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TYPE
Original Research
PAGE NO.
46-51
OPEN ACCESS
SUBMITED
24 February 2025
ACCEPTED
20 March 2025
PUBLISHED
23 April 2025
VOLUME
Vol.05 Issue04 2025
COPYRIGHT
© 2025 Original content from this work may be used under the terms
of the creative commons attributes 4.0 License.
Strategic Cost
Management Accounting
in Enterprises
Khayitboeva Laylo Oybekovna
PhD researcher, Tashkent State University of Economics, Uzbekistan
Abstract:
This article analyzes the theoretical and
practical aspects of improving strategic cost
management accounting in enterprises. Under market
economy conditions, traditional cost accounting is no
longer sufficient to ensure the competitiveness of
enterprises. Therefore, the concept of strategic cost
management accounting is being introduced, which not
only focuses on controlling costs but also on aligning
them with long-term strategic objectives. The article
reviews the views of leading scholars and provides
international case studies from companies such as
Toyota, Apple, Nestlé, and Nike. Additionally,
recommendations are developed for implementing
strategic cost accounting systems in Uzbek enterprises.
The analysis proves that improving cost management
through efficient resource allocation, enhancing
product
profitability,
and
introducing
digital
technologies is both necessary and feasible.
Keywords:
Strategic cost management accounting, Cost
analysis, Activity-Based Costing (ABC), Target costing,
Value chain, Life-Cycle Costing (LCC), ERP system,
Competitiveness,
Financial
efficiency,
Digital
transformation.
Introduction:
In a market economy, enterprises are
increasingly required to manage their financial
resources efficiently in order to operate effectively,
withstand internal and external competition, and
ensure sustainable economic growth. One of the most
crucial components in achieving this is the
establishment of a robust cost management system,
particularly through a strategic approach. Traditional
cost accounting systems are often limited to collecting
and classifying data for financial reporting purposes,
primarily reflecting short-term results. These systems
tend to focus on past financial flows and, therefore, do
not provide sufficient support for making strategic
managerial decisions.
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In contrast, Strategic Cost Management (SCM) is
considered a comprehensive system aimed at
enhancing an enterprise’s long
-term competitiveness,
identifying internal opportunities, and directing
resources toward strategic goals in an efficient
manner. This approach not only focuses on controlling
costs but also emphasizes the proactive management,
modeling, and strategic analysis of costs. Through this
method, enterprises can determine the value creation
level of each activity, identify key cost drivers, and
consciously influence them to optimize performance.
Within the framework of strategic cost management,
the analysis and optimization of costs are carried out
in the following areas:
Calculation and evaluation of costs at the level of
individual products and services;
Comparison of cost-effectiveness across different
departments, branches, or geographic regions;
Benchmarking against competitors’ cost structures to
identify best practices;
Analysis of cost formation at each stage of the value
chain (R&D, production, logistics, marketing, and after-
sales service);
Identification of cost-related risks and their integration
into strategic planning processes.
This system enables enterprises to strengthen their
strategic positions and adapt quickly and effectively to
changing market conditions. Moreover, strategic cost
management can be significantly enhanced through
the integration of digital transformation tools, artificial
intelligence, and advanced information technologies.
Analyzing costs through a strategic management
perspective is not merely a financial control
mechanism; it is a powerful managerial tool aimed at
shaping corporate strategy, optimizing resource
allocation, and increasing profitability. This approach
has significant practical relevance, especially in rapidly
developing industrial sectors such as automotive
manufacturing, food production, and the light
industry.
Literature Review
The concept of Strategic Cost Management (SCM) has
been developing since the 1990s and is now
considered a key component of enterprise cost
management strategy. This section explores the
theoretical foundations, evolutionary stages, and
scholarly approaches related to the development and
implementation of SCM.
Shank and Govindarajan (1993) are regarded as the
pioneers of the SCM concept. They emphasized that
cost management should not be limited to cost control
but should serve as a tool for making strategic decisions.
They introduced the concept of value chain analysis,
highlighting the importance of analyzing costs not only
during the production phase but across the entire
business process
—
including research, marketing, and
after-sales services.
The Activity-Based Costing (ABC) model, developed by
Cooper and Kaplan (1988), made it possible to identify
costs directly associated with each product or service.
This model marked a significant step forward in
providing accuracy and reliability within strategic cost
accounting frameworks.
Kaplan and Norton (1996, 2001) developed the
Balanced Scorecard (BSC) model, which enables the
alignment of financial and non-financial performance
indicators with strategic objectives. Their framework
supports the integration of customer perspectives,
internal processes, innovation and growth metrics, and
financial
performance
within
strategic
cost
management.
Horngren, Foster, and Datar (2006) viewed strategic
analysis and decision-making as processes that require
robust informational tools. They advocated the use of
relational analysis, alternative evaluation, and efficiency
analysis as effective methodologies for strategic
assessment.
Mintzberg (1994) emphasized that cost analysis should
be conducted in the context of strategic decision-
making, suggesting that costs should not be viewed
solely as economic indicators, but also as tools for
shaping a firm’s market strategy.
In Michael Porter’s
(1985) seminal work "Competitive
Advantage", the concept of value chain analysis was
presented as a theoretical foundation of Strategic Cost
Management. Porter proposed that companies analyze
how costs are generated at each functional level of the
business and identify the stages where competitive
advantage can be achieved.
Turning to the approaches of Uzbek scholars:
K.K. Abdurakhmonov (2022), in his research on large
industrial enterprises in Uzbekistan, highlights the
limitations of strategic cost accounting mechanisms. He
points out that the insufficient implementation of ERP
systems and the low qualification levels of personnel are
among the key factors hindering the development of
effective strategic management.
A.G. Kholboyev (2020) focuses on the improvement of
cost analysis. He links cost analysis methods with
statistical evaluation and simulation models, proposing
the assessment of efficiency at the level of each cost
component.
R.A. Karimov (2019) recommends advanced strategic
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accounting approaches tailored to the Uzbek economic
context, emphasizing the need to modernize cost
accounting systems in line with strategic management
principles.
I. Ergashev (2021) explores the integration of digital
transformation and cost control. His work scientifically
substantiates the applicability of ERP systems, the
Internet of Things (IoT), and Big Data technologies for
automated
cost
monitoring
in
enterprise
management.
The literature analysis demonstrates that strategic cost
management accounting enables:
•
Enhancement of competitiveness in a market
environment;
•
Integration of accounting systems with long-
term strategic goals;
•
Optimization of resource allocation;
•
Synergizing human capital and technology to
achieve superior results.
Comparing national and international practices, and
leveraging modern information technologies, can
significantly improve the implementation and
effectiveness of SCM systems in enterprises.
RESULTS
Strategic Cost Management (SCM) has been actively
implemented in enterprises of developed countries
and has become a fundamental tool for ensuring long-
term sustainability, cost control, and maintaining
competitive advantage. Below are case studies of how
some of the world’s leading companies have applied
this system in practice.
1. Toyota (Japan)
–
Target Costing and Value Chain
Analysis. Toyota bases its cost management approach
on the Target Costing system. For each new vehicle
model, the company first determines the market price,
then optimizes internal cost structures to ensure
profitability at that price. Outcomes:
⎯
Toyota has maintained a leading position in cost
efficiency in the global automotive market for over
20 years.
⎯
To achieve a 10
–
15% cost reduction, the company
established strategic collaboration with suppliers
(supplier integration).
⎯
A detailed value chain analysis is carried out for
each stage of the production process, from R&D to
post-sales service.
Model applied: Target Cost = Market Price
–
Desired
Profit
2. Apple Inc. (USA)
–
Activity-Based Costing (ABC) and
Life-Cycle Costing (LCC). Apple successfully applies
both Activity-Based Costing (ABC) and Life-Cycle Costing
(LCC) models in the development, production, and
distribution of its products (iPhone, iPad, MacBook). For
each product, costs are calculated separately across
various stages such as design, manufacturing, logistics,
and customer service. Outcomes:
•
In 2022, Apple saved over $8 billion by
optimizing costs based on LCC analysis alone.
•
The ABC model helped identify hidden costs
associated with each product, allowing the company to
prioritize high-margin segments.
•
Apple also uses digital platforms to monitor
costs
in
real-time,
increasing
efficiency
and
responsiveness to operational needs.
3. Nestlé (Switzerland)
–
Integration of SCM and
Sustainability Strategy
Nestlé integrates Strategic Cost Management (SCM)
with its sustainability strategy. The company optimizes
expenses related to energy, water usage, packaging,
and
transportation,
thereby
reducing
both
environmental
impact
and
operational
costs.
Outcomes:
According to the 2023 annual report, 70% of Nestlé’s
production processes have been digitized using
comprehensive analysis and cost monitoring systems.
The company achieves an annual cost reduction of 5
–
7%
as a result of SCM-based strategies.
Through its "Planet Promise" initiative, Nestlé
implements a dual approach focused on cost reduction
and environmental sustainability.
4. Nike Inc. (USA)
–
ERP Systems and Real-Time Cost
Monitoring
Nike manages its strategic cost control via the SAP
S/4HANA ERP system. This platform allows real-time
monitoring of costs, supply chain logistics, marketing
operations, and customer demands on a global scale.
Outcomes:
The most significant savings were achieved in supply
chain optimization, with a 12% cost reduction reported
in 2021.
Nike evaluates departmental performance using ABC
(Activity-Based Costing) and KPI (Key Performance
Indicators) systems to ensure continuous monitoring
and improvement.
Importantly, Nike views cost control not just as a
limitation but as an opportunity to fund innovation and
drive business growth.
5. Procter & Gamble (P&G, USA)
–
Global Cost Strategy
and Benchmarking
Procter & Gamble (P&G) applies a unified SCM policy
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across all its global subsidiaries. Each unit assesses cost
efficiency through benchmarking, and best practices
are systematically implemented company-wide.
Outcomes:
Through SCM benchmarking, P&G achieved a 15%
reduction in manufacturing costs over three years.
Quarterly performance comparisons are conducted
automatically across all branches using standardized
strategic cost accounting reports.
P&G’s “Productivity
Strategy” emphasizes
the
integration of cost analysis and innovation-driven
efficiency, positioning SCM as a core component of
corporate performance improvement.
Table 1. Comparative Strategic Cost Management among Companies Implementing
Companies
SCM Focus Area
Achieved Cost
Savings
Applied Tools & Methods
Toyota
Target Costing
10–15%
Value Chain Analysis, Supplier
Integration
Apple
Activity-Based Costing
(ABC), LCC
Over $8 billion
(2022)
Life-Cycle Costing, Real-Time
Cost Monitoring
Nestlé
SCM + Sustainability
Integration
5–7% annually
ERP Systems, Environmental
Cost Optimization
Nike
ERP-Driven Real-Time
Monitoring
12% (Supply
Chain, 2021)
SAP S/4HANA ERP, ABC, KPI
Procter &
Gamble (P&G)
Global SCM Strategy +
Benchmarking
15% over 3 years
Standardized Reports, Best
Practice Benchmarking
Leading international companies implement Strategic
Cost Management (SCM) by:
⎯
Integrating it with innovative technologies such as
ERP, ABC, and LCC;
⎯
Aligning cost management with broader market
strategies;
⎯
Basing decisions on sustainability, customer needs,
and efficiency indicators to ensure long-term
success.
For Uzbek enterprises, the experience of global
corporations can serve as a roadmap for adopting
strategic cost management practices. In particular,
companies like Toyota, Apple, Nestlé, Nike, and
Procter & Gamble have successfully developed and
implemented advanced SCM approaches that can
serve as exemplary models.
The methods applied by these firms
—
such as target
costing, activity-based costing (ABC), ERP systems,
value chain analysis, life-cycle costing (LCC), and
benchmarking
—
not only help reduce costs but also
provide a powerful framework for building strategic
competitive advantage.
In the context of Uzbekistan, these approaches have
significant potential, particularly in sectors such as
automotive manufacturing, food production, and the
light industry:
−
Automotive industry (e.g., UzAuto Motors): By
implementing target costing and ERP systems in the
production of vehicle models and spare parts,
enterprises can reduce production costs, establish
strategic integration with suppliers, and optimize
manufacturing processes.
−
Food industry (e.g., dairy, bakery, canned
goods): By applying the Life-Cycle Costing (LCC) model,
it becomes possible to monitor costs throughout the
entire life cycle of a product, enabling reductions in
production, logistics, and packaging costs. Inspired by
Nestlé's experience, companies can also incorporate
sustainability-related
costs
into
their
financial
strategies.
−
Light
industry
(e.g.,
textiles,
garment
manufacturing): Through the Activity-Based Costing
(ABC) system, enterprises can calculate the actual costs
associated with each product type, identify low-profit
items, restructure their product portfolios, and increase
export potential. In addition, using platforms such as
SAP ERP allows for digital oversight of each stage in the
production chain.
By adopting these strategic approaches, Uzbek
enterprises can:
−
Gain access to accurate cost information to
support strategic decision-making;
−
Achieve sustainable development through
digital transformation and technological innovation;
−
Develop a cost-effective production system
aligned with market demand and international
standards.
Adapting the best practices of foreign companies to the
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local context and using them as a roadmap and
benchmarking framework for implementing SCM can
lead not only to improved economic efficiency but also
to the modernization of entire production systems and
a significant boost in export capacity.
CONCLUSION
The implementation of Strategic Cost Management
(SCM) is a crucial strategic tool for ensuring the
sustainable development and competitiveness of
modern enterprises. Unlike traditional cost control
systems, SCM represents a forward-looking approach
focused on aligning cost structures with strategic goals,
building competitive advantage, and creating long-
term value.
By introducing SCM systems, enterprises can achieve
the following positive outcomes:
−
Ensure efficient use of resources through detailed
cost analysis;
−
Establish a reliable information base for making
strategic decisions related to cost structures;
−
Identify the value chain and cost drivers for each
product or service;
−
Detect and optimize low-efficiency activities by
conducting in-depth cost structure analysis;
−
Develop market-driven competitive strategies
based on product profitability assessments;
−
Enable real-time cost monitoring and analysis
through digital technologies such as ERP, ABC, IoT,
and Big Data.
However, several institutional and technological
barriers hinder the full-scale implementation of
SCM systems, including:
−
Low qualification levels of personnel
–
a shortage
of experienced specialists capable of maintaining
strategic accounting practices;
−
Slow adoption of information technologies
–
financial and infrastructural limitations regarding
ERP and ABC systems in enterprises;
−
Weak integration between financial and
managerial accounting
–
making strategic-level
analysis more complex and less effective;
−
Lack of standardized methodologies and legal
frameworks
–
the absence of clear regulatory
guidelines supporting strategic cost management
practices.
Therefore, a three-stage approach is proposed for
improving strategic cost management accounting in
Uzbek enterprises:
1.
Institutional preparation
–
training qualified
personnel, integrating SCM subjects into academic
curricula, and developing methodological guidelines
and frameworks.
2.
Technological transformation
–
adopting digital
technologies, transitioning to automated accounting
systems, and enhancing data analytics capabilities.
3.
Formation of a strategic management culture
–
promoting a mindset focused not merely on cost
reduction, but on value creation throughout the
organization.
As a result, through the effective implementation of
SCM, enterprises can not only optimize costs, but also
ensure efficient resource utilization, income stability,
and gain long-term strategic advantages. This
transformation contributes not only at the enterprise
level but also supports innovation-driven growth and
economic security on a national scale.
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