A Case Study on Cost Control Based on Value Chain : Focusing on the Case of Chinese FH Dairy Company

[Purpose] According to the relevant policies of the Chinese government on dairy farming, the business environment of dairy enterprises is becoming more complex and diversified. Most of the dairy companies facing these changes in the business environment remain in the basic cost control stage that they have been doing in the past. Therefore, in this study, cost control based on the value chain is applied to dairy companies and an improvement method is presented through a case study. [Methodology] In this study, we propose a cost control based on the value chain in this way were applied to FH Chinese companies. The contents of this case study are as follows. First, based on existing studies and theories, the cost management status of Chinese FH dairy companies is analyzed to find problems in cost and budget management. Second, we analyze the external and internal value chains of Chinese FH dairy companies to introduce value chain cost control, respectively, and seek added value by linking the two value chains. Finally, we propose a reasonable improvement plan for Chinese FH dairy enterprises. [Findings] In the cost control of the external value chain, it should pay attention to information collection, broaden sales channels and establish competitive advantages. In the cost control of internal value chain, it is necessary to optimize the cost budget system, improve the cost control method and broaden the scope of cost control. [Implications] In addition to the continuous rise in labor costs, difficulties in securing raw materials, and power shortages that all Chinese companies are currently experiencing, dairy companies in particular have recently entered an era of high costs and are becoming a major obstacle to corporate development. As a result, it is necessary to find a new approach for effective cost control of enterprises. In this study, we propose a cost control based on the value chain in this way were applied to FH Chinese companies.