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Strategic Management of Costs: A New Tool to Gain Competitive Advantage

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DOI: 10.1007/978-3-319-48454-9_17

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Chapter 17 1

Strategic Management of Costs: A New Tool 2

to Gain Competitive Advantage 3

Vlora Berisha 4

Abstract In a dynamic business environment that includes rapid change, the 5

F
powerful extension of technological development, increased competition, globaliza- 6

O
tion, market segmentation, unsustainable demand, the importance of information, 7

and changing business processes, cost management has become more critical, 8

O
dynamic, and necessary than ever before. In order to rescue itself from the claws of 9

competition today, every firm must achieve a competitive advantage. Managers need 10

PR
to think competitively and devise and execute an effective strategy. The selection and 11

implementation of an appropriate competitive strategy are the keys to both the short- 12

term and the long-term success of the firm. The purpose of this study is to identify 13

and empirically test the role of cost management tools in achieving the strategic 14
D
objectives of Kosovo firms. 15
TE

Keywords Strategic cost management • Competitive advantages • Value chain • 16

Cost drivers 17
EC

17.1 Introduction 18
R

During the past two decades, many firms in both sectors, production and service, 19
R

are faced with dramatic changes in the business environment. These changes are 20

expressed mainly in the following four aspects: (1) oversupply of most products 21
O

in domestic and foreign markets, resulting in competition in an increasingly fierce 22

market; (2) the diversity of product demand, consumers are increasingly looking for 23
C

quality products; (3) international division of labor is becoming closer and closer, 24
N

the competition tends to be more severe and cruel; (4) new technologies and new 25

technological innovations have become common practice (Sander and Roy 1999). 26
U

V. Berisha ()
Asistence Accounting and Finance Department, University of Peja, Haxhi Zeka, 70. Qamil Hoxha
Str. 4-1, Prishtinë 10000, Republic of Kosovo
e-mail: [email protected]

© Springer International Publishing AG 2017 239

N. Tsounis, A. Vlachvei (eds.), Advances in Applied Economic Research, Springer
Proceedings in Business and Economics, DOI 10.1007/978-3-319-48454-9_17
240 V. Berisha

Costs have always been one of the key components of the entire business 27

enterprise. They are undoubtedly one of the most important factors on which the 28

company’s management is based (Skënder 2008). 29

In conditions of globalization, technological evolution and innovation in the 30

production process have gained popularity. As a result, cost management’s role as a 31

competitive tool is becoming increasingly important, especially in making strategic 32

business decisions. Cost management has been developed precisely because of the 33

changes in the production environment and has a much broader focus than those 34

given traditional cost systems. 35

Cost management is not related only to the fact that it costs something but also 36

F
the factors that affect cost such as cycle time, process quality, and productivity. 37

It is not enough simply to reduce costs, but costs must be managed strategically 38

O
(Cooper 1995). At the same time, it is not intended to diminish the importance 39

of the traditional approach to cost management, which has been very useful for

O
40

managers to make decisions. But the traditional view cannot advance unless we take 41

PR
into consideration changes in the business environment, which requires a change of 42

approach based on new concepts and new types of thinking. 43

Cost management methods are important, but equally important is to know 44

how and when to apply them to achieve long-term success. Cost management 45
D
methods help managers understand behavior and cost structure. Therefore, they can 46

make decisions that will create opportunities to reach firm competitive advantage 47
TE

(Buckingham and Loomba 2001). 48

The paper is organized as follows. Sections 17.1 and 17.2 included a literature 49

review and analysis of works by well-known authors in the field. Section 17.4 50
EC

includes the research methodology, hypothesis testing, and analysis of the results. 51

Section 17.5 includes the conclusion and recommendations derived from this 52

research. 53
R
R

17.2 Literature Review 54

O
C

By reviewing the literature, there is a different approach to this issue, a new way of 55

thinking and acting toward cost management as a beneficiary of multiple opportu- 56

N

nities and provides assurance of significant success. Various authors, after detailed 57

research and supporting facts, have reasonably concluded that the strategic way of 58
U

managing costs in most cases is an undisputed necessity which reference should 59

definitely order to achieve the required effect and gained competitive advantage in 60

today’s dynamic business environment. Academic authors have stressed that the 61

importance of strategic cost management has grown dramatically in recent years 62

due to intensified competition. 63

Kaplan and Norton (1997) and Shank and Govindarajan (1997), in general, are 64

honored authors cited most when it comes to achieving competitive advantage 65

through the strategic cost management. Strategic cost management in the literature 66

is discussed from many aspects. Many authors in their research have studied and 67
 17 Strategic Management of Costs: A New Tool to Gain Competitive Advantage 241

paid attention to the various instruments used for strategic management of costs as 68

target costs (Seidenschwarz 1993; Ansari et al. 1997), cost based on activities and 69

management based on activities (Cooper and Kaplan 1998; Turney 1998, 1999), 70

benchmarking (Hoffjan 1997; Wagener 2006), or the life cycle of cost (Shields and 71
AQ1
Young 1991; Coenenberg 1997; Hansen and Moëen 2000; Götze 2004). Thus, in the 72

field of strategic cost management, the majority of studies in the literature focus on 73

tools (instruments) that are applied to cost management (Pong and Mitchell 2005), 74

as well as cost leadership (cost leadership) (Porter 1985). 75

Contribution to the development of strategic cost management belongs to Porter 76

(1998). Porter suggested that a firm has a choice of three generic strategies in 77

F
order to win lasting competitive advantage. They are cost leadership, differentiation, 78

and focus. An important approach to strategic cost management that has gained 79

O
attention internationally was proposed by Shank and Govindarajan (1993), based 80

on the study of Porter. According to these authors, strategic cost management is

O
81

discussed through some key concepts such as value chain, cost drivers, and strategic 82

PR
standpoint. Shank and Govindarajan (1993) highlighted some important aspects of 83

cost management in the value chain. 84

Porter 2000 and Shank and Govindarajan (1988, 1992) presented their concept 85

more clearly on strategic cost management. By using cost-based activities, these 86

D
authors analyzed value chain for the strategic direction of the cost. A sophisticated 87

cost structure of a company can facilitate the search for sustainable competitive 88
TE

advantages, says Shank and Govindarajan (1993). Mannel (1995), Corsten and 89

Stuhlmann (1996), and Arnaout (1997) focused on objects (resources, processes, 90

and products) and analysis of areas and activities (bringing the cost, the cost 91
EC

structure, and management of the cost) of strategic management of costs. 92

While in his study, Kajüter (2000) argues that the methods of cost management 93

and cost management structure are two basic conceptual frameworks for cost man- 94
R

agement. According Kajüter (2000), elements of a cost management system include 95

activities (cost planning and monitoring costs), objects (resources, processes, and 96
R

products), and techniques that support cost management activities. Kajüter notes 97

that the structure of cost management is an important aspect in the construction 98

O

of cost management. This includes the assignment of responsibilities (who will 99

C

carry out the management cost) and the choice of coordination mechanisms. Kajüter 100

(2000) focused on cost planning, cost monitoring, and organizational issues. Some 101
N

studies point out aspects of organizational behavior and strategic cost management 102

(Shields and Young 1989; Cooper 1995). These studies argue that the factors that 103
U

affect the successful implementation of cost management methods include behav- 104

ioral and organizational factors. For example, these factors include support from 105

the most senior management, connection methods of cost management strategies, 106

competitive, connection methods of cost management performance evaluation and 107

reward (compensation), and sufficiency of internal resources, training, dedication, 108

motivation, etc. 109

According to Horvath and Brokemper (1998), strategic management of costs has 110

emerged as a key element to achieve and maintain a strategic competitive advantage 111

through long-term forecasts and the formation of the level of costs, the structure of 112
242 V. Berisha

costs, and bringing the cost of products, processes, and resources. They also argue 113

that strategic cost management should define and analyze long-term cost factors 114

(economy of scale, experience, etc.) and their impact on the level of costs, cost 115

structure, and cost behavior. Finally, strategic cost management should be applied 116

from the research stage and development and design phase of the product, in order 117

to avoid costs at the beginning of the product life cycle. Strategic cost management 118

sees products, processes, and people as objects of creative resources to achieve a 119

strategic competitive advantage. 120

In his study, Hinterhuber (1997) argued that cost management as “a necessary 121

mechanism of action is more strategically important to increase the number of 122

F
choices for discovering new possibilities or discovering the markets new.” Hinterhu- 123

ber interviewed executives of European companies about strategic cost management 124

O
and concluded that strategic cost management should be part of business strategy in 125

order to achieve a radical and long-term growth of the company value.

O
126

According to McIlhattan (1992), strategic cost management is the ability of 127

PR
management of costs. While Horngren et al. (2000) noted that cost management 128

is not applied in particular. Cost management has a broad focus. For example, cost 129

management involves continuous reduction of costs. 130

Horgen and McIlhattan define strategic cost management as a set of actions that 131
D
managers take to satisfy customers through constant control and reducing costs. 132

Simmonds show that in the literature, strategic cost management is interpreted in 133
TE

different ways. First, it may refer to “competitors.” Simmonds (1981) has developed 134

a conceptual framework that emphasizes the importance of information on competi- 135

tors (on costs, prices, market share, and so on) in the development and monitoring 136
EC

of business strategy. Later, various authors justify the value of information on 137

competitor to achieve a competitive advantage (Jones 1988; Bromëich 1990; Ward 138

1992; Moon and Bates 1993). 139

R

In recent periods managerial accountants are being seen not only as a financial 140

expert but also as a key adviser to help businesses develop and implement their 141
R

strategies (Blocher et al. 2010). The essence of cost management is the use of tools 142

to generate information about the planning, decision-making, and control for the 143
O

short and long term, in order to facilitate the management of the firm to create 144
C

products and provide services in the most effective and efficient way compared to 145

competitors (Horngren 2003; Hansen and Moëen 2000; Hilton 2000). 146
N

Most costing procedures used today were developed in the period stretching 147

between 1880 and 1925. Early developments up to 1915 belonged to the cost 148
U

method of product identification—determining the feasibility of a business for 149

special products and the use of information for making strategic decisions. From 150

1925 he devoted a crucial method of calculating the cost of inventory—identification 151

of manufacturing costs by enabling product cost reporting of inventories in financial 152

statements for external users’ needs. 153

From 1980 onward, many scholars in this field argue that traditional cost 154

management systems are not serving the needs of management and are unsuitable 155

for modern business environment demands. For example, according to Chenhall 156

(1991:2), the traditional methods of cost better adapt to circumstances and situations 157
 17 Strategic Management of Costs: A New Tool to Gain Competitive Advantage 243

AQ2 Table 17.1

Variables Categories Absolute frequencies Frequencies in %
Region/Municipality Peje 10 71.4% t205.1
Prishtine 2 14.3%
Gjilan 1 7.1%
Ferizaj 1 7.1%
The size of firm 0–9 0 0% t205.2
Number of employees 10–49 8 57.1% t205.3
50–249 5 35.7%
Mbi 250 1 7.1%

F
Level of qualification Bachelor 8 57.14% t205.4

O
Master 6 42.9%
PhD 0 0%

O
Position Accountant 9 64.3% t205.5
Financial manager 5 35.71%

PR
when “the markets are safe, the large-scale production is specifically fixed, and
there is less pressure in response to requests very flexible to market changes.” The
158
159
D
difference between traditional cost management and strategic cost management is 160

explained in Tables 17.1 and 17.2. 161

TE

Morse (2003), Dekker (2003), Hilton (2000), and Blocher (1999) suggested these 162

tools for strategic management of costs: 163

These tools are vital for long-term success. Prevailing in the short term is not the 164
EC

only success criteria; firms should try to succeed in the long term by strengthening 165

relationships with customers. 166

R
R

17.3 Methods of Research and Hypotheses 167

O

17.3.1 Research Methodology 168

C

This research is based on primary and secondary data. The secondary data for this 169
N

research was provided through extensive references from the literature and of similar 170

research published by other universities. The primary data were provided through
U

171

a questionnaire, which was designed in accordance with the problematic elements 172

examined in this paper. This presents some intellectual questions to consider this 173

problem: 174

1. What role do techniques/tools of cost management play in achieving strategic 175

goals and objectives of modern management? From the viewpoint of specialists, 176

there are relevant issues in finance and accounting in Kosovo firms. 177
244 V. Berisha

Table 17.2 Tools for strategic cost management

Tools Type
Analysis of the value chain To survive in today’s competitive environment, t208.1
companies must be oriented about the customers
and have first priority to fulfill their needs by
creating consumer value on a lower cost than
competitors
Costs based on activities An analytical tool designed to provide accuracy t208.2
in the allocation of indirect costs
Analysis of the competitive advantage Determining the strategy that an organization can t208.3
adopt to distinguish from its rivals

F
Target costs Cost management tool for the reduction of total t208.4
C D P costs of a product along the entire life cycle of its

O
Target cost D market production with the help of research and design.
price—target profit A target cost is the amount of cost that can be

O
included in a product, and it can still be arriving
at the firm’s profit required of that product at a

PR
special sale price
Total quality management To adopt policies and procedures necessary to t208.5
meet customer requirements
Just in time A comprehensive system to purchase materials or t208.6
D
produce goods when necessary “in due course”
SWOT analysis SWOT analysis—systematic procedure to t208.7
TE

identify the critical factors for the success of an

organization
Benchmarking Benchmarking means the search for those best t208.8
practices of competitors. The basic idea of
EC

benchmarking is that managers can improve the

quality by analyzing and then copying the
methods of leading companies in various fields.
As such, benchmarking is a specific form of
R

environmental inspection
R

Balanced scorecard Consisting of a plurality of integrated t208.9

performance measurements of output stemming
O

from the strategy of the company and are entirely

in support of her. It is divided into four main
dimensions: financial performance, customer
C

satisfaction, operations and internal innovation,

and growth
N

Theory of constraints A tool to improve the rate of transfer of material t208.10

to finished goods
U

Source: Blocher (1999)

2. What are the constraints that Kosovo firms face in the use and application of tools 178

of strategic management of cost? 179

3. What are the benefits of using company funds to strategic cost management? 180

4. What are the strategies applied by Kosovo firms to achieve competitive 181

advantage? 182
17 Strategic Management of Costs: A New Tool to Gain Competitive Advantage 245

To achieve the objectives of this paper, statistical analysis using an algebraic 183

method of average size variation and absolute indicators is used. The questionnaire 184

consists of five parts. This includes, first, the general information on the company; 185

second, the role of the SCM in achieving contemporary management objectives; 186

third, restrictions to use SCM tools; fourth, benefits from the use of SCM; and, fifth, 187

strategies that bring competitive advantage. 188

Respondents were asked to express their level of agreement with several 189

statements/allegations made by the interviewer in the role of strategic management 190

techniques to achieve cost management objectives. Respondents were asked to rank 191

their responses according to a Likert scale from 1 to 5 (level of agreement with 192

F
statements made, where 5 represents full compliance). 193

O
17.3.1.1 Hypotheses

O
194

PR
Through this paper it is intended to verify these hypotheses: 195

H1 Cost management techniques play an important and fundamental role in 196

achieving the goals and objectives of modern management. 197

D
H2 The application and use of strategic cost management techniques in directing 198

firms to the benefits and achieving a notable success. 199

TE

H3 Firms in Kosovo face several obstacles and difficulties in the use of tools and 200

techniques of strategic cost management. 201

EC

H4 Firms can achieve competitive advantage through determination or advantage 202

and the strategies of their choice. 203

R
R

17.3.2 Results of Research and Testing Hypotheses 204

O

17.3.2.1 Characteristics of Respondents and Research Results 205

C

A sample of 14 respondents participated in the survey. In the questionnaire which 206

was sent to accountants and financial managers in Kosovo firms, the characteristics
N

207

of the respondents were as follows (Figs. 17.1, 17.2, 17.3, 17.4, 17.5 and 17.6). 208
U

Regarding cost management firms, respondents believe that the main purpose 209

of cost management is to increase company performance, ensure financial survival, 210

and achieve competitive advantage. This can be seen in the graph below. 211

Fourteen firms in Kosovo discussed cost management in all departments. The 212

firms surveyed indicated that cost management is discussed mostly in the finance 213

department and the office of the board of directors’ meetings, as seen in the graph 214

below. 215
 246 V. Berisha

Variables Categories Absolute Frequencies in %

Frequencies

Region Peje 10 71.4%

Prishtine 2 14.3%
Gjilan 1 7.1%
Ferizaj 1 7.1%

0-9 0 0%
The size of firm
10-49 8 57.1%
Number of employees 50-249 5 35.7%

F
Mbi 250 1 7.1%

O
Bachelor 8 57.14%
Level of qualification Master 6 42.9%

O
PhD 0 0%

PR
Position Accountant 9 64.3%
Financial manager 5 35.71%

Fig. 17.1 Distribution of respondents’ demographic characteristics. Source: Author’s calculations

D
Increase Performance 100% 14
TE

Ensure financial survival 50% 7

Competetive advantage 85.7 % 12

EC

Fig. 17.2 Cost management. Source: Author’s calculations

Finance department 84.6% 11

R
this figure will be printed in b/w

Office of the board of directors meetings 76.9% 10

Marketing Department
R

53.8% 7
Production Department
O

Fig. 17.3 Departments deciding for cost management. Source: Author’s calculations
C

85.7% 12
cost of raw materials
N

labor cost 35.7% 5

cost of operations 71.4% 10

U

inventory cost 92.9% 13

cost of maintenance 100% 14
environmental factors 64.3% 9

Fig. 17.4 Cost determinants. Source: Author’s calculations

While the most important cost drivers firms surveyed are: cost of raw materials, 216

labor cost, cost of operations etc. 217

The use of cost management tools by firms surveyed is indicated in the table 218

below. 219
 17 Strategic Management of Costs: A New Tool to Gain Competitive Advantage 247

Techniques of Analysis value chain is used by your firm?

Yes 76.8% 11

No 21.4% 3

ABC 2 Techniques is used by your firm?

Yes 92.8% 13

No 7.14% 1

Countinuous improvement tool is used by your firm?

F
Yes 92.8% 13

O
No 7.14% 1

O
BSC 3 techniques is used in your firm?

PR
Yes 42.9% 6

No 57.1% 8

Source: Author's calculations

D
Fig. 17.5 Cost management tools. Source: Author’s calculations
TE
this figure will be printed in b/w

EC
R
R
O
C

Fig. 17.6 Graphic presentation of the responses of the respondents. Source: Author’s calculations
N
U

17.3.2.2 The Role of Cost Management Tools in Achieving the Strategic 220

Goals and Objectives of Modern Management 221

To evaluate the role of cost management tools in achieving the strategic goals and 222

objectives of modern management, the four tables below show the results of the 223

questionnaire (Tables 17.3, 17.4, and 17.5.) 224

The tables show that respondents believe that four methods of strategic cost 225

management are of great importance in achieving the objectives of strategic 226

248 V. Berisha

Table 17.3 Value chain analysis

Standard
Paragraph Mean % deviation
1. Applying of this technique helps the firm in managing costs and 4.71 94.2 1.07 t211.1
improving the quality of products
2. Application of this technique leads to maximizing the value of 4.64 92.8 1.08 t211.2
activities to the acquisition of raw materials (raw) to product
delivery to the customer
3. Applying this technique helps the management to identify 4.07 81.4 1.00 t211.3
unnecessary costs in manufacturing performance and achieving a
lower cost with high efficiency

F
4. Applying of this technique helps in achieving the firm’s 4.14 82.8 1.10 t211.4
competitive advantage by lowering costs

O
5. Application of this technique leads the firm’s profit growth 4.29 85.8 1.14 t211.5
General weighted mean D 4.3 total sample (N) D 14 Sig. ˛ D 0.05

O
Source: Author’s calculations

PR
Table 17.4 ABC and BSC techniques
Standard
Paragraph Mean % deviation
6. Applying this technique helps in improving firm performance and 4.43 88.6 0.65 t214.1
D
achievement of objectives
TE

7. Applying this technique helps the firm to calculate the exact costs 4.21 84.2 1.21 t214.2
of production
8. Management needs for more accurate cost information requires 4.29 85.8 1.14 t214.3
the application of this technique
EC

9. Applying this technique helps all levels of management in the 4.43 88.6 0.65 t214.4
provision of data for more efficient decision-making
10. In this way there are better technical aids in controlling and 4.57 91.4 0.76 t214.5
R

reducing firm costs

General weighted mean D 4.38 total sample (N) D 14 Sig. ˛ D 0.05
R

16. Financial perspective of the firm’s application of this technique 2.36 47.2 1.91 t214.6
helps improve the performance meter
O

17. Application of this technique leads to establishing a better 2.21 44.2 1.72 t214.7
internal control
C

18. Applying this technique provides strategic gauge in financial and 2.36 47.2 1.91 t214.8
nonfinancial performance of the firm’s management
N

19. This technique represents a way of thinking and a management 2.21 44.2 1.72 t214.9
tool that helps the company to achieve its strategic objectives
U

20. By applying this technique, the firm provides comprehensive 2.36 47.2 1.91 t214.10
information and convenient performance
General weighted mean D 2.3 total sample (N) D 14 Sig. ˛ D 0.05
Source: Author’s calculations

management for contemporary firms in Kosovo, where the arithmetic and weighted 227

averages and percentage attest to the importance of these methods for managing 228

these firms. Of the four methods, it is clear that the balanced scoreboard is used at 229
17 Strategic Management of Costs: A New Tool to Gain Competitive Advantage 249

Table 17.5 Continuous improvement technique

Standard
Paragraph Mean % deviation
11. The continuous improvement helps firms in maintaining 4.50 90 1.09 t217.1
competitive advantage, increasing sales, and achieving its strategic
objectives
12. Continuous improvement leads to lower losses, reduction of 4.21 84.2 1.21 t217.2
production time, and improvement of the quality of the firm’s
products
13. Continuous improvement helps to the discovery of the best 4.57 91.4 1.09 t217.3
ways to carry out activities of the firm

F
14. Continuous improvement leads to lower costs of production and 4.29 85.8 1.07 t217.4
control

O
15. Continuous improvement leads to increased customer value 3.79 75.8 1.12 t217.5
General weighted mean D 4.27 total sample (N) D 14 Sig. ˛ D 0.05

O
Source: Author’s calculations

PR
least in Kosovo entity. The arithmetic mean of the answers of the respondents in this 230

category reached 2.3 consisting of the second option “disagree,” and the standard 231

deviation is 1.7. 232

D
While the average total of three tables shows the importance of methods for 233
TE

managing modern companies and the achievement of objectives in terms of their 234

strategic methods, if we list according to the results obtained through these methods, 235

ABC comes in the first, then followed by analysis value chain and continuous 236
EC

improvement, while the balance scorecard is the latest. 237

When we calculate the correlation of coefficients between these four methods of 238

strategic cost management, we have provided the following results. 239

Table 17.6 shows the correlation among these methods, as it is the correlation 240
R

between the analysis of the value chain and the method of continuous improvement 241
R

with (0.68) this correlation which is significant at the level of significance at the 242

0:01, and shows that the use of these methods together can achieve the expected 243
O

benefits of management and the use of one of these techniques is linked to the use of 244

other techniques. From all these results the first hypothesis can be accepted, which 245
C

confirms that the strategic methods of cost management plays an important role in 246

achieving the strategic goals and objectives of modern management (Table 17.7).
N

247

The results show that respondents confirm the existence of obstacles and 248
U

difficulties in the employment of strategic cost management, where the average 249

total arithmetic weighted 4.26, and the standard deviation for the answers of 250

respondents did not show any significant difference in their responses to this part 251

of the questionnaire. According to the results, it is indicated that one of the biggest 252

obstacles to the use of these tools is the “high costs for the use of these techniques 253

compared to traditional methods (4.43).” 254

From these results, the second hypothesis can be accepted, which confirms 255

that there are many restrictions and difficulties faced by firms in Kosovo for the 256

application and use of methods of strategic cost management (Table 17.8). 257
250 V. Berisha

Table 17.6 Correlation coefficients

Correlations
Technique Technique Technique Technique
AZV ABC TPV BSC
Technique AZV Pearson correlation 1 t220.1
Technique ABC Pearson correlation 0.113 1 t220.2
Technique TPV Pearson correlation 0.679** 0.077 1 t220.3
Technique BSC Pearson correlation 0.122 0.207 0.372 1 t220.4

**Correlation is significant at the 0.01 level (2-tailed)

Source: Author’s calculations

F
Table 17.7 Obstacles and difficulties faced by firms in the use of strategic cost management

O
Standard
Paragraph Mean % deviation

O
21. Management’s unwillingness to change current systems used 4.14 82.8 1.10 t223.1
because they are considered sufficient and do not need to change

PR
22. The lack of administrative and financial staff qualified 4.29 85.8 1.07 t223.2
scientifically and practically in the application and use of these
techniques and methods
23. The lack of a proper database affects the use of these tools 4.36 87.2 1.15 t223.3
D
24. The lack of data not detailed enough and the lack of 4.07 81.04 1.14 t223.4
information about you using these techniques
TE

25. High costs for the use of these techniques compared to 4.43 88.6 0.94 t223.5
traditional methods of management used by the company which
were rejected
General weighted mean D 4.26 total sample (N) D 14 Sig. ˛ D 0.05
EC

Source: Author’s calculations

Table 17.8 Features and benefits of the use and application of means of strategic cost management
R

Standard
Paragraph Mean % deviation
R

26. It helps more in the control of production costs 4.57 91.4 0.51 t226.1
O

27. It helps to develop better plans for the future 4.50 90 0.52 t226.2
38. It helps in the decision-making 4.79 95.8 0.43 t226.3
C

29. It helps in the process of evaluating the performance of the firm 4.43 88.6 0.51 t226.4
30. It helps in the process of evaluating the performance of individuals 4.57 91.4 0.65 t226.5
N

General weighted mean D 4.57 total sample (N) D 14 Sig. ˛ D 0.05

Source: Author’s calculations
U

The results show that the respondents see the application and use of these 258

methods of strategic cost management as more profitable for firms in Kosovo, where 259

the resulting total average arithmetic was 4.57, and one of the greatest benefits by 260

these results is that the use these methods helps in the decision-making process 261

(4.79). 262

These results validate the third hypothesis, confirming that there are more 263

benefits from the application of strategic approaches to cost firms in Kosovo. 264
17 Strategic Management of Costs: A New Tool to Gain Competitive Advantage 251

17.4 Strategies to Achieve Competitive Advantage 265

Competitive advantage is an advantage over competitors by creating customer value 266

equivalent to a lower cost than competitors. The strategy is a plan to succeed against 267

competitors. The strategy includes the extensive use of technology to reduce costs, 268

a management structure that welcomes change, and a constant focus on customer 269

service. The term “cost management” is widely accepted in the literature to express 270

a new system of accounting information. This system is intended to generate the 271

necessary information in order to assist entities to gain competitive advantage 272

Brierley (2008) (Table 17.9). 273

F
According to these results, Kosovo firms mostly use cost-cutting strategy (4.79) 274

O
together with differentiation and focus on product quality, to achieve competitive 275

advantage. And secondary data and the results of this survey can say that firms can 276

O
take advantage and achieve competitive advantage through their election strategy, 277

which confirms the fourth hypothesis in this paper (Table 17.10). 278

PR
Table 17.9 What is the appropriate strategy for your company to provide
competitive advantage
D
Standard
Paragraph Mean % deviation
TE

31. Reduce costs/leadership cost 4.79 91.4 0.43 t229.1

32. Product differentiation 4.07 90 0.47 t229.2
33. Concentration in the quality of products 4.71 95.8 0.47 t229.3
EC

General weighted mean D 4.52 total sample (N) D 14 Sig. ˛ D 0.05

Source: Author’s calculations
R

Table 17.10 Responses of respondents

Respondents Strongly disagree I do not agree Neutral Agree Strongly agree
R

I 5 0 6 19 3 t232.1
II 5 0 0 10 18 t232.2
O

III 5 0 0 19 9 t232.3
C

IV 4 0 2 2 25 t232.4
V 0 1 1 15 16 t232.5
N

VI 10 0 1 3 19 t232.6
VII 7 0 2 4 20 t232.7
U

VIII 5 0 3 6 19 t232.8
IX 5 0 1 8 19 t232.9
X 5 0 0 8 20 t232.10
XI 5 0 0 9 19 t232.11
XII 5 0 0 12 16 t232.12
XIII 0 0 0 13 20 t232.13
XIV 0 1 4 11 17 t232.14
Sum 61 2 20 139 240 t232.15

Source: Author’s calculations

 252 V. Berisha

17.5 Conclusions and Recommendations 279

In today’s competitive environment, the development and use of cost information 280

management has an important strategic role in the success of the firm. Strategic cost 281

management should help the company indentify and develop superior strategies that 282

will ensure the sustainable competitive advantage. 283

Through the study of the subject’s strategic cost management, it can be concluded 284

that the use of strategic cost management methods has become an undeniable 285

and vital need for all types of businesses and firms in order to survive and 286

grow in light of an increasingly complex and dynamic business environment. 287

F
Strategic cost management is a more effective tool in developed countries than 288

O
in developing countries such as Kosovo. Although the implementation of strategic 289

cost management is problematic for Kosovo, the country should nonetheless begin 290

O
to apply the process because it will create benefits as the country becomes more 291

developed in the future. 292

PR
Managers of firms are also aware that the application and use of strategic cost 293

management entails difficulties and obstacles. On the other hand, these challenges 294

are surpassed by the advantages and benefits of using cost management tools. 295

Kosovo at present does not have many opportunities for the application of cost 296
D
management. Nonetheless Kosovo firm’s should begin to adopt a new approach to 297

cost management because it is the future of the global economy that will eventually
TE

298

include Kosovo. 299

This new approach to cost management does not mean that Kosovo firms should 300

completely reject the traditional way of managing costs. Many businesses are
EC

301

obligated to use traditional methods while using traditional products and traditional 302

ways of preserving the market owing to set environmental, geographic, strategic, 303

and practical considerations. 304

R
R

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