Strategic And Cost Managent Concepts

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STRATEGIC MANAGEMENT AND COST MANAGEMENT CONCEPTS Introduction The concepts of cost management and strategic management are the foundations for managers. The growing pressures of global competition and technological innovation have made cost management more critical and dynamic than ever before. Now cost management has moved towards a broader strategic focus than that of product costing. This so-called strategic cost management needs to facilitate strategic management in order to allow the firm to retain its competitive advantage. In order to implement this, benchmarking, value chain, balance scorecard and SWOT analysis should be undertaken. A firm should then identify its strategic positioning in the market: how it will sustain a competitive position. Furthermore, the strategic role of cost concepts will also be described in relation to product/service costing, strategic decision-making (cost driver analysis), planning/decision making and control/feedback purposes. Costs are now more complex than ever since large companies like Proctor & Gamble have a large product portfolio, and costs have become a vital element of a firm’s strategy. In order to understand these concepts fully, we will relate them to real businesses; in particular, we will analyze these concepts with relation to the McDonald’s corporation. Strategic Management Strategic management is the conduct of drafting, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives. It is the process of specifying the organization’s mission statement, developing policies and plans – often in terms of projects and programs which are designed to achieve these objectives – and then allocating resources to implement the policies and plans, projects and programs (wikipedia, 2010). A firm is said to possess a competitive advantage
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