Strategic cost management is deliberate decision-making aimed at aligning the firm's
cost structure with its strategy and optimizing the enactment of the strategy. Alignment
and optimization must comprehend the full value chain and all stakeholders to ensure
long run sustainable profits for the firm. Strategic cost management takes two forms:
structural cost management, which employs tools of organizational design, product
design and process design to build a cost structure that is coherent with strategy;
and executional cost management, which employs various measurement and analysis tools
(e.g., variance analysis, analysis of cost drivers) to evaluate cost performance.
In this chapter I develop a model that relates strategic cost management to strategy
development and performance evaluation. I argue that although management accounting
research has advanced our understanding of executional cost management, other management
fields have done more to advance our understanding of structural cost management.
I review research in a variety of management fields to illustrate this point. I conclude
by proposing that management accounting researchers are uniquely qualified to create
a body of strategic cost management knowledge that unifies structural and executional