Strategic

Cost
Management
Chapter 1:
Overview of Cost Management and Strategy
Strategic Cost Management
Strategic Cost Management

Strategic Cost Management

 Strategic Cost Management
1.Cost Management
2. Strategic Management
Cost Management
-is the practice of accounting in
which the accountant develops
and uses cost management
information.
Cost Management
-is the practice of accounting in
which the accountant develops
and uses cost management
information.
Cost information derives from
cost accounting.

Management of this Cost

information is called Cost
Management
Users of Cost Management Info(CMI)
All organization
1. Business Firms
○ Mechandising
○ Manufacturing
○ Service
2. Governmental Units
3. Not for Profit Organization
Uses of Cost Management Info(CMI)
1. Strategic Management
2. Planning and Decision Making
3. Management Operational Control
4. Reportorial or Compliance to Legal Requirements
Uses of Cost Management Info(CMI)
1. Strategic Management
- involves the development of a sustainable
competitive position in which the firm's
competitive advantage spells continued success.
Management accountants
(including cost accountants) are
concerned with providing
information to managers, that is,
people inside an organization
who direct and control the
operations.
Staff Authority
Vs.
Line Authority
Basic Cost
Management
Perspective
Basic Cost Management Perspective
-For cost management process to
succeed, it is necessary that managers
must complement their measurement
skills with basic management
perspectives that "go beyond the
numbers". This will enable them to make
intelligent planning, control, and decision
making for the enterprise.
Basic Cost Management Perspective
A. A Strategic Management
B. An Enterprise Risk Management
C. Corporate Social Responsibility
D. A Process Management
E. A Leadership Perspective
F. An Ethical Perspective
A. A Strategic Management Perspective

“The key to a company’s success is

creating value for customers while
differentiating itself from its competitors”
A. A Strategic Management Perspective

“The key to a company’s success is

creating value for customers while
differentiating itself from its competitors”

HOW?
A. Customer Value Broad Categories
1. Customer Intimacy Strategy
2. Operational Excellence
3. Product Leadership
B. An Enterprise Risk Management
- is a process used by an entity to
identify those risks and develop
responses to them that enable it to be
assured of meeting its goals.
C. Corporate Social Responsibility (CSR)
-is a concept where business
organizations consider the needs of all
stakeholders when making decisions. They
are responsible not only for creating
strategies that produce financial results
that satisfy shareholders but also to serve
other stakeholders such customers,
suppliers, communities and as
environmental and human rights
advocate- whose interests are tied to
D Process Management Perspective
- Managers should be knowledgeable
of the business process/functions to
be able to create a more effective
strategy/plan.
E. Leadership Perspective
● Internal Motivation - Boss with
Integrity
● External Incentives -Salary increase
● Cognitive Bias - Different thoughts
F. Ethics Perspective
-fundamental trust in the integrity of
the business.

“Ethical behaviour is the lubricant

that keep the economy running
smoothly”
Thank you!!