Analysis of the realization of enterprise profit maximization from the perspective of enterprise transformation

Maximizing profit is the prerequisite for the survival and development of enterprises, but also the basic goal of enterprises. All the business activities of the enterprise are centered around the core of the enterprise profit. So realize the optimal management of enterprise resources, as far as possible to win the highest amount of profit is the ultimate goal of the enterprise. So the purpose of the enterprise should be: everything is to create profit

Obviously, there are many ways to improve the profit of the enterprise, there are legal and illegal. Due to the fact that there are more types of taxes in China and the tax rate is high. Many enterprises engage in tax evasion in order to increase their profits. Of course, it is also possible to avoid taxes and reduce the burden of enterprises through legal means, and I am talking about the practice of enterprise cost control to improve enterprise profits here. In this paper, cost control in the cost refers not only to the production of raw materials, labor, depreciation and other assets directly attributable to the cost of products in the cost of consumption, but more than the cost of products has a broader meaning of a concept. Is the production of a product all the costs required. Currently in China's listed companies, many of the company's costs out of control, are only pay attention to the control of production costs, while ignoring the control of other expenses.

An enterprise with a sound system and no tax evasion phenomenon, at least it shows that the cost control mechanism within the enterprise is good. And can maximize cost savings, in order to win greater profits for the enterprise. This is the fundamental conditions for the survival and development of enterprises to win, leaving this condition, the enterprise will also lose competitiveness, and ultimately can only choose to exit the social stage.

At present, most of the enterprises in China in the cost management and control of the existence of many defects, mainly in the following points:

(a) enterprise cost management theory and content of rigidity, aging means

Many enterprises pay attention to the cost of the production process management, ignoring the cost of the supply process and the sales process of cost management; pay attention to the cost of the production after the production of the cost of the production of the production of the cost of the production of the design and rational organization of the factors of production before the production of the product design, as well as the rational organization of the cost of the production. Product design and production factors before the reasonable organization of cost management. Some enterprises have weak cost management beforehand, cost prediction, cost decision-making lack of standardization, systematic, dispensable; cost plan lack of scientific, serious, can be increased or reduced, therefore, resulting in the blindness of the cost management in the event, after the event. In the specific cost accounting, only focus on financial cost accounting, lack of management cost accounting; focus on production cost accounting, but ignore the cost of product design process and sales cost accounting. As for the means of cost management is still in the manual operation stage, lack of modern management tools. A basic requirement of modern cost management is the timeliness, comprehensiveness and accuracy of cost information, and manual operation is difficult to meet these requirements.

(ii) the traditional cost management is overly dependent on the existing cost accounting system, can not meet the needs of the enterprise to implement comprehensive cost management

The traditional cost management system fails to adopt a flexible and diversified cost methodology, so that the cost management is trapped in the circle of cost reduction for the sake of reducing the cost of cost reduction, can not provide the correct information required for decision-making, can not reflect the business process, can not provide the cost information of each operation link, and can not provide the cost information of each operation link, and can not provide the cost information of each operation link. The cost information of each operation, as well as the causes and consequences of the cost of each link, and sometimes even the preparation of cost statements is difficult to explain their own "product" cost composition of the embarrassing situation, thus misleading the formulation of business strategies. In addition, the traditional cost management object is limited to the financial aspects of the product information, can not provide the management personnel need resources, operations, products, raw materials, customers, sales markets and sales channels and other non-financial information, it is difficult to play for the purpose of strategic management to provide adequate information.

(C) Serious distortion of cost information

The traditional cost accounting system is based on the assumption that "business volume is the only factor affecting costs", and the cost accounting process is oversimplified. In the past, in highly labor-intensive businesses, such simple assumptions about accounting (i.e., allocating overhead based on direct labor hours or production volume) did not usually cause significant distortions in product costs. However, in the modern manufacturing environment, the proportion of direct labor costs has declined significantly, the proportion of manufacturing costs has risen significantly, and the use of traditional costing methods will produce unreasonable phenomena: 1 with a smaller and smaller proportion of direct labor costs in the cost of the product to allocate a larger and larger proportion of the manufacturing costs; 2 to allocate more and more work costs that do not correlate with the number of hours worked; 3 to ignore the actual cost differences between different batches of products. 3 ignoring the differences in the actual costs of different batches of products. The use of traditional cost accounting will lead to a serious distortion of product cost information, so that companies choose the wrong product business direction.

(D) lack of market concept of enterprise cost management

Cost is a comprehensive embodiment of the efficiency of an enterprise's production and operation, is a comparative relationship between inputs and outputs within the enterprise, low-cost means that less resource inputs to provide more products and services, thus implying high efficiency, but not necessarily high-efficiency. Many enterprises in China in accordance with the cost habit of dividing and accounting for product costs, by increasing production can reduce the fixed cost per unit of product share, so that the higher the output, the lower the cost per unit of product, in the case of the same sales volume, the higher the profits of the enterprise. This practice leads to the enterprise regardless of the market demand for products, one-sidedly through the increase in production to reduce the cost of products, through the backlog of inventory, the production process costs incurred in the transfer or hidden in the inventory, to improve short-term profits. The reason for this phenomenon lies in the lack of market concept of enterprise cost management, resulting in cost information in the management of decision-making in a misunderstanding, it seems that the greater the output, the lower the cost, the higher the profit.

Because the traditional cost reduction is basically realized through the cost savings, that is, strive to not waste resources at the work site and improve the way of work to save costs will be incurred in the cost of expenditures, the main methods of saving energy, prevent accidents, to bidding for the purchase of raw materials or equipment, a tactical improvement in the enterprise, belonging to the reduction of costs of a primary form. However, this kind of cost reduction is a symptomatic, but not the root cause of the problem, but only an improved form of cost management. Modern enterprises need to seek new ways to reduce costs, trying to avoid costs from the root. Zero defects in the form of avoiding almost all maintenance costs and other costs due to product failure. The idea of cost avoidance lies fundamentally in exploring the potential for cost reduction from a management perspective, believing that prevention beforehand is more important than adjustment after the fact to avoid unnecessary costs. This advanced form of cost reduction requires companies in the product development, design stage, through the reorganization of the production process, to avoid unnecessary production links, to achieve the purpose of cost control, is an advanced strategic change.

The following example of Japan's famous TOYOTA company, to illustrate how foreign enterprises to get rid of the traditional model, out of a new type of enterprise cost management mode. The company in order to improve the competitiveness of the world market, and strive to reduce costs, first from the inventory cost to start, put forward the concept of zero inventory. That is to say, it endeavors to turn the company's inventory into zero, complete tasks on time and deliver on time. Japan TOYOTA company just started to enter the Chinese market, there are the United States, Germany and other strong with its battle, fierce competition can be imagined, but ultimately Japan TOYOTA company won, relying on the cost reduction. First of all, Japan Toyota company in China selected a city as the head office of the agent, and in the surrounding area of not more than a hundred miles spread all over the different suppliers. The head office spent three whole years to make agents and suppliers to form a tacit understanding between. For example, the exact number of cars to be produced this month is not 2,500 or 2,000, but exactly 2,047, not one more, not one less, to reach zero inventory completely. Why can we achieve this effect? First of all, the supervisor will call the tire supplier to notify 2047 sets of car tires, car glass supplier to ask for 2047 sets of glass, car shell supplier to ask for 2047 sets of car shell. And they all agree on a specific time frame. By the time all the suppliers have arrived, unload, start work and assemble the car parts on site, so that the 2047 cars are completed. Maybe you have a question, how can the quality of the cars be guaranteed? Because the agent has quality inspectors in each supplier's plant to check the quality of the product until it reaches a satisfactory level. Because of the good quality of the products, fair price and good reputation, the company's assets turnover is fast and the capital is returned quickly. So the company's cash position is optimized to reduce the investment risk, but also further improve the company's ability to raise debt, corporate capital to form a virtuous cycle, bringing the company a huge profit return.

From this example, we can see that cost management and cost control has a great impact on corporate profits. And obviously the impact of inventory costs on most business enterprises is also very obvious. Inventory, as a current asset, in the enterprise cost management plays a pivotal role, it is the enterprise engaged in production and operation activities of the basic elements, accounting for a large proportion. Good management of inventory, to ensure the smooth progress of production and operation, accelerate the turnover of assets, improve the efficiency of asset utilization, reduce costs and increase profitability has an important role. In order to solve the inventory problem, as early as in the 1930s there was an inventory order point theory, basic MRP (Material Requirements Planning), closed-loop MRP, MRP Ⅱ, ERP (Manufacturing Resource Planning) and other management concepts, but did not meet the requirements of the people. Subsequently, there have been a succession of JIT (just -in- time just-in-time manufacturing), agile manufacturing and other new theories to try to interpret and solve the inventory problem, but obviously not dealt with as satisfactory. The Japanese TOYOTA company proposed zero inventory theory, giving a new feeling. It is worthwhile to learn from and promote. According to the actual situation of China's enterprises, to make zero inventory is obviously not easy, difficult and challenging are very big. Japan TOYOTA company is also spent a lot of material resources and manpower to be effective. So first of all, enterprises should first predict the amount of funds put into inventory (i.e., demand), planning the number of ordering costs, to maintain a reasonable amount of physical reserves and the amount of funds used to solve the relationship between inventory and production, sales, and improve the liquidity of inventory, try to avoid the backlog of inventory, reduce the annual storage costs. Establish and improve the internal management system of the enterprise, and effectively organize the daily work of receiving, sending and keeping. According to the prediction of reasonable inventory occupancy level and plan, control the scale of inventory, maintain a reasonable ratio between the inventory. At the same time regularly or irregularly on the status of inventory management and the effect of analysis, assessment and evaluation, to find out the problem, summarize the experience, in order to accelerate the turnover of assets.

In the modern economy and society, cost control must first of all be the whole process of control, should not only control the production cost of the product, and should be controlled by the product life cycle cost of the whole content, practice has proved that only when the product life cycle cost is effectively controlled, the cost will be significantly reduced; and from the perspective of the whole society, only then can we really achieve the purpose of saving social resources. An enterprise's financial management and cost control can be successful, more importantly, also depends on the business leaders of financial management and cost control of the importance of the degree of; otherwise, even the best cost control system is also virtually useless, difficult to achieve the desired results.

And for the market concept is not strong for the enterprise, the most important thing is to try to improve the enterprise's sensitivity to the market. Because only the market sensitivity has improved, in order to accurately grasp the market opportunities, before competitors, into the market, the market, the market, stable market. That is, the art of war said that the first strike, after the hair is restricted. Shopping malls such as the battlefield. With the further opening of the market, modern society, the competition between enterprises is also a white-hot trend. Therefore, in the business war, everywhere talking about "first", pre-emptive, but also to achieve the key to victory. In addition, it is important to grasp the opportunities in the business war. Folklore Tao Zhu Gong business training "can know the opportunity to sell storage at any time, can be called a famous philosopher." Wu Zi art of war. The Art of War: "the harm of using the army, the greatest hesitation, the disaster of the three armies, born in the fox." In war, not hesitating to pounce on the enemy is often an important condition for winning. Combat should talk about timing, and competition should also talk about timing. Opportunity is not to be lost, the time will not come again, so enterprises should pay attention to this point, so as not to miss the business opportunities.