Cost Control and Enhancing Competitiveness through Benchmarking

Cost Control and Enhancing Competitiveness through Benchmarking

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*Lecturer, Department of Commerce, Mahatma Gandhi Govt. Arts College, New-Mahe. E-mail: manojpillai @ sify.com. Cost Control and Enhancing Competitiveness through Benchmarking: An Analysis Dr. Manoj Pillai* Abstract Numerous innovative cost control practices have been evolved during the last two decades. The entire gamut of the cost accounting system has been broadened to equip and assist managers to better serve the needs of the customers and manage the firm’s business processes that are used to create customer value. The vital aspect here is providing customer value for less cost than its competitors, thus enhancing the competitiveness and profitability of the firm. Bench marking is one such innovative cost control tool which basically involves measuring an organizations operation, products, and services against those of its competitors. It is a means by which targets, priorities and operational strategies are evolved based on external realities that will lead to competitive advantage which in turn improves the profitability and competitiveness of an organization. *********** The last two decades has witnessed the genesis of various innovative cost management practices. The focus and thrust of these cost accounting systems has been broadened to enable managers to better serve the needs of the customers and manage the firm’s business processes that are used to create customer value. These innovative cost management tools help a firm to establish a competitive advantage by providing more customer value for less cost than its competitors. The three strategic areas that give the firm the extra competitive advantage over its rivals are the Time Based Performance, Quality and Cost Control. These three strategic components influence the competitive feature of an organization in the contemporary liberal free market economy. Hansen -Mowen (2003) has identified the following factors affecting cost management. (a) Global Competition- Free market economic policies and improvement in transportation and communication system have led to a global market for manufacturing and service firms. This new competitive environment has increased the demand not only for more cost information but also for more accurate cost information. (b) Growth of the Service Industry. The service sector had a meteoric rise in the last decade and a half. The liberalization and deregulation of many services like Airlines, Telecommunications and other Utility sectors has resulted in fierce competition in this segment. The increased competition has made managers in this industry more conscious of the need to have accurate cost information for planning, controlling and decision-making. (c) Advances in Information Technology The Information Technology innovations have revolutionized every aspect of business management. The Enterprise Resource planning (ERP) which provides an integrated software system that can run all the operations of a company, the availability of Personal Computer (P.C), Online Analytic Programs (OLAP), Decision Support System (DSS) and the Electronic
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Cost Control and Enhancing Competitiveness through Benchmarking

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