STRATEGIC COST

MANAGEMENT
Christian King S. Ilarde, CPA
WHAT IS MANAGEMENT?
 WHAT IS MANAGEMENT?
Management is the process of leading and controlling a group of people, resources or an
organization in totality to achieve the goals and objectives of the entity in pursuit of success
and value creation.

Management is the process of planning, decision making, organizing, leading, motivation and
controlling the human resources, financial, physical and information resources of an
organization to reach its goals efficiently and effectively.
 FOUR (4) MANAGEMENT
FUNCTIONS
PLANNING
-determining the proper courses of action and strategizing tactics to enforce in order to
achieve the goals set
 FOUR (4) MANAGEMENT
FUNCTIONS
ORGANIZING
-coordinating activities and resources and delegation of responsibilities
 FOUR (4) MANAGEMENT
FUNCTIONS
LEADING
- Managing and guiding people along with proper motivation and direction
 FOUR (4) MANAGEMENT
FUNCTIONS
CONTROLLING
-monitoring and evaluating activities to ensure they answer the goals being set.
STRATEGIC COST MANAGEMENT
 STRATEGIC COST MANAGEMENT
Strategic Cost Management is the application of cost management techniques which aims to
reduce or regulate costs while strengthening the strategic position of the business.

Strategic Cost Management is the use of cost information as a toll for decision making and
business development that would support the strategic placement of the entity.
 STRATEGIC PLACEMENT AND ITS
RELATIONSHIP WITH COST

COST PRODUCT
LEADERSHIP DIFFERENTIATI
ON
 COST LEADERSHIP
-Managing cost through reduction so that an entity can sell products with the lowest price in
the market

STRATEGY
LOWER COST > LOWER PRICES > HIGHER REVENUE
( since may will buy due to our cheap prices)
 PRODUCT DIFFERENTIATION
Managing cost through supporting the strategy of an entity to become the provider of unique
products in the market

STRATEGY
Not so LOWER but REGULATED COST > UNIQUE PRODUCTS > HIGHER PRICES but
still HIGHER REVENUE since many will buy our unique products
MANAGERIAL ACCOUNTING

A field of accounting that provides

economic and financial information
for managers and other internal users

Also called Management Accounting

 MANAGERIAL ACCOUNTING

DISTINGUISHING FEATURES
Applies to all types of businesses –
service, merchandising, and manufacturing

Applies to all forms of businesses –

proprietorships, partnerships, and corporations

Applies to not-for-profit and profit-oriented

companies
 MANAGERIAL ACCOUNTING

More responsible for strategic cost

management.
Team includes members from
production, marketing, engineering,
etc.
Aid in making
critical decisions.
 COMPARING MANAGERIAL AND
FINANCIAL ACCOUNTING
STUDY OBJECTIVE 1

SIMILARITIES

Both deal with economic events of a business.

Both require that economic events be
quantified and communicated to
interested parties.
COMPARING MANAGERIAL AND
FINANCIAL ACCOUNTING
DIFFERENCES