What is the difference between enterprise strategic cost management and traditional management?

The purpose of cost management is to provide enterprises with cost information to meet their management needs, but the traditional cost management has not adapted to the changing market environment and the needs of sustained and stable development of enterprises. The extensive application of enterprise strategic cost management theory requires that cost management can provide useful information related to decision-making for enterprise strategy manager, but the traditional cost management system cannot meet this requirement. The core of strategic cost management is "cost advantage", while the goal of traditional cost management is to achieve "cost reduction". "Cost reduction" and "cost advantage" are essentially different concepts, which are mainly manifested in the following four aspects:

(1) The goal of strategic cost management is different from that of traditional cost management. The goal of traditional cost management is usually to blindly pursue cost minimization and profit maximization, but it often ignores the disadvantages of product quality decline and customer satisfaction decline, which deviates from the ultimate goal of enterprises to gain competitive advantage and seek rapid development. Any method and measure that is conducive to achieving this strategic goal is worth trying, even if it will increase the cost of enterprises in the short term.

(2) Strategic cost management has broken through the scope of traditional cost management. Traditional cost management focuses on the resource consumption of value chain activities within enterprises, without analyzing the external environment. Enterprises are in an open and competitive market environment, and a series of value activities are influenced by external conditions. The traditional cost management system is difficult to meet people's demand for cost information, which requires extending the scope of cost management to the outside of the enterprise, including both the external environment and the external value chain.

(3) Strategic cost management expands the content of traditional cost management. Traditional cost management only pays attention to explicit cost factors, such as raw material cost, labor cost and management cost, while ignoring more decisive hidden costs, such as enterprise scale, geographical location and technology. Strategic cost management requires that all key factors affecting cost should be excavated as much as possible, and through the analysis and management of key factors, enterprises can be helped to achieve strategic goals as soon as possible.

(4) Strategic cost management and traditional cost management have different emphases. Traditional cost management, whether it is activity-based costing and product costing, or standard cost control and cost-volume-profit analysis, is based on post-event cost management control and daily production and operation activities. To some extent, strategic cost management is a kind of forward-looking management, focusing on strategic decisions before costs occur.