INTERNATIONAL SCIENTIFIC CONFERENCE “SMALL AND MEDIUM ENTERPRISES - POSSIBILITIES AND PERSPECTIVES 2011” International University of Novi Pazar. UDC 657.478:334.713
COSTS MANAGEMENT MODELS IN SMALL AND MEDIUM ENTERPRISES Mr. Aleksandra Vidović Pan-European University Apeiron, Banja Luka Pere Krece 13, mail:
[email protected] Abstract: In today's conditions, when changes take place rapidly, the company is requesting an adequate response. The external environment in which they operate are complex and unstable factors, the company imposes a strategic way of thinking. The changes are causing problems, but these problems can become more likely if the company aware of its position, its direction and result of application of the chosen strategy. In real terms, unfortunately, often the proposed solution does not match the available resources in a company that cannot respond to requests - because of its location, financial resources, or due to conditions and limitations of the external environment. Incorrectly chosen solution, if applied at all costs, spend effort and resources companies, and may lead to an unenviable position in relation to its competitors, and hence a loss of confidence in senior management, and reduced motivation. It is necessary to use scientific methods to better show what adaptability methods could miss. Key words: Small and medium enterprises, cost, models, JEL Codes: O12 - Microeconomic Analyses of Economic Development
Introduction Basic standing in recognition of the relevant cost is that the very notion of cost has more than one meaning and that the various construction costs caused by the different approaches and using different methodologies. In many business plans, market data and costs are often superficial and vague. Providing demands for new products are considered, but studies on innovation clearly show that the introduction of new products may fail mainly because of lack of acceptance in the market and overestimating the potential market.
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As the first serious approach to the process of reducing costs, it is necessary to identify all costs, be acquainted with their scope, periodicity and repetition of the necessity of their existence to processes in which they arise. Often defined economic analysis is set of economic theory, economic statistics and economic history, where development is a dynamic process (Schumpeter). 1
Cost management - how to successfully manage them
Operating costs are an important, if not decisive influence the size of the profit. In today's difficult economic conditions, entrepreneurs and managers on a daily basis feel the importance of cost management. For these reasons, in order to try to influence the costs in different ways, measures to be used while often depend on the level of economic knowledge entrepreneurs or managers that range from very technical to very modest. Some cut costs wherever possible, even to those most in need, while others knowingly or unknowingly allow spending beyond measure. Economic science and practice has long been engaged in studying and applying specific methods of managing costs and expenses incurred seeking to bring maximum benefit. Through this process, methods have been developed and there are certain rules and guidelines that would be observed: 1. in the long run it is crucial to be cheaper than competitors offering the same level of services / products or offer more for the same price 2. to be able to maintain the competitiveness of all costs witch must be controlled in the designed stage and all the time controlled decrease 3. it is necessary at all times to accurately monitor the actual costs, revenues and profits for each part of the business 4. the actual cost and revenue for each service / product must be always known (especially true of relationships with key customers) 5. take into account the cash flow and sources of liquidity Practice shows that a common source of problems is that the responsible person within companies does not know the companies’ cost structure, nor place, nor the reasons for their emergence. Therefore, it is useful to more clearly define the costs by type, product, and profit centres. Continued efforts to reduce
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unnecessary costs and increase productivity will give each company a competitive advantage in the marketplace and the ability to quickly adapt to market conditions, which are all prerequisites of a successful business. The ultimate goal of any business is to maximize profit, while managing costs and increasing revenue are two equally important tools at our disposal.
Models of cost management
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In an effort to improve the ratio of total assets and total effects, which actually depends on good results, we want to influence the inputs into the business process. The imperative of business performance management effectively forcing the organization to the application of different methods and models of cost management. For this purpose methods and procedures have been developed, and numerous models provide a critical mass of information necessary for decision making in order to optimize costs, based on facts. These are: The traditional management model of production costs, model-based cost management processes, model-based cost management activities, the target cost model, Activity-based budgeting, balance model of achievement, "Kaizen" costs, analysis of values, Model of quality cost management and other managerial concepts as determinants influence the development of a model information system for managing business processes and overall system management organization. As can be seen from the above method is written ELIKI number but in this aspect of the work I put on the traditional model of managing production costs, cost management model based on processes, Kaizen, a. b. c. d. e. f. g. h. i.
The traditional model of management of production costs (Traditional Product Costing-TPC). Tries accounted costs of direct materials and labour, while the overhead expenses connected direct costs. The traditional
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model of management of production costs also called "traditional calculation methods." "When we talk about traditional methods of calculations, think the simple calculation of 24 sharing a calculation with additions such as additives calculated on the basis of different value bases.
Cost management model based on processes (Process Based Costing - PBC) costs of production monitors and evaluates the next logical stage in the production process (process steps). In the PBC model direct costs of materials and labour charged and follow the stages of production and the cost of production overheads are added direct costs at each stage of the application of certain "keys" schedule based on cost indicators.
"Kaizen" costs ("Kaizen" Costing - KC) designed for Japanese companies, and its application and calculation model is the most prominent in the automotive industry, namely Toyota. The essence of this model is a continuous reduction of costs, during the production process by applying the procedures. This model assumes that everything can always do better. "It gives an answer to the question: can you even better?"
Cost management model based on the activity (Activity-Based Costing ABC) involves the deployment costs by activities. Instead of costs are monitored on a particular product, this method follows the trend in cost per individual activity or part of the business process. This allows for easier control costs in some segments and managers easily focus on removing unnecessary costs and activities. Determining the cost-based activities is Accounting procedure that enables organizations to detect and connect real costs to each individual product or service that comes from within the organization. Systematic study of cost models based on activities identified five activities to be implemented at any cost analysis in the organization: - Analysis of activities, - Analysis of direct costs, - Monitoring of expenditures by activity, - The establishment of measuring the output product, - Cost analysis. In addition, model-based cost management processes and cost management model based on process-oriented activities include the organization of the constructed, documented and implemented business processes. Answers the question: "Why cost occurs?"
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Costs observed in European countries From the above chart it is clear that in Western European countries where small and medium enterprises has reached a certain level of development, have significantly greater experience in identifying and defining the costs in the company of their relations and dependencies. Also opportunities in an environment where companies do business in Western Europe are very different and Coherent, the result of the trends, changes in the environment and systematic adjustment of organizational segments and resources to these changes. Simple comparison of the cost structure presented in the previous page, can we notice that in Western Europe most of the cost of waste on human resources. While in south-eastern Europe due to a number of circumstances caused by the socio political, social and other impacts of the turmoil, the impossibility of restoring the means of production and opting equal to the environment by far the largest part of the costs of waste materials. It is clear that SEE countries need much more effort, resources, will, help and knowledge to optimize costs in SMEs and the only work that is focused in this direction may result in the inclusion of companies from South Eastern Europe in a competitive match with neighbouring area.
Conclusion Cost optimization is the process of balancing the amount of consumption of resources in the process of realizing that ensure the achievement of the quality of products, which means meeting the requirements of the buyer / user, and interpreted as the maximization of the amount of quality performance with minimum total cost. Requirements for steadily increasing the competitiveness of entrepreneurs both domestic and The foreign market demand from management mentioned taking a series of activities to reduce costs and increase effectiveness and efficiency at all levels of business. Survival in the market and further development provided only to those entrepreneurs who will own inventiveness, use of modern organizational and IT solutions to provide real basis for cost reduction as one of the most important element for increasing competitiveness.
References ULRICH KURT, workshop: "The costs in SMEs", PK RS, GTZ 2006 B. STAVRIĆ, Ž.BAROŠ: The theory of cost, CIP, Belgrade 2005 MIROSLAV HARROW, methods of cost management, internet document www.metode.dr.pdf BOJAN ILIC, V. MILICEVIC, Cost management, FON, Belgrade 2005 S. MARKOVSKI, Costs in business decisions, Scientific Book, Belgrade 1991
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