Buy custom Strategic Cost Management essay

Nowadays, companies more often have to use the strategic cost management (SCM), which aims to expand the horizons of planning and create the opportunities for a quick response to some changes in the environment. The role of SCM in industrial enterprise management system is sufficiently high. By implementing the system it is important to bear in mind that the cost management strategy is not directed on an end in itself, but it is rather a tool for achievement the strategic goals of the company. That is why, the particular methods of SCM should be considered in terms of the role they are obliged to play for goals' accomplishment.

According to Gupta (2009), "Trying to define strategic cost management requires looking at today's leading organizations who are venturing in this idea" (p. 74). Strategic cost management is based on the use of information on costs and clearly focused on strategic control. Management is a regular process so it can be claimed that SCM is the management activity aimed at the cost control and their optimal value regarding the long term, taking into account the fluidity of economic conditions. New conditions require, along with the training of staff, the establishment of the strategic cost management to the enterprise. SCM includes the implementation of all management functions regarding all elements of the management cycle. The specialty of cost control is its dynamism, variety, and difficulty in measuring and accounting, as well as its complexity and contradictions of the impact on the economic outcomes.

The subjects of the strategic cost management are managers of every level, as well as experts of the company and its production units. As for control objects in SCM, they are the costs of development, production, implementation, operation and utilization of industrial produce. SCM is based on such following principles, as a systematic approach, a methodological unity at different levels, cost control at all stages of the product's life cycle up to utilization, and the combination of low costs and high quality. In addition, the principles of SCM are aimed at avoiding excessive costs, and rather the introduction of efficient methods in order to reduce them. Also, the improvement of cost information and the increase of units' interests to lower some costs are quite considerable.

The formation of strategic cost management as an element of control system requires the introduction of such objectives, as the exposure of the role of SCM,  the correct determination of costs in the production units, and the identification of its principal methods. Moreover, those tasks must identify the economic and technical ways and methods of measurement, provide both accounting and control of the costs on a company. Although the company needs to evaluate its own strengths and weaknesses, the opportunities of its competitors must be considered as well. Hansen (2009) found "cost information about customers, suppliers and different product designs is also needed to support strategic management objectives". Strategic cost management should primarily be focused on the core of the company's strategy that would bear a competitive privilege. After the main goal is defined, the company would have to determine further strategic and tactical actions.

Presently, the transition to the creation of fundamentally new technologies that would provide new types of products takes place. Consequently, the reorganization of management is shifting towards strategic orientation and the higher role of direction. Therefore, due to current circumstances, a particular necessity occurs for establishing the strategic management, including cost management as part of its system, and training competent managers that would be in charge for making economically feasible solutions, and implement the theoretical foundations to the management practice. 


  1. Hansen, D., Mowen, M., & Guan, L. (2009). Cost management: Accounting and control. (6th ed.). Mason, OH: South-Western Cengage Learning
  2. Gupta, K. P. (2009). Cost management: Measuring, monitoring and motivating performance. New Delhi: Global India Publications.

Buy custom Strategic Cost Management essay

Related essays

  1. Leadership Challenges
  2. Workplace Diversity and Multiculturalism
  3. Renault Acquires Nissan
  4. Business Information Systems