DISCUSSION (STRATEGIC COST MANAGEMENT)

Strategic Cost Management is the application of cost management measures to improve a company’s
strategic position while also controlling costs. It also deals with a decision-making system to support the
organizational strategy as a whole. Traditionally, firms have always been pressured to cut costs in the
short-term without considering the long-term growth and integration with the overall business strategy.
Most especially in today’s business environment of increased global competition, more stringent
regulations, and changing demographics, companies must build a comprehensive cost strategy or
framework to gain sustainable competitive advantage in the market. Managers must be able to see
possibilities for improvement, consider trade-offs, define priorities, and take actions that are consistent
with desired strategies to cut costs and enhance revenues, in other words improved profitability.