What is value integration?

Most enterprises are easy to fall into various misunderstandings in cost management. For example, managers pay more attention to the control of production costs, while ignoring the control of marketing costs, service costs and logistics costs; Pay attention to the cost analysis of each individual activity that constitutes the business process of the enterprise, but ignore the cost of the enterprise from the height of grasping the relationship between activities; 3. The method of cost analysis relies too much on accounting methods and systems, but lacks the analysis of cost behaviors that are not included in accounting.

In the MBA course of Harvard Business School in the United States, a new theory of enterprise resource analysis-value chain analysis is put forward, that is, the activities and relationships of enterprises are investigated in a systematic way, so as to find resources with competitive advantages. The author believes that the essential goal of enterprise cost management should be to obtain the accumulated cost lower than that of competitors through enterprise behavior and win the cost advantage. Therefore, with the help of the value chain theory, we want to examine the enterprise cost from the perspective of enterprise behavior rather than accounting methods. This paper intends to describe it from the following aspects: 1, identify the enterprise's own value chain, and collect costs and allocate assets accordingly; 2. Analyze the structural influencing factors of enterprise cost behavior from the perspective of value chain; 3. Reduce the enterprise cost from a strategic perspective by controlling various factors affecting the cost or reconstructing the enterprise value chain; 4, long-term maintenance and consolidation of enterprise cost advantage, realize the durability of cost advantage.

First, use the value chain analysis method to determine the value activities related to cost management, and divide the enterprise's value activities into five main activities and four auxiliary activities. The five main activities include (1) input activities, such as receiving, storing and configuring; (2) production operations, that is, activities related to transforming inputs into final products; (3) Productive activities, such as transportation and storage of finished products, customer contact, order processing, etc. (4) sales activities aimed at letting customers know and buy goods, such as advertising, promotion, sales agency fees, etc. (5) Service activities, including training, repair, maintenance, component updating, etc. , all in order to increase the added value of products.

The four auxiliary activities include (1) procurement activities, which refer to the activities of purchasing all inputs used in the value chain of enterprises, such as purchasing raw materials and materials, purchasing and building fixed assets, etc. (2) Technology development activities, all value activities involve technology components, such as new product development, technological transformation, trademarks, patents, specialized technology, software development, etc. (3) Human resource management activities, including employee recruitment, training, development, motivation, etc. (4) Enterprise infrastructure refers to hardware such as plant facilities, machinery and equipment, and a large number of software such as overall management, planning, finance, law, quality management and public relations.

There are other classifications of enterprise value activities. For example, according to the relationship between the products produced, it can be divided into three types: 1, and direct activities refer to activities that directly create value for buyers, such as supply, production and sales; (2) Indirect activities refer to activities that ensure the continuation of direct activities, which are wide in scope and rich in content and easy to be ignored; (3) Quality assurance activities refer to activities to ensure the quality of various value activities of enterprises, such as trademark registration, hiring legal counsel, mergers and acquisitions and other asset restructuring activities. This classification is of practical significance to cost management. It is worth noting that the costs of indirect activities and quality assurance activities have not been correctly recognized and paid enough attention to in enterprise cost management. This paper will discuss this.

Second, the enterprise value chain collection and cost sharing From the perspective of cost management, the value activity of the enterprise is the cost behavior. Managers can grasp the main components of enterprise costs, but those value activities that are in a growing state and can eventually change the cost structure of enterprises are easily overlooked. Applying value chain analysis method to cost management can overcome this point.

The cost of each value activity of an enterprise includes:

1, input cost of outsourcing operation: raw materials, reserve materials and low-value consumables input for production; 2. Human resource cost: the cost incurred by an enterprise to acquire or replace human resources, such as the cost of acquiring human resources (recruitment, employment, placement, etc.). ), the cost of developing human resources (on-the-job education, on-the-job training, off-job training, further study, etc.). ), the cost of maintaining human resources (salary, bonus, welfare, medical care, housing, social insurance, etc. ), and the turnover cost of human resources (wages and benefits of retirees). 3. Capitalized expenses: refers to the expenses whose benefit period is one year or more than one business cycle. Such as fixed assets (buildings, machinery and equipment, labor tools, transportation tools, etc.). ), intangible assets (patents, trademarks, etc. ), deferred assets (enterprise registration fee, decoration fee, lease equipment improvement fee and other upfront expenses. ).

In cost management, enterprises must allocate the above costs to various value activities in the value chain. The purpose of distribution is to produce a value chain that reflects the cost distribution, compare the cost distribution of various value activities, and find out the breakthrough that can increase the cost.

How to share the expenses? The general principles are as follows: the input cost and human resource cost of outsourcing activities should be allocated to their activities; Capitalized expenses are allocated to activities that are used, controlled or have a significant impact on their use. There are usually three distribution methods: 1, when the causal relationship between cost and enterprise value activities can be directly identified, it can be directly distributed, such as production cost; 2. Although the direct relationship cannot be determined, when it can be confirmed that future income will be generated, it can be apportioned according to the characteristics of assets, such as depreciation of fixed assets according to the benefit period and amortization of intangible assets. 3. If there is no causal relationship, and the income cannot be predicted, the cost will be immediately recognized as the current expenses, such as interest, business entertainment, legal fees, etc., and immediately calculated as the current expenses.

The above-mentioned cost allocation should be based on a certain accounting year or operating year, which is different from the allocation of accounting records. The data of this cost allocation is mainly for strategic decision-making, so the accuracy requirements can be adjusted according to the principle of cost-effectiveness.

Through cost collection and distribution, it can be found that the sum of indirect activity cost and quality assurance activity cost, which were neglected in the past, accounts for far more than the initial estimate of managers. Moreover, with the challenge of knowledge economy, modern enterprises will increase their investment in information technology, and the establishment of network systems, automation systems and decision support systems will make indirect costs account for an increasing proportion of total costs.

Third, the structural factors that affect the cost of enterprises are the products of the environment, and many factors of the external and internal environment of enterprises are affecting the value behavior of enterprises, which in turn affects the cost of enterprises. The interaction between these factors determines the value behavior of enterprises; But we should also see that no factor can be the only factor of enterprise cost level, that is, enterprise cost is a multivariate function. Analyzing the influencing factors of enterprise value activities is helpful for enterprises to judge their cost behavior from the source and have a deep understanding of how to change their cost behavior.

Combining the basic theories of management, financial management, production management and marketing and the practice of cost management in many enterprises, we can find that the structural factors that affect the cost are as follows:

First, the choice of enterprise scale. The expansion of the scale has led to a new allocation proportion balance of production factors such as specialization and cooperation and technical management level, which has stimulated new productivity and significantly reduced costs. However, when the scale exceeds a certain level, it will lead to the complexity of coordination and the reduction of management efficiency, and the natural conditions of production will deteriorate, that is, economies of scale will exceed the critical point and turn into economies of scale. Enterprises should adjust their scale to an appropriate level to achieve the lowest possible cost.

Second, the differential rent effect. Geographical location is obviously an independent factor affecting the cost of enterprises, which leads to differences in labor, management, energy, infrastructure, raw materials, product consumption demand, transportation mode, communication, wage level and tax burden. Enterprises with superior geographical location may obtain excess profits that exceed the average social profits. The geographical location of enterprises has external reasons such as its history, industrial scale and national policies, but this does not mean that enterprises have done nothing in this regard. Enterprises can redesign the place to carry out value activities, and even relocate infrastructure, revitalize and replace real estate to reduce costs.

Third, the effect of learning knowledge. After entering an industry, enterprises will find and learn many mechanisms and experiences to reduce costs in production decision-making, planning, organization and scheduling, improving labor efficiency, improving operational processes and asset utilization efficiency. The direct result of this learning activity is that the unit cost of enterprise products will drop. This is the learning knowledge effect, or knowledge spillover effect. This effect can not only enable enterprises to gain the experience of reducing costs through learning, but also make enterprises lose the durability of cost advantage because of the overflow of their own knowledge in the whole industry.

Fourthly, the utilization of production capacity depends not only on environmental conditions and investment behavior of competitors, but also on the choice of production and marketing strategies. At different stages of each production cycle, the capacity utilization rate of enterprises is more affected by seasonal and cyclical factors that cause demand fluctuations. This level of regulation and control of utilization rate determines the reasonable degree of enterprise cost reduction or increase.

Fifth, integration and connection.

The problem of integration involves the attitude of enterprises to external cooperation, that is, the strategy of self-control or outsourcing. Too much self-control will make the business direction of enterprises develop in depth, but it will lead to scattered resources, increasingly dignified management and slow response to the market; Too much outsourcing will make enterprises rely too much on the outside world and develop their own specialization. These two situations are not conducive to enterprises to reduce costs. Proper use of integration can avoid the use of market costs higher than self-made costs, make enterprises avoid suppliers with strong bargaining power, and bring the economy of joint operation. Enterprises sometimes want to delete integrations. At this time, we should not only consider whether this move is conducive to reducing costs, but also consider whether it is detrimental to corporate strategy. The connection problem includes the internal connection of enterprise value chain and the vertical connection in marketing channels. The activities in the value chain are interrelated, and changing the realization mode of one of them will sometimes produce unexpected cost reduction effects.

IV. Strategic Ways to Seek Cost Advantage There are two ways for enterprises to obtain cost advantage: First, according to the above-mentioned structural factors that affect costs, select value activities that account for a significant proportion of total costs according to the principle of importance, and control or change the structural factors that affect them to obtain cost advantage; The second is to rebuild the original value chain and design, produce and sell products in a more efficient way.

(1) Control the structural factors that affect the cost 1 and choose the scale. Pictures can be used to illustrate the purpose of choosing scale to reduce costs. Figure 1 illustrates the cost structure of three different scales. A, B and C represent the average cost curves of small, medium and large enterprises respectively, and choose the scale according to the market demand. If the demand is Q 1, then the scale is selected as A, because the average cost of A is lower at this time; Similarly, when there is no Q3 demand, if scale B is selected, the average cost A2 is lower. The scale represented by C is only desirable when the demand is considerable. For example, the number of chain stores in Shanghai Hualian Supermarket is less than 35, and it is meager when it grows to 35 to 70. At present, it has grown to 165, and the cost profit rate is 12%. This factor has an impact on the organization of production space and the cost of transportation and distribution of raw materials and products. Geographical location should be considered: close to the origin of raw materials; Adequate energy supply; The water source is guaranteed; The climate is suitable; The transportation cost is relatively low; Distribution of human resources; Close to the consumer market; The influence of social and cultural customs; The distribution of teaching and scientific research institutions, etc.

3. Learn knowledge management. The learning curve effect makes it necessary for enterprises to strengthen learning management. Enterprises should formulate learning strategic objectives in combination with competitive strategies, evaluate strategic knowledge to determine the cycle of knowledge and technology updating, determine the organizational structure supporting learning strategies, incorporate learning into evaluation contracts as the basis for personnel evaluation, examine and approve the efficiency and quality of internal training plans and learning networks, and determine the entry point and benchmark for catching up with competitors. We should keep necessary vigilance and preventive measures against knowledge spillovers and use legal means to protect intellectual property rights. Enterprises should make full use of the Internet, be familiar with the operation and development trend of the world financial market, capital market, talent market and the same industry market, and be forward-looking to various opportunities and crises. Shenzhen Huawei Hi-Tech Company was hardly damaged in the financial turmoil in previous years, because it was good at analyzing the changes in the world market and taking certain preventive measures.

4. Balance production and operation, and adjust the fluctuation of market demand.

Enterprises can control from two aspects: production and sales. The purpose of production process control is to prevent and stop the deviation from the target in production and ensure the balance and stability of production. Balance line method, chart control method and production card method have all been proved to be effective methods to save costs. In sales, we can adjust the fluctuation of demand to a certain extent through planning, such as expanding products to products that are cyclical and not obvious in seasonality, studying customers with stable demand, quitting the off-season in the peak season, and squeezing competitors into market segments with large fluctuations in demand.

5. Identifying the link and properly integrating the cost factors in the value chain are often interrelated. If an enterprise can accurately understand and use this link, it can change the cost situation. For example, the quality cost of an enterprise consists of two parts: preventive inspection cost and product loss cost. If the cost of the former increases, the cost of product loss will decrease. On the contrary, if the former is small, the latter will be large, and only the minimum sum of the two is the optimal quality cost. Similarly, inventory cost and cash holding cost can also be controlled. Both integration and dissolution are likely to reduce costs, so it is very necessary to use integration systematically, comprehensively and properly. Lenovo Computer Company has opened more than 200 parts factories and more than 20 assembly and debugging centers in Dongguan, Guangdong Province, which has obvious cost advantages and is a model for correctly understanding and handling integration and contact.

(2) Reengineering and reconstructing the value chain can achieve significant cost advantages, which stems from two mechanisms: first, reengineering does not mean improvement, and value chain reconstruction will fundamentally change the cost structure; Secondly, after a period of twists and turns, enterprises reconfirm the main factors affecting costs, thus changing their competitive base. The methods of reconstructing the value chain are: adopting different processes; Utilize automation differences; Change indirect sales into direct sales; Adopt new distribution channels; Forward (towards raw materials) or backward (towards products) integration, etc.

First, Shiseido has been expecting to introduce products (cosmetics) into China through the distribution channels of its headquarters, but it has made little progress. Later, a joint venture company was established in Pudong, Shanghai, which was directly produced and sold in China. This measure of restructuring the value chain has greatly reduced tariffs, freight and labor costs. Second, Southwest Airlines used to shuttle through big airports for a long time and confronted many big companies with poor profits. Later, a new trail was opened to provide short-distance cheap services between small and medium-sized cities: it only takes 15 minutes to take off after stopping, which increases the flight density and is equivalent to extending the voyage; There is no first class, no designated seats and no meals on the plane to reduce the ticket price; Passengers can buy tickets at the gate ticket vending machine to save commission; All new Boeing aircraft are put into use, reducing maintenance costs, thus rebuilding the value chain and gaining obvious cost advantages.

5. The long-term maintenance and consolidation of the strategic value of the cost advantage depends on its persistence: only when the source of the cost advantage of the enterprise is difficult to be copied and imitated by competitors will the cost persistence exist. There are two basic ideas to maintain cost advantage: one is to develop the lasting source of cost advantage and expand its quantity; The second is to establish barriers (such as tariff barriers in international trade) to prevent the spread of experience and the invasion of competitors. Specific operations, such as establishing alliances to obtain franchise rights, maintaining differential rents, seeking government policy support, and seeking market monopoly position, can all become the source of lasting cost advantages.

For example, in recent years, Sichuan Changhong has been fighting a price war, fighting for market share with low prices, and developing a lasting source of cost advantage by obtaining a market scale that makes competitors sigh. For another example, Microsoft Corporation of the United States relies on creating exclusive "Windows" office software and using legal provisions to protect intellectual property rights and other barriers to consolidate its shocking cost advantage. 1998 Compared with General Motors (Fortune 500), Microsoft's sales are 5% of the latter, while its profits account for 44%, and its stock market value is 2.4 times that of the latter. This shows its cost advantage.

To sum up, the key to the application of value chain analysis in enterprise cost management is to carefully analyze and identify the structural factors that affect the cost, and then seek strategic ways to develop the lasting source of cost advantage according to these factors, so as to maintain and consolidate the cost advantage.