Main Work

Abstract: Strategic cost management has become an essential area now days. While formulating the strategy for the accomplishment of organizational overall objectives, different cost drivers should be clearly identified. Identification of key cost drivers helps companies to focus on key activities that will constitute almost 90% of the total costs. In view of this, the importance of strategic cost management should not be underestimated. This implies that organizations should be installing appropriate framework of strategic cost management to reduce its costs in key areas on which the success of organization is heavily dependent. To give spotlight to the companies in this complex business model, this term paper will cover some important aspects of strategic cost management which can be very much helpful to the business world. Introduction: The Concept of Strategic Cost Management Managers are often quite concerned about costs, but the proper time for this concern is before the costs have been incurred, not after. Managers want cost data to help them manage costs. Of course, the temptation is for managers to use the data that comes out of the cost accounting system for this purpose. However, since unit costs from the cost accounting system are seldom appropriate views of cost from the perspective of taking actions, this use of cost accounting data must be applied with caution. In the not too distant past, manufacturing companies operated in an environment where the single most powerful technique managers had for managing costs was increasing productivity by increasing production volume. For the vast majority of managers today, simply increasing production volume is STRATEGIC COST MANAGEMENT . In the past, there were few really successful mass producers. Their market opportunities were great. If they could produce goods at substantially lower average costs, they could lower their prices. If they could lower their prices, they could increase their sales. Today, nearly every manufacturer understands how to mass produce goods. Thus, no one can effectively lower prices without frightening competitors into doing the same. Extra production means extra stuff you cannot sell. Smart managers have begun to focus in on other issues in order to manage costs. This has led to companies implementing the 3 themes of strategic cost management which is: Value Chain Analysis Strategic Positioning analysis Cost Drivers analysis This term paper studies how Superlock Technologies limited (STL ) has implemented the 3 themes underlying strategic cost management. STL offers a wide array of high-quality services providing their clients with tailor-made solutions using state of the art technologies. Their expertise ranges from Information Communication Technology (ICT) and Security Systems to implementation and management of turnkey projects. STL specializes in feasibility studies, planning, design, implementation & supervision of a wide range of projects. The Company focuses on professional installations, intensive training and high quality after-sales service. The combination of 20 years of proven worldwide experience and the highest quality products and services turn all of our projects into success stories. Besides the provision of ICT services, STL provides state-of-the-art security solutions for all your security needs: CCTV Surveillance system, Access Control, Fire detection, Intruder alarm, Perimeter defense products and more.  Our security products are used in, governmental facilities, corporate buildings, public institutions and private homes. We provide a wide range of patented technologies and custom-made equipment meant to address specific client needs.  STL provides complete solution including consultancy, design, supply, installations and maintenance services.  STL's team of world-class security experts combines experience with the understanding of our clients' needs, to create integrated holistic solutions for people and property.  We have unparalleled expertise in Remote CCTV systems combined with centralized control room using our strong communication capabilities. The vision of STL is to spearhead development by building infrastructure, delivering world class service and providing sustainable solutions through comprehensive knowledge transfer and training. STL clients enjoy a variety of nationwide commercial services right from the planning stages and through to the post-installation maintenance. STL offers tailor-made technological solutions made to meet all your personal needs: Security & Interior doors, Collapsible & fixed Burglarproof, Balustrades, Air conditioners, Padlocks, Safes, Water heaters and more; all based on patented technologies and custom-made equipment for specific client needs. The division's expertise is well-known among government institutions, Corporates & SME, Architects & contractors and private home owners. STL provides complete solution which includes on site consultation, supply of high quality products, on site professional installations, top customer care and after-sell service Their attention to detail and quality performance over the past two decades have earned STL a worldwide stellar reputation among clients and business partners alike. In Ghana, STL has successfully handled projects like The NHIA ICT project The GPHA ERP implementation project WAN and LAN installation for 70% Banks in Ghana The EC Voter ID verification project. CHAPTER 1: Regardless of the specific methodology of Strategic Cost Management, however, the common theme they share is an assessment of the relevance of the investment to implement the organization's strategy. This is the essence of Strategic Cost Management (SCM). A sophisticated understanding of an organization's cost structure can go a long way in the search for sustainable competitive advantage, this point is emphasized by Shank and Govindarajan (1993:6ff.) Shank and Govindarajan (1993:6ff.) who define strategic cost management as "the managerial use of cost information explicitly directed at one or more of the four stages of strategic management: Formulating strategies, Communicating those strategies throughout the organization Developing and carrying out tactics to implement the strategies, Developing and implementing controls to monitor the success of objectives". According to Horvath and Brokemper (1998:585), Horvath and Brokemper (1998:585)strategic cost management has emerged as a key element to attain and sustain a strategic competitive advantage through long-term anticipation and formation of costs level, costs structure, and costs behavior pattern for products, processes, and recourses. For this purpose, strategic cost management must provide managers with different information. Strategic cost management sees products, processes, and resources themselves as creative objects for attaining a strategic competitive advantage. This goal may not be achieved based on traditional cost management. They also argue that strategic cost management must determine and analyze long-term cost determinants (economics of scale, experience, etc.) and their influence on costs level, costs structure, and costs behavior pattern. Finally, strategic cost management should begin with participation during R&D and design stages of the product in order to avoid the costs early in the product life cycle. Another contribution to the development of strategic cost management was that of Porter (1998a). Porter suggested that a firm has a choice of three generic strategies in order to achieve sustainable competitive advantage. They are cost leadership, differentiation, and focus. Where cost leadership is selected Porter advocates the use of strategic cost analysis. Hinterhuber (1997:11-13) argued in his study that cost management is "a necessary course of action which acquires strategic significance the more it increases the number of options for discovering new opportunities or inventing new markets. Strategic cost management tends to be an integrated, proactive part of strategic management aimed at satisfying all key stakeholders." Further, Hinterhuber has interviewed executive of European companies about strategic cost management and has come to the conclusion that strategic cost management should be a part of the strategy of businesses in order to achieve a radical and long-term increase in the value of the company. Strategic cost management needs the support of employees, top management as well as information technology because effective and timely communication is a prerequisite for implementing it. Finally, strategic cost management has to consider the value systems, beliefs, and projections of employees; changes in business processes and in the ways activities are carried out have to be supported by incentive and other non-monetary systems - strategic cost management has to create win/win situations and to communicate effectively the benefits for all involved. The term strategic cost management has a broad focus, it is not confined to the continuous reduction of costs and controlling of costs and it is far more concerned with management's use of cost information for decision-making. Strategic cost management is also not confined to use cost management techniques that reduce costs and improve the strategic position of a firm at the same time. When most authors talk about strategic cost management, they are really thinking about cost reduction. However, it is often difficult to demean the importance of cost factor for the success of company, but the challenge is to increase revenue, which can be facilitated by strategic cost management. Cost-management knowledge and information is critical to their organization's success. Strategic cost management is important to organizations because it is more than focusing on costs; in the successful companies of the 21 century costs will not be the only most important factor, but also value and revenue consider critical factors in the success of companies. At this point the researcher advocates that strategic cost management is a philosophy, an attitude, and a set of techniques to contribute in shaping the future of the company (Hilton et al. 2001:8) (Hilton et al. 2001:8) The concept of strategic cost management is illustrated best by example. There are three types of cost management initiatives: those that strengthen the firm’s competitive position, those that have no impact on the firm’s position, and those that weaken it.  The first class of initiative can be illustrated by a hospital that redesigns its admissions process for patients so that it is simpler, faster, and less stressful on the patients to be admitted. If patients have a choice of hospital they will enter, the new process will make the hospital more attractive to them. Hence, the strategic position of the firm has been strengthened.  The second class of initiative can be illustrated by an insurance company that redesigns its accounts payable system to make it more efficient. This project has no strategic significance other than to make the firm more profitable. Unless the additional profitability is significant, the project will have no strategic implications. The strategic position of the firm remains essentially unchanged.  The third class of initiatives can be illustrated by an airline’s decision to reduce headcount by no longer having "floaters" ask passengers why they are queuing up to get their tickets. This question is important because at this airline’s hub there are two types of ticket desks and hence two sets of queues. One type of desk deals with normal conditions, and the other desk deals with special conditions. As a rule of thumb, initiatives that lead to a weakening of strategic position should never be undertaken. They should be viewed not as cost reduction programs but as revenue reduction programs. For example, passengers will begin to avoid the hub that has excessive queues and high queuing errors during bad weather and fly direct or to another hub, both instances frequently requiring a switch to another airline. In most cases, the resulting revenue reduction will exceed the cost savings many times over.  Occasionally, managers argue that the savings will be so great that weakening the firm’s strategic position will be offset by the increased profitability. We are almost never persuaded by this argument. We believe that there always are solutions that will enable the costs to be reduced and the firm’s strategic position to be strengthened, not weakened. Once a firm grasps the concept of strategic cost management, finding ways to achieve both objectives (simultaneously reduce costs and strengthen strategic position) is easier than it first appears.  Occasionally, managers argue that the savings will be so great that weakening the firm’s strategic position will be offset by the increased profitability. We are almost never persuaded by this argument. We believe that there always are solutions that will enable the costs to be reduced and the firm’s strategic position to be strengthened, not weakened. Once a firm grasps the concept of strategic cost management, finding ways to achieve both objectives (simultaneously reduce costs and strengthen strategic position) is easier than it first appears.  Strategic cost management can be defined as the use of cost information to help formulate and communicate strategies, carry out tactics that implement those strategies and then develop and implement cost controls that monitor the success at achieving strategic objectives. Strategic cost management may be defined as the process of integrating cost management within the company's strategic plan in order to ensure that cost management is part of a company's operating procedures aimed at the provision of the best possible products or services with the amount of financial resources available. Thus strategic cost management requires that a cost management system should be designed and developed in such a way that its structure and life-cycle evolve to support a company's changing competitive strategy with respect to products/services, markets, human resources and technologies. This means that a cost management system should mirror, at any point in time, the company's life-cycle as defined by the company's products/services, markets, human resources and technologies.  The process of identifying causes of costs and taking a proactive approach to their management requires that company management takes a long-term perspective to cost containment and cost reduction. As such, management should regard cost management as a managerial issue and not simply a finance issue. The point here is that cost management should not be seen as the sole responsibility of the finance function. On the contrary, it should be regarded as the responsibility of all key stakeholders in the business. Thus cost management should be fully integrated into the company's strategic plan. This means that cost management should be emphasized at every level of the company's strategic plan, i.e. it should be an important part of the: Product/service market situational analysis; Company's operational plan; Company's service plan; and Company's financial management. The notion of strategic cost management specifically addresses the relationship between strategy and cost information. Strategic cost management involves a combination of three analytical streams: value chain analysis, strategic positioning analysis, and cost driver analysis. Value chain analysis and strategic positioning analysis, broadly speaking determine the appropriate places and reasons to spend money in order to make money. Thus, in a very real sense, value chain analysis and strategic positioning analysis direct management's attention to specific kinds of cost data in specific aspects of the organization's work. Meanwhile, cost driver analysis identifies the consumption of organizational resources by the particular actions that the organization employs to do its work. It helps managers determine the efficient ways to spend money in the places that add value. CHARPTER 2 Value Chain Analysis Value Chain Analysis is a useful tool for working out how you can create the greatest possible value for your customers. In business, we're paid to take raw inputs, and to "add value" to them by turning them into something of worth to other people. This is easy to see in manufacturing, where the manufacturer "adds value" by taking a raw material of little use to the end-user (for example, wood pulp) and converting it into something that people are prepared to pay money for (e.g. paper). But this idea is just as important in service industries, where people use inputs of time, knowledge, equipment and systems to create services of real value to the person being served – the customer. In most cases, the more value an organisation create, the more people will be prepared to pay a good price for thier product or service, and the more they will they keep on buying from the organisation. According to John Shank and V. Govindarajan the value chain for any firm is the value-creating activities all the way from basic raw material sources from component suppliers through to the ultimate end-use product delivered into the final consumers' hands." This description views the firm as part of an overall chain of value-creating processes. The idea of a value chain was first suggested by Michael Porter (1985) to depict how customer accumulates along a chain of activities that lead to an end product or service. Porter's Definition : He described the value chain as the internal processes or activities a company performs "to design, produce, market, deliver and support its product." He further stated that "a firm's value chain and the way it performs individual activities are a reflection of its history, its strategy, its approach of implementing its strategy, and the underlying economics of the activities themselves." Porter classified business activities under two heads. These are, Primary activities and Support activities. Primary activities are directly involved in transforming inputs into outputs and delivery and after-sales support to output. Value analysis or value engineering is one of the most widely used cost reduction techniques. It can be defined as a technique that yields value improvement. It investigates into the economic attributes of value. It attempts to reduce cost through Design change, Modification of material specification, Change in the source of supply and so on. It emphasizes on finding new ways of getting equal or better performance from a product at a lesser cost without affecting its quality, function, utility and reliability. The Table above depicts Superlock Technologies Limited’s Value Chain Analysis. At Superlock Technologies Limited, it was evidently clear that management was implementing this theme to gain a competitive edge. Some of the primary activities that STL undertook include: Material handling and warehousing Transforming inputs into final product Order processing and distribution Communication, pricing and channel management, and Installation, repair and parts replacement. A typical example is the building of an ultra-modern warehouse in Tema which was commissioned in December last year. Support activities on the other hand are the activities, which support primary activities. At STL, some of the support activities are seen to be handled by the organization’s staff and these functions include the following: Procurement - purchasing of raw materials, supplies and other consumable as well as assets. Technology Development - know-how, procedures and technological inputs needed in every value chain activity. This includes the STL’S construction of the state of the art data center and data recovery site Airport residential and Kpone respectively. Human Resource Management - This looks at the selection, promotion and placement, appraisal, rewards, management development, and labour/employee relations at Superlock Technologies Limited. In terms of human resource for instance, the company places much emphasis on training and development by offering staffs 40% of their fees when they are offering post graduate courses besides having constant in house training. Firm infrastructure - This includes General Management, Planning, Finance and Accounting, Legal, Government Affairs and Quality Management. COMPETITIVE ADVANTAGE AND CUSTOMER VALUE Competitive advantage for a company means not just matching or surpassing their competitors, discovering what the customers want and then profitably satisfying, and even exceeding their expectations. As barriers to inter-regional and international trade are diminishing and as access to goods and services are growing, customers can locate after identification and the best of what they want, at an acceptable price, wherever it is in the world. Under growing competition and, hence, rising customer expectations, a company's penalty for complacency becomes even greater. A strategic tool to measure the importance of the customer's perceived value is value chain analysis. By enabling companies to determine the strategic advantages and disadvantages of activities and value-creating processes in the market place, value chain analysis becomes essential for assessing competitive advantage. In order to survive and prosper in the ICT industry, STL must meet two requirements; supply what customers want to buy, and they must survive competition. Competitive advantage derives from the difference between the value STL is willing to offer its customers and its cost of creating that customer value. Competitive advantage with regard to products and services at STL takes two possible forms. The first one is an offering or differentiation advantage. If customers perceive a product or service as superior, they become more willing to pay a premium price relative to the price they will have to pay for competing offerings. This is very common with the Data Housing services provided by STL. Similar arguments can be made for products like the security doors and locks STL deals in. The second is a relative low-cost advantage, under which customers gain when STL’s total costs undercut those of its average competitor. Based on this fact, the management of STL has successfully differentiated its offering, management now exploits the advantage in one of two ways by either; increase price until it just offsets the improvement customer benefits, thus maintaining current market share; or price below the "full premium" level in order to build market share. In STL, it was realized that Value chain analysis requires a team effort. Thus, the Management accountants has to collaborate with engineering, production, marketing, distribution and service professionals to focus on the strengths, weaknesses, opportunities and threats identified in the value chain analysis results. By championing the use of value chain analysis, the management accountant enhances the firm's value and demonstrates the value of the finance staff to the firm's growth and survival. THE VALUE CHAIN APPROACH FOR ASSESSING COMPETITIVE ADVANTAGE AT STL At STL, they define their mission as one of creating products or services. These products or services generated are more important than any single step within their value chain. In contrast, other companies are acutely aware of the strategic importance of individual activities within their value chain. STL, thereby thrives by concentrating on those activities that allow them to capture maximum value for their customers and themselves. They use the value chain approach to better understand which segments, distribution channels, price points, product differentiation, selling propositions and value chain configurations will yield them the greatest competitive advantage. The value chain approach helps STL to assess competitive advantage and this includes the use of following steps of analysis : Internal cost analysis — to determine the sources of profitability and the relative cost positions of internal value-creating processes. Here, the principal steps STL follows includes: Identifying the firm's value-creating processes, determining the portion of the total cost of the product or services attributable to each value-creating process, Identifying the cost drivers for each process, Identifying the links between processes and then evaluating the opportunities for achieving relative cost advantage. Internal differentiation analysis— to understand the sources of differentiation (including the cost) within internal value-creating processes; and Vertical linkage analysis — to understand the relationships and associated costs among external suppliers and customers in order to maximize the value delivered to customers and to minimize cost. LIMITATIONS OF VALUE CHAIN ANALYSIS Value chain analysis is neither an exact science nor it is easy. It is more "art" than preparing Precise accounting reports. There are several limitations to the implementation and interpretation of value chain analysis. First, the internal data on costs, revenues and assets used for value chain analysis are derived from one period's financial information. For long-term strategy decision-making, changes in cost structures, market prices and capital investments from one period to the next may alter the implications of value chain analysis. Organizations should ensure that the value chain analysis is valid for future periods. Otherwise, the value chain analysis must be repeated under new conditions. Identifying stages in an industry's value chain is limited by the ability to locate at least one firm that participates in a specific stage. Breaking a value stage into two or more stages hen an outside firm does not compete in these stages is strictly judgment. Isolating cost drivers for each value-creating activity, identifying value chain linkages across, and computing supplier and customer profit margins present serious challenges. The use of full cost assumes that the full capacity of the value chain activity's facilities is used to derive the costs. Plant and manufacturing personnel and vendors of equipment are good sources for capacity information. Finding the Costs, Revenues and Assets for each Value Chain activity poses/ gives rise to serious difficulties. There is no scientific approach and much depends upon trial and error and experimentation methods. Value Chain Analysis is not easily understandable to all employees and hence may face resistance from employees as well as managers. CHARPTER 3 Strategic Positioning The second major theme underlying companies need to implement as part of their strategic cost management is the perceived uses of management accounting information. The basic question to ask here is “what role does cost management play in the firm? Following Porter’s (1980) delineation of basic strategic choices, a business can compose either by having lower costs (cost leadership) or by offering superior products (product differentiation). Porter (1985) suggests that a firm has a choice of three generic strategies in order to achieve sustainable competitive advantage. They are: Cost leadership-whereby an enterprise aims to be the lowest-cost producer within the industry thus enabling it to compete on the basis of lower selling prices rather than providing unique products or services. The source of this competitive advantage may arise from factors such as economies of scale, access to favorable raw materials and superior technology. STL has been able to implement this very strategically. STL currently charges the lowest in terms of Data centre housing and this has attracted huge customers like Ghana commercial bank, Agric Development Bank, Apex and Aviance. This is as a result of the setting up of the state of the art Data Centre In Tema. STL does this because of easy access of clients having access to a Data Centre with morden gadgets and also having their Data Recovery site offshore. Differentiation- whereby the enterprise seeks to offer products or services that are considered by its customers to be superior and unique relative to its competitors. These products speak of features that include the quality or dependability of the product, after-sales service, the wide availability of the product and product flexibility. In terms of product differentiation, STL stands out with its security doors and locks. By far it is the best on the market and with its unique free installation and after sales service, they stand tall above all competition. Focus- which involves seeking advantage by focusing on a narrow segment of the market that has special needs that are poorly served by other competitors in the industry. Competitive advantage is based on either cost leadership or product differentiation. With Focus, STL focuses on Turn Key projects and provide good services which competitors shy away from. Because of that, all competitors fall on them for such services. CHARPTER 4 Cost Driver Analysis A cost driver represents anything that changes the cost of an activity, most likely an activity associated with manufacturing goods. Cost driver analysis is a review of these items to ensure the company accurately allocates production costs to goods and services. Different methods for this analysis include a cost accounting system review, internal activity analysis, and an industry analysis. Managerial accountants are the individuals primarily responsible for cost driver analysis. These individuals can also make recommendations for instituting new or better cost drivers for the cost allocation process. At STL, management views Cost driver analysis as an internal activity. For example, the managerial accountant reviews each activity in the production process. He will list all current cost drivers and assess the ability to accurately allocate costs to each good or batch of goods produced. Recommendations for new cost drivers becomes necessary when they change the production method. Cost driver analysis then dictates which new driver will best fit the company’s internal production system. During the study, it came to light that, an external review process is also a possibility under cost driver analysis. Many companies in a particular industry probably use a similar cost accounting system. The cost drivers used by competitors may be better to use for the company than its own selected cost drivers. Companies must be careful here, however, as production processes can vary widely between multiple businesses. Managerial accountants will probably conduct a review to determine if a new cost driver based on industry analysis will work for the company’s production system. In traditional costing the cost driver to allocate indirect cost to cost objects was volume of output. With the change in business structures, technology and thereby cost structures it was found that the volume of output was not the only cost driver. Some examples of indirect costs and their drivers are: indirect costs for maintenance, with the possible driver of this cost being the number of machine hours; or, the indirect cost of handling raw-material cost, which may be driven by the number of orders received; or, inspection costs that are driven by the number of inspections or the hours of inspection or production runs. Generally, the cost driver for short term indirect variable costs may be the volume of output/activity; but for long term indirect variable costs, the cost drivers will not be related to volume of output/activity. John Shank and Vijay Govindarajan list cost drivers into two categories: Structural cost drivers that are derived from the business strategic choices about its underlying economic structure such as scale and scope of operations, complexity of products, use of technology, etc., and Executional cost drivers that are derived from the execution of the business activities such as capacity utilization, plant layout, work-force involvement, etc. In essence, these things all have to do with efficiency in the use of material, capital, and labor. Such cost drivers are called executional cost drivers. Executional cost drivers capture a firm's operational decisions on how best to employ its resources to achieve its goals and objectives. These cost drivers are determined by management policy, style and culture. How well a firm executes its use of human an physical resources will determine its level of success or failure. For example, worker empowerment and flattened organizations are helping many firms in their continuous improvement efforts. In strategic cost management, there is a major effort to make sure all of the executional cost drivers are running at their best. Thus, strategic cost management analysis might suggest that a company put additional money into product design, plant layout analysis and change, quality management training, and so on. No matter how efficient a company is in executing its cost structure, if the cost structure itself is a poor one for the company's purpose, the final result will be poor. Traditionally, STL have put a good deal of effort into decisions related to the scale of their investments in plants, marketing, and product development. They have also been relatively careful in their thinking about how many links they want to occupy in the value chain or how many different market channels they want to participate in. These two kinds of decisions involve the structural cost drivers of scale and scope. Structural cost drivers consist of organizational factors that determine the economic structure driving the cost of a firm's products. These cost drivers reflect a firm's long-term decisions, which position the firm in its industry and marketplace. Structural c« drivers may change. For example, large pharmaceutical companies enjoy economies c scale that lowers their unit costs for expensive R&D. There are other structural cost drivers that have become more recognized in recent years. One of them is experience. The more a company has done something, the more it "knows" how to do it. Another structural cost driver is technology which STL best stand for. STL does best with the technology it uses an appropriate match to its strategic position and its value chain location. Finally, a STL's cost structure is greatly affected by how many different kinds of things it tries to do - its complexity. This includes the variety of products and services it offers, the variety of markets and consumers it tries to satisfy, and the variety of technologies it tries to master. Few structural and executional cost drivers can be operationalized under existing management accounting systems in the cost analysis of the value chain. However, these cost drivers do offer an important reminder of the strategic decisions that firms need to make, o least acknowledge, in designing their value-generating systems. Increasingly, companies using activity-based costing to understand the resources/costs consumed by the activities and processes used in delivering their products and services. Recommendation / Conclusion Strategic decisions are aimed at maintaining an organization’s alignment with its environment, while also managing internal interdependencies. Therefore, they involve organizational goals as well as the allocation of resources needed to achieve these goals (Snow & Hambrick, 1980 Snow & Hambrick, 1980). However, straightforward as this statement makes the strategic process appear, there is no “right” way to arrive at optimum strategic decisions. Even in organizations where strategy is well-formulated, translating strategic plans into reality sometimes becomes a stumbling block (Spanyi, 2003). Strategic cost management tools could help with this issue by providing important information for strategy formulation, evaluation of strategy implementation, and highlighting the practical limitations or problems with the adopted strategy (Shank & Govindarajan, 1993). Dent (1990) conducted a literature review and also identifies three possible avenues of research into the interface between accounting systems and strategy – how accounting system structure is adapted to strategy, the role of accounting systems in influencing the strategic decision-making process, and the proactive role of accounting systems in strategic change. Extant literature focuses on the role of cost management in creating strategic competitive advantage (e.g., Kaplan & Cooper, 1998 Kaplan & Cooper, 1998), but examples of cost information being used to monitor strategy implementation and evaluate an existing strategy are not found. Supelock Technologies Limited has to be able to provide the "package" of product or service attributes that the market demands. Markets react to more than simple price. In order to strengthen their ability to respond to demand, modern manufacturers and service providers alike have come to adopt a wide range of strategies. STL should be aware that the cost advantages of such broad management approaches only manifest themselves when the associated costs are planned. That is, a critical part of strategy deployment is taking advantage of the possibilities for cost reduction that are associated with that strategy. If STL do not lay off, redeploy, or retrain the workers whose job it was to track raw materials and customer jobs under the old system, they will not gain all of the potential cost savings. Effective cost planning and cost management critically depend on the idea "spend money to make money." In today’s highly competitive environment, Strategic Cost Management has become a critical survival skill for many firms. But it is not sufficient to simply reduce costs; instead, costs must be managed strategically. Strategic cost management is the application of cost management techniques so that they simultaneously improve the strategic position of a firm and reduce costs. Strategic cost management can be applied in service and manufacturing settings and in not-for-profit environments.  It can be said that STL’s implementation of the three themes of Strategic cost management has helped them a lot since they are involved in both service and manufacturing. REFERENCE Frank Attoh-Owoo MBAE 11050294 12 12