Strategic Cost Management, presents an extensive protection of modern-day expense management methods to satisfy the needs of enterprise in the brand-new competitive environment. This book provides a new structure to the vital concern of cost management, usage of cost info to create a company’s competitive method and provide enhanced value to clients, shareholders and other stakeholders. The book develops a logical linkage between the concepts and treatments and how these can be utilized in practice by business organizations. It goes over expense management methods in detail and their function in strategic decision-making of a firm and building and sustaining competitiveness.
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Defines tactical cost management in the following words:
” It (SCM) is expense analysis in a wider context, where the strategic aspects end up being more conscious, specific and formal. Here, expense information is utilized to establish superior techniques enroute to getting sustainable competitive benefit … An advanced understanding of a company’s expense structure can go a long method in the search for sustainable competitive benefit.
Strategic Expense Management
Standard costing is useful however having many limitations like:
- Emphasis on short term choices
- Relay on Internal Information
- Techniques of Apportionment and Absorption is arbitratory
- Reactive technique
Strategic Expense Management issue the focus of Cost Management efforts
- Clearly highlights strategic concerns and issue
- Uses both internal and external information for decision making
- Cost structure use for search of best strategy
- Go for long term sustainable competitive advantage
Technique– Michal Porter develop two essential method– Cost Management & Product distinguish method
- Expense Management method
- Goals to lowest cost
- Economics of scale
- Tight expense control
Product separate method
- Special measurement in item/ service
- Ingenious
- Extremely high brand name image
- Luxury product/ service
Take the example of Maruti and Mercidize vehicle, how tactical expense management use in these business.
| Area | Cost Leadership (Maruti) | Product Differentiate (Mercidize) |
| Standard Costing System | Very high important | Not much important |
| Expense Control method | Very high important | Moderate essential |
| Development & Research | Not much important | Very important |
| Strong market abilities | Very little important | Really high essential |
| Business credibility | Moderate | Extremely high essential |
| Product engineering | Moderate | Really high crucial |
Strategic Expense Management Methods
Some strategies of Strategic Expense Management which business use
Above and much more strategies are used for long term sustainability competitive advantage instead of narrow cost sheet frame. In short Strategic Expense Management using Strategic Management through Management Accounting perspectives.
- Sub Fields of Accounting
- How is Risk Management Policy developed?
- Significance of Accounting, Scope of Accounting
- CMA Final Suggested Answers
