Strategic Cost Management and Business Analysis for Decision-Making

This report delves into the realm of strategic cost management and strategic business analysis, emphasizing their crucial role in providing decision-oriented information to senior management, ultimately enhancing corporate value. The study scrutinizes the tools and techniques of cost management, including activity-based costing, total quality management, and benchmarking, alongside strategic business analysis methodologies like SWOT and PESTEL analysis. The analysis uses Bannershop Hong Kong Limited as a case study, illustrating how these tools facilitate informed decision-making by providing cost data, conducting cost functions, and generating comprehensive reports. The report also explores how effective cost management and business analysis contribute to cost control, improved budgeting, and strategic pricing, thereby increasing the organization's financial strength and market responsiveness. The discussion further highlights how these decisions can improve the value of the company through cost restructuring, meeting unanticipated costs, and improving the competitive position of the business. The report concludes by underscoring the importance of continuous adaptation and the strategic use of data to drive performance, risk assessment, and proactive portfolio management within the dynamic business landscape.

Running head: DECISION-MAKING WITH COST MANAGEMENT TOOLS
DECISION-MAKING WITH COST MANAGEMENT TOOLS
Name of Student
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Author Note

1DECISION-MAKING WITH COST MANAGEMENT TOOLS
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
The tools and techniques of cost management and cost business analysis and the way they
help in providing information to the top management for decision making..............................2
The way these decisions can improve the value of the company..............................................6
Conclusion..................................................................................................................................8

2DECISION-MAKING WITH COST MANAGEMENT TOOLS
Introduction
Strategic cost management refers to a process by which organizations can improve
their strategic positions by reducing the cost and therefore it makes application of strategic
cost techniques and tools for the same purpose (Cokins 2017). Therefore the main objective
of SCM is reduce the organizational cost and thereby strengthening is position. Strategic
business analysis is the process of analysis of pre-project work through identification of
business problems, identification of all business opportunities, development of various
business cases and finally recommending on whether it is feasible to start a project or not.
There are many tools and techniques of both the strategic cost management and business
analysis and these tools and techniques help the top management in taking major decisions.
The company chosen for the purpose of this study is Bannershop Hong Kong limited
(BannerSHOP HK, 2019). The company is engaged in digital printing and production of
banners. The main aim of the paper is to analyse all the tools and techniques of strategic
business analysis and cost management that can help the management in taking decision
through various information. The paper will also discuss about how these decisions can help
in improving the corporate value of the organization.
Discussion
The tools and techniques of cost management and cost business analysis
and the way they help in providing information to the top management for
decision making
Strategic cost management refers to making use of different tools and techniques of
cost management in order to reduce the cost of the organization and to improve the

3DECISION-MAKING WITH COST MANAGEMENT TOOLS
organizational position. Cost management involves planning and controlling the cost of the
company through preparation of the budget and seeing that actual expenditures does not
extend the same (Cooper 2017). Cost management is important for all organizations because
they can help in predicting the cost that the company is going to spend without
overestimating it or under-estimating it. By carrying out strategic cost management, various
unforeseen and unanticipated costs can also be dealt with. It makes use of different tools and
techniques such as- Activity based costing, total quality management, inventory management,
time management, benchmarking, business process re-engineering and various other tools
and techniques. The tools of cost control can be divided on the basis of two main categories-
internal and external tools. Internal control tools includes- budgetary control and standard
costing. These can help the top management in taking some of the most important decisions.
One of the most important functions of the management is decision making. Some of the
important decisions taken by the management are- fixation of the prices, changing the price
in different economic scenarios, determination of the plant capacity and various others
(Bhargava, Bafna and Shabarisha 2018). In order to appropriately take decisions, the
management needs information. Cost management helps the top management in carrying out
its functions properly. It provides the cost data, carries out various cost functions and provide
the management with all the necessary information they need. Therefore cost management
tools and techniques help in recording the transactions, analysing the same, preparation of
various reports and providing recommendations on the basis of the same. Some of the major
benefits that it provides to the management is controlling costs, these tools and techniques of
cost management help the management to keep a control over all its expenses and costs. It
requires the management to keep a continuous check on material ledger and stores. It helps in
classifying the costs as fixed and variable through which the ultimate cost cutting can happen.
It helps the management to take decisions related to budgeting by analysing the same and

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preparation of performance reports. These costing tools can help in budget formation that I
quantifying the management plans (Amir, Auzair and Amiruddin 2016). It also ensures that
there are no deviations between the budget and the actual expenses. Therefore it can find out
any deviations easily and take actions accordingly. It helps the management in taking
decisions related to determination of price- Since these tools and techniques help in
identification of the fixed and the variable cost therefore it helps the management in fixing all
the prices in accordance with the economic situations. The company BannerShop HK limited
believes in meeting the customers need by providing them with efficient exhibition survives
and digital inkjet printing and various other services. The company believes in breaking the
tradition of having expensive production models and has a production model that can reduce
the cost by bringing the price to a reasonable level (Jenkins and Williamson 2015). Therefore
it not only helps in improving the lives of the people but also is leading the print industry to
do the same. They adhere to their own Hong Kong workshop, in order tom ensure that the
majority of the products gets produced in Hong Kong itself and therefore as it reduces the
production time and saves the supply chain cost. The company is engaged in using different
system in order to reduce cost. The company believes in proving good quality survives, at a
reasonable price (Greco, Figueira and Ehrgott 2016). Therefore the company is able to take
all these major decisions because of its cost management tools and techniques that is used by
its cost department while also ensuring high quality of goods and services.
Business analysis on the other hand refers to analysis of the pre-project factors such as
identification of all the threats of the projects, identification of the opportunities,
recommending whether it will be feasible to undertake a project or not. Some of the major
tools and techniques of strategic business analysis is SWOT analysis, PESTEL analysis,
business process modelling, use case modelling and various others. SWOT involves
identification of the strengths, weaknesses, opportunities and the threats for project analysis

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and on the basis of the same decisions are taken. Business process modelling is used as a
process of improving the projects because it helps in identification of the gaps between the
business process of the present scenario and the future business processes. In order to carry
out the business analysis appropriately in the organizations it is important to follow a few
steps such as- gathering background information, identification of all the stakeholders,
discovering the objectives of business, evaluation of all the opinions, definition of scope, a
delivery plan by the business analyst, definition of the requirements of the projects and
implementation of the SDLC models. Business analysis is important for organizations
because it helps the company in gaining financial strength, it can also help in enhancing the
technical and tactical skills through analysis of business. It can provide information about the
market scenario. Business analysis helps in increasing the return on investment by analysing
the total cost of business through business analysis. It can help in cost reduction. This is so
because a business analyst can help in properly describing the right requirements to the
people, and the project can be designed or may be created that can help in ultimately reducing
the cost. Business analysis can help the managerial people in taking proper decisions. This
can be achieved through proper discussion between a business analyst and the stakeholders. It
can also help in taking cost effective decisions for the organization. Bannershop Hong Kong
limited has an in-house department for designing and other printing facilities. The company
has a specialized team for this purpose. All decisions regarding making investments in the
projects is made by this department only. The company is able to understand the consumption
patterns of the consumers through business analysis. The business analyst of the organization
uses data to drive performance for instance the decision to carry out activities in-house. The
business analyst of the organization helps it in analysing the risk and better risk prediction. It
also in gaining continuous feedback and therefore makes improvement accordingly. The
business analyst of the organization helps in improving the portfolio of the company by being

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proactive to the changing market scenario. The business analyst can help in analysis of the
market trends, recommendations of the best practices and help in adding value. The business
analyst of the organization can help in identification of the errors. Business analysts have
discussion with the stakeholders to provide information about previous mistakes. And
therefore help in bringing new learning’s to the organization. The organization meets the
needs of the customers by adapting to the changes.
The way these decisions can improve the value of the company
The effective decision management of the company has been the integral part of the
organisational development. As per the above analysis, it has been observed that the company
often adopt the effective cost management tool to strengthen their decision making process
and implement more changes in accordance with the business demands. Various author
implied that cost management process is particularly involved with the budget allocation of
diverse departments. The following areas are mostly influenced by the implementation of
cost management tools:
 Cost management tool contributes in controlling the cost structure of some specific
projects. For example, companies usually look forward to restructure the operational
activities to reduce the cost allocated to any specific activity (). In addition to this, it
also helps in restructuring the budget of the overall project. As a result, it helps in
increasing the profit margin. The development of the appropriate cost management
tools help in cost reduction and the improvement of the operational efficiency that
eventually lead towards adding value to the business profits.
 Cost management tools helps in meeting the unanticipated costs for the future. For
example, if a business can restructure their budget and accordingly schedule the

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internal activities, it would help in predicting future expenses. Hence, the company
can easily avoid the unanticipated expenses (Brijs 2016).
 Another most advantageous feature of implementing the cost management tool is the
rescheduling of the business records. The predefined costs are always helpful for the
business to develop the value added services that help in strengthening the
competitive position of the business.
 The business company usually maintain the long term trends of the business with the
complete structural integration of the cost management tool. It is quite necessary for
the business to define their trends before starting up their organisational activities.
Hence, preparing a complete and structure cost management tool would be much
beneficial in identifying the future constraints and reducing the risks accordingly.
 With the help of the effective cost management tool can be much helpful for the
business in terms of comparing the budget with the actual cost incurred. The company
can identify the exact business components that require more expenses than the
expected capital (Pavlatos 2018). Once the business recognises the area, the company
can easily reschedule their cost structure and invest it in developing the value added
services.
 Another most recognised advantage of developing the cost management tool is
gauging the business position in a competitive landscape. It is quite true that the
effective value added services are the keys to achieve the competitive advantage in
this current business scenario. Hence, it is quite important for the company to
compare the value added services of the other competitors in the market.
The idea obtained from the above analysis specifies that it is quite necessary for the
business marketers to develop a clear picture of their profit margin. Once they are clarified
with their target set for a stipulated time, it will be easier for them to allocate budget for the

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specific activities in a structured way. Moreover, the appropriate scheduling of the cost
management strategies would improve the business decisions as a whole that will lead
towards future business success.
Conclusion
From the above discussion, it can be concluded that strategic business management
and strategic business analysis are of great importance for any organization as they make use
of many tools and techniques that can help the top management in taking decisions
appropriately. The cost management tools and techniques can help the top management to
take decisions for improving operational efficiency and reducing the total cost. Business
analysis helps the management in taking corrective decisions about investments into projects
and can also help the organization in making changes to their activities through identification
of the customers consumption patterns.

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References
Amir, A., Auzair, S.M. and Amiruddin, R., 2016. Cost management, entrepreneurship and
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Brijs, B., 2016. Business analysis for business intelligence. Auerbach Publications.
Cokins, G., 2017. Strategic business management: From planning to performance. John
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Cooper, R., 2017. Supply chain development for the lean enterprise: interorganizational cost
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Greco, S., Figueira, J. and Ehrgott, M., 2016. Multiple criteria decision analysis. New York:
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Jenkins, W. and Williamson, D., 2015. Strategic management and business analysis.
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Pavlatos, O., 2018. Strategic cost management, contingent factors and performance in
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