This section introduces the existing problem and motivation of the research, and an overview of the topic.
1.1 problem statement
The topic of this research is “methods and importance to control costs in the company”, it aims to study the importance of cost control on enterprise and find out the effect cost control methods to enterprise. This thesis intends to make enterprises realize the influence of cost control on companies, and thereby attach importance to cost control and do their homework to help enterprises improve the competitiveness and achieve even greater gains. On the other side, the research will study which cost control method is able to operate most efficiently with regards to get a lot of expected return, and figure out the cost control method that most appropriate to enterprises through data acquisition and processing in all respects.
Cost control is one of the most important departments within the operation of company. Enterprises should pay much more attention to the management of cost especially in the period of financial crisis; control the corporate cost efficiently will do a good job of helping enterprises to overcome the financial crisis. So far, two most popular methods of controlling cost are adopted by enterprises: the Value Chain method and the target costing method. However, an article published on Finance and Accounting indicated that both of the Value Chain and the target costing methods have blind spot. The author suggest a new cost control system with a name “3+1” to overcome these blind spots, this cost control system is help to fill in gaps of previous two methods. It does make sense that the article suggest the blind spot of the two methods, but it is unsure that whether these blind spots or defects are important when those methods are applied to enterprises, and whether the assistance of application of new “3+1” system is significant to corporate cost control or is just slight improvement instead of substantial increase to enterprises. The article with a name “set up a new 3+1 cost control system for Chinese enterprises” remind us that the modern main cost control methods are not perfect, it still have some certain factors that make enterprises fail to minimize corporate operating costs when these cost control methods are performed. Problems may not exist only in Value Chain method and target costing method, five most popular cost control methods in the contemporary world may also have their own disregarded imperfection that will decrease the utility of cost management methods. Thus, find out the method that most suitable for companies by means of research to perform cost control effectively or fill in gaps of previous method will help enterprises to find a way out of predicament about having no idea how to select cost control method, to take out and put into use what they think is the most benefit method to companies or work out a better method to cover the previous shortages, so that enterprises are able to make progress in improve their profits and ensure better operating efficiency than before.