(i) poor concept of cost control
The traditional notion of cost control is judged by savings and excessive demand for cost reductions and cost reductions, the aim of which is to limit the reduction of total costs to less cost effectiveness in terms of overall benefits. The total cost of an enterprise occurs at all stages of production and distribution, and scientific and technological progress has been accompanied by a decrease in the cost share of the production chain and an increase in the cost of r & d and marketing, which, if cost control is ignored, will not be conducive to the long-term development of the enterprise. Under market economy conditions, such cost-reduction-led controls
On the one hand, it undermines the overall objective by taking into account local requirements: on the other hand, it discourages enterprises from pre-spending certain incentives for high costs in the short term for future performance。
(ii) weak cost control awareness
1. Lack of awareness among leaders of cost control. Cost control is an important component of enterprise management, the subject of which should be driven by the need for internal business management. However, in some cases, the relatively weak awareness of cost control among top leaders ignores the importance of cost control in business management. Some leaders consider cost control to be minor and less demanding; others consider that the enterprise's own product structure is simple, with short production cycles and few processes, and that there is no need to focus too much on cost statistics, leading to a disconnect between economic efficiency of the enterprise, market competition, etc., and cost control. From this point of view, weak corporate-led cost-control awareness can severely constrain the reduction of the cost of modern enterprise production operations。
2. Cost managers ' awareness of cost control is weak. Improving the quality of cost managers is key to achieving cost control. A well-developed system of cost management organizations is one of the necessary conditions for modern cost management in enterprises and an important feature of their successful production activities. At present, the cost managers of enterprises are less qualified and less knowledge of the theory of cost control is available. In addition, the cost liability system for the various sectors of the enterprise is not clear, cost management is relatively confusing, cost management organizational links at all levels are not sufficiently close, orders from higher cost management organizations are not well completed and coordination and alignment are inadequate。
(iii) significant cost information distortion
Cost information distorted. There are serious distortions, distortions, etc. In business cost control information. In labour-intensive enterprises in the past, since cost accounting systems were based on the assumption that “volume is the only factor affecting costs”, there was usually no significant cost distortion. But today, as the modern market economy system evolves, the rise in the price of productive resources can easily lead to the loss of the value of enterprise assets. At the same time, a number of procurement staff, for their own benefit, have opted for quality and high-priced production data in the procurement of materials, which, combined with poor transport management, has led to the emergence of a large number of inferiors on the production line, thus increasing the cost of products。
Inadequate accounting methodology. Cost accounting is an important component of cost management, which calculates the total cost and unit cost of the product on the basis of a relatively complete accounting of the costs incurred by the object by which the costs incurred by the enterprise in the course of its production are aggregated and distributed. However, if cost accounting focuses only on materials, labour, manufacturing costs and neglects the increasing investment in product r & d design, intermediate testing and after-sale services of modern enterprises, it leads to inadequate cost content of the product and, consequently, to an incorrect evaluation of the economic benefits of the product throughout its life cycle, to distortions in product cost information and to errors in the decision-making of enterprises in choosing the direction in which the product will operate。
(iv) cost-control system is not robust all
In seeking a way out of the business management dilemma, more consideration has been given to merger bankruptcy, leasing auctions and, in particular, to the fact that some state-owned enterprises have repeatedly sought national concessions, less to the establishment of a system of cost-control systems for sound enterprises and a real upgrading of internal management. In addition, inadequate macro-cost management systems have to some extent undermined the motivation and initiative of enterprises to develop sound internal cost control mechanisms. A complete absence can affect an enterprise's ability to make accurate cost accounting and create significant barriers to its cost management。
(v) lack of reasonable control over the cost of funds
In order to maintain an enterprise's day-to-day operations, the adequacy and liquidity of funds play a key role, and therefore the management of funds is strategically important in business management. However, many enterprises have problems in this regard. First, there is a lack of awareness of the importance of finance, a lack of attention to reducing expenditure while increasing income, and a poor sense of financial risk prevention; secondly, many enterprises are subject to drifts, blind expansions and expansions, neglecting the real economic situation of the enterprise, which is clearly irrational and undesirable; and thirdly, the creditworthiness of the enterprise is fundamental to the social foundation. There is considerable uncertainty about the sustainability of the business in the event of difficulties in managing the business, a shortage of funds and a failure to pay off bank loans in a timely manner, which can pose significant risks to the enterprise。
