost management involves all aspects ofbusiness activities, is an extremely complex process. In practice, manyenterprises which not do well in cost management would take adisadvantageous position in the competition and seriously affected theeconomic efficiency of enterprises. Therefore it is necessary toestablish a comprehensive cost management diagnostic system to improvecost management of the enterprise. According to this system enterprisecan diagnose cost management timely, find the problems in cost managementand then make some suggestions for improvement. However, the diagnosisof cost management is still in exploration stage, where different aspectsto be improved, e.g. lack of research information, single study methods,study on the financial index analysis only, not combined analysis withthe business models. It has not established a more scientific,comprehensive cost management diagnostic system, which severely affecteddiagnostic operation of enterprise cost management. In view of this, Ichose the topic of diagnosis of enterprise cost management as master’sdegree thesis and I hope this work can make some meaningful referencesto cost management practitioners.This article is aimed to make up the shortcoming of the existingdiagnostic mode and method of cost management, analyzes the formationprocess of the product cost and cost performance decision process and thenexplores the inner mechanism of the cost management diagnosis and basictrain of thought. Under this guidance, this research explores from valuechain’s perspective and takes A company as a case study to build adiagnosis mode of cost management, including disease diagnosis, problemdiagnosis, etiological diagnosis and trouble diagnosis. Different withthe general diagnostic mode, cost management diagnostic mode constructedin this paper will organically connect the cost of performance levels tothe performance of the business functions, management functions and development strategy and competitive strategy. The enterprise can achievea thorough diagnosis of the decision and impact of the cost. In the courseof the study, cost management problems of A company were found in manyareas like research and development, procurement, production, sales,distribution and customer service. The company’s cost management methodsand business model is not scientific, reasonable. The cost management ofA company is inefficiency. Aiming at these problems, this paper putsforward the corresponding suggestions for improvement.The construction of the cost management diagnosis system is based onthe formation process of cost, the cost decision mechanism and acomprehensive study on the influencing factors of cost value chain. Thediagnose process covers many shortages of traditional financial diagnosisthat focusing on the financial performance only, realizes the organiccombination of the financial analysis, cost management methods andbusiness model. So the diagnosis of problems can be more thorough,systematic and comprehensive, the suggestions can also be more targeted,scientific and practical, and will strongly support diagnosis operationin cost management.