Monday, July 24, 2017

COST MANAGEMENT TOOLS TURNS AROUND a Rs 30,508.45 cr Market company


Strategic cost management & Cost management tools have always helped a struggling organization to realign its resources and delve into new futuristic growth process. The value of the profession have created many struggling organization from the verge of getting collapsed to create share holders value followed with stupendous growth for other stake holders associated with the  company. Implementation of strategic cost management and cost accounting tools of resource allocation and identification of product mix have been one of the game changers for the industry growth in the long term. Those who criticize that the professional aspect of the subject has less identification its well reply and eye opener that a one of the largest engineering companies adopted the principles of the subject and made an outstanding turnaround. Tools like sales mix, resource allocation and optimization followed with shedding down non core business along with cost control and target costing driven product launching have helped the organization to make a turn around.

Now today I will share a company’s details one of the largest engineering companies as well as one of the largest conglomerates in the world. IT has operations in around 100 countries, with approximately 132,000 employees in December 2016. The current Market Cap stands at 30,508.45.  The Company's segments include Power Systems, which offers turnkey systems and services for transmission and distributions for power grid and power plants; Power Products, which manufactures, engineers, supplies key components to transmit and distribute electricity.

 Recently over the last 5 year the company had made huge implementation of cost accounting tools and strategies to turnaround the company. Back in the year 2009-10, the company had a huge task to realign its products as business suffered a huge setback with the problems in the power sector, and subdued demand in the industrial segment. The company is none other than ABB.

ABB India Ltd is a pioneering technology leader in electrification products, robotics and motion, industrial Automation and power grids, serving customers in utilities, industry and transport & infrastructure globally. Continuing more than a 125-year history of innovation, ABB today is writing the future of industrial Digitalization and driving the Energy and Fourth Industrial Revolutions. ABB operates in more than 100 Countries with about 132,000 employees.
The overhaul, which began in 2014, has seen the industrial robot maker combine some of its businesses, cut labor costs and exit riskier projects.  The company pressed ahead with cost-cutting efforts including consolidating more than 60 service centers into two sites in India and Poland to handle finance and personnel issues. The focus on cost cutting is helping it cope with a difficult environment as economic uncertainty is making companies and governments more cautious about investing in expensive projects like new production lines and power stations.
ABB reorganises business segments: Beginning CY17, ABB had rearranged businesses into four  Segments. Now, Electrical products include electric vehicle charging, solar and power quality businesses of erstwhile Discrete Automation & Motion division. The residual Discrete Automation & Motion division now renamed as Robotics & Motion division while the Process Automation division renamed as Industrial Automation division.

The numbers speaks itself and on can get a clear understanding of the revaluation within organization achieved through implementation of strategic cost management.



The results of the implementation of strategic cost management and cost accounting tools of resource allocation and identification of product mix keeping the future industries in mind played a pivotal role. The company's four divisions which make products ranging from power grids to industrial motors - had all achieved their profitability targets.

Adapting strategic cost management and costing accounting tools the company started focusing on futuristic products back in 2011. It focused on energy-efficient products on the back of climate change talks. It decided to leverage its global presence and products in smart grid, robotics in the industrial segment. Cutting down on expensive business propositions and working for futuristic driven industries paved the way for the growth of the company. The demand for up gradations such as robotics in industrial, smart grid products etc lead to a phenomenal growth for the organization.


On an overall it can be said that Strategic Cost Management and cost accounting tools have paved a new away of growth for the company. If a company struggling with profitability could made turn around then just calculate how many NPA and insolvency stage can be avoided.

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