A Study on Strategic Cost Management in Financial Planning and Control

Strategic Cost Management (SCM) is a key area of financial planning that enables companies to maximize the utilization of resources, enhance profitability, and reach long-term financial wellness. Differing from traditional cost-cutting, SCM integrates costing, budgeting, and decision-making as an essential part of an overall strategic framework. Techniques such as Activity-Based Costing (ABC), Target Costing, and Life Cycle Costing help organizations determine drivers of cost and align their cost structures with company objectives. SCM also helps in developing budget models, risk minimization strategies, and financial projections that help in ensuring sustainable business development. In spite of its strategic advantage, most companies persist in applying aged practices that only care about reducing costs in the short term at the expense of the long run. The benefits of tools like AI-based cost analysis and real-time financial surveillance are not tapped to their fullest potential, particularly among small and medium-sized firms (SMEs), due to resource inadequacies and skilled manpower deficits. This research delves into SCM's contributions to financial planning and decision-making and provides implementable recommendations to companies, finance professionals, and policymakers.