Strategic Cost Management Of The Midea Household Air-conditioning

Customers demand for personalized and diversification of products with the rapid development of the world economy, science and technology. Enterprises are now facing increasingly tough competition environment, just like a boat sailing against current. How to win in this fierce competition has become the most important issue for every enterprise.Therefore, business management must have a competitive advantage, either cost less than competitors, or form differentiated characteristics in product, service and other aspects.Management costs cannot be limited to the enterprise internal management, enterprises need to emphasize the management from strategic view and pay more attention to the relationship between enterprise and the competitive environment. As a combination of cost management and strategic management, strategic cost management is an adaptive transform in reaction to the change of traditional management environment, and is gradually applied to practice. Strategic cost management identifies cost driving factors and manages value chain. That is to say, strategic cost management uses cost data and information to provide strategic cost information for each key step of strategic management. This would help enterprises implement realistic competitive strategy and obtain sustainable competitive advantage.Midea household air-conditioning as the second air-conditioning brand in China, has the characteristics of a typical modern manufacturing enterprise. Research on its cost management model has certain practical significance. Considering the most extensive application of SHANK Theory and its accordance with Midea household management status, this paper makes full use of the value chain, strategic positioning and strategic cost drivers these three analysis tools in SHANK Theory, to help enterprises build strategic cost management system.Firstly, this paper introduces the overview of Midea Group and its household air-conditioning and analyzes the current situation of its cost management.Secondly, analyze the value chain from internal value chain, vertical value chain andhorizontal value chain to find out the added value of each business unit. Identify strategic cost structural driver and executive driver of. This paper uses PEST model to analyze the overall environment, five forces analysis model to identify the enterprise industry, BCG growth-share matrix to take strategic position and make sure that effective alienation of leading technology and differentiation is the direction and focus of the strategic cost management. Thirdly, find out the actual cost management problems in Midea household air-conditioning according to three strategic cost management tools.Finally, six improvement measures are put forward according to Midea household air-conditioning problems, including strengthening management of suppliers; improving purchasing channels; implementing diversified inventory management model; building a flat, diversified, pulling marketing channels; flexibly controlling hidden costs; focusing on technology innovation; cultivating core competitive advantages and encouraging full participation. In short, this article aims to contribute to the fact that modern enterprises obtain strategic advantages by improving cost management through the analysis of Midea household air-conditioning.