THE EFFECTS OF GLOBAL COMPETITION ON STRATEGIC COST MANAGEMENT AND BEHAVIORAL MANAGEMENT ACCOUNTING

Abstract

Because of constant and fast changes in global competitive environment, cost management has become an important survival condition for many organizations. Because it is not adequate simply cost reduction; instead costs must be managed strategically. When considering the development of cost management and formulating the strategy for the achievement of organizational overall objectives, different cost driver should be clearly determined. This implies that organization should build appropriate framework of strategic cost management to reduce its costs in key areas on which the success of organization is intensely dependent. Factors that affects successful strategic cost management lies in all business activities and operations throughout the value chain. Traditional cost systems, mainly focus on measuring and controlling products-services cost, but, these are not sufficient to deal with contemporary competitive environment. As a result of these circumstances, companies shifted to strategic cost management as a powerful tool to attain competitive advantage and to maximize profits in short run and in long run as well. In this perspective, the importance of strategic cost management and cost reduction should not be underestimated. The objective of this research is to determine whether strategic cost management techniques can be applied effectively while considering the behavioral dimension of management accounting that could be useful to companies' stakeholder in short run and in long run as well.