Cost Management Strategy For Small And Medium Sized Enterprises

Most of the cost management of small and medium-sized enterprises is also in a traditional mode that focuses on short-term interests.

With the international development of commodity economy, the market scope is expanding and competition is becoming increasingly fierce. The cost management mode, which focuses on short-term interests, can no longer meet the needs of strategic management.

Combined with the management advantages of small and medium-sized enterprises, we can carry out strategic thinking on cost management from the following aspects.

First, promote cost management by technological innovation.

Small and medium-sized enterprises have the advantage of technological innovation, and we should establish the concept of constantly reducing the cost of products through technological innovation.

We should promote cost management through technological innovation, and constantly improve product quality, style, performance and technological equipment through technological innovation, so as to meet the upgrading and changing needs of consumers and keep the cost leading strategy.

Low cost is not about low quality, low cost can not come from Jerry building, nor can it reduce product function.

Only products with the same quality and the same function can be compared with the cost.

To promote cost management by technological innovation, from the perspective of value chain analysis, products can be changed to eliminate excess functions; the manufacturing process can be changed to make the process more effective; automation can be realized in high cost labor-intensive activities; value analysis is carried out in the purchase and purchase process; the basic functions of all raw materials and spare parts are evaluated, and the lowest cost is sought, thereby reducing procurement costs and raw material costs.

To promote cost management by technological innovation, in the short term, technological pformation needs to be invested and new products need to be invested. This is all a factor of increasing cost. But in the long run and overall, it can not only gain greater benefits, but also be advantageous to the initiative of competition and establish the advantages of enterprises in competition.

Therefore, the current investment is necessary for enterprises to increase efficiency in the future, because innovative products will increase sales volume and increase market share; innovative products can appropriately raise the selling price; the application of new technological achievements can increase efficiency, save energy and reduce consumption, reduce waste and reduce losses; through technological innovation, the added value of product services can be increased.

The profit increase factor brought by technological innovation is greater than its input cost factors.

Two, using activity-based cost management thinking

Small and medium-sized enterprises can not reduce the cost of unit products and gain economies of scale like large enterprises through mass production.

The survival space of small and medium-sized enterprises is precisely in those industries that lack scale efficiency and are suitable for decentralized operation, or small batch and multi variety production areas that large enterprises are unwilling to set foot in according to customer requirements.

So in the calculation and management of cost, we must adopt the "customer centered" activity based cost management method.

Activity based costing (ABC) is a scientific information system based on operations. It pfers from "product" as center to operation centered. By identifying and measuring the cost of activity, it can eliminate "no value added operations" as much as possible, improve the "value added operation", and provide useful information in time, so that the losses and waste can be reduced to a minimum.

This is the potential source of deep excavation and cost reduction and the basic source of cost reduction.

The most important point of activity-based costing management is that it does not focus on cost theory, but focuses on the antecedents and consequences of cost. Through tracking and tracing all activity activities, the activity-based cost in the process of final product formation is effectively controlled.

In the current fierce market competition, small and medium-sized enterprises must take strategic consideration in cost management. They should expand the management of the cost of production process from the beginning of product design to the whole process of cost management, including technology development, manufacturing, sales, marketing, and services, and further deepen the management of all activity costs for the final product formation process, so as to achieve sustained and dynamic cost management to achieve long-term goals of enterprises.

Three, pay attention to the cost of differentiation strategy.

Small and medium-sized enterprises have the advantages of service diversification and specialization in meeting the needs of consumers. It is advisable to choose differentiation strategy in market competition and form a strategy of "people without me".

Differentiation strategy is also called characteristic management strategy. Its strategic theme is to create some distinctive features in the whole industry range through company image, product characteristics, product service, technology characteristics, distribution network and so on, so that users can establish brand preference and loyalty.

The implementation of differentiation strategy enables enterprises to obtain abnormal returns.

For example, an enterprise can effectively avoid the price competition by using customer loyalty to the brand; the characteristics of the product make the customer's choice become very small, and its sensitivity to the price is reduced; in the face of supplier pressure and latent product threat, a characteristic enterprise or product is often more advantageous than other competitors.

There are many ways to achieve differentiation strategy. Through patent technology, enterprises can produce products that are superior in performance and quality to existing similar enterprises.

Through marketing publicity, efforts should be made to enhance advertising sales so that users can have a distinctive impression of the products of their enterprises. Their manifestations are the functional differences of objects, the differences in service contents, and the differences in market management modes.

Small and medium-sized enterprises must pay attention to cost when implementing differentiation strategy.

Because the creation of distinctive business and discrepancies will often incur costs. For example, products that provide users with longer life usually require more and more expensive raw materials.

If the profit generated by the characteristic operation is offset by its corresponding cost, the differentiation strategy has no practical significance and can not bring benefits.

Therefore, in implementing differentiated strategy, SMEs should not neglect their own cost status, so that they can not only make products distinctive, but also reduce costs.