Strategic Cost Management: The Value Chain Perspective.

The value chain concept has been discussed in the strategy literature for more than a decade now. As a generic concept for organizing our thinking about strategic positioning, its significance is widely accepted. But empirical examples of the power of the concept for shaping cost analysis have not yet reached the literature. This paper reports a disguised field study in which a value chain is constructed. The insights for cost management which emerge are contrasted with those which are suggested by two traditional analysis techniques — a 2x2 growth/share matrix and conventional cost analysis. The purpose of the paper is to extend our knowledge about how to construct and use value chains in managerial accounting. The authors believe the concept is powerful and deserves far more empirical study as a way to make the strategic perspective more explicit in managerial cost analysis.