Value Chain Analysis and Strategic Alliance under Total-life-cycle Costing: An Examination of New Costing Technology

By Gang (Henry) Wu.

Published by The Technology Collection

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Article: Print $US10.00
Article: Electronic $US5.00

Due to competitive forces, deregulated economies and technological development, strategic alliances have become noteworthy in business. A kind of cooperative business activity without strict contract laws, strategic alliances have dramatically increased in the last decade. They have been considered as a critical way to manage activities, handle uncertainties, conduct financial and strategic planning, and make correct economic decisions. Coordination and optimization of activities within strategic alliances should be achieved by using a holistic view to organize strategic positioning and to build linkages between value-creating activities. A value chain analysis can guide firms to management interfirm linkages, to reduce internal and cross-organizational costs, and to build advantages of differentiation. With the aid of value chain analysis, firms will be able to integrate relevant relationships in the whole business cycle, to improve cost management systems (CMSs) and interfirm cost management, to facilitate information sharing, and to enhance performance across firm boundaries in the management of interfirm relationships. A structured costing approach and evaluation technique, Total-life-cycle costing (TLCC) completely addresses all cost elements in owning, maintaining, operation, and replacement related to products/services. Viewed in a value chain perspective, TLCC can be considered as a longitudinal method to recognize value relevant/irrelevant activities from the start to the end of products and services. TLCC can be used as both a cost management basis and an information-sharing technique to reduce (1) value irrelevant costs down the value chain of a product/service, and (2) value irrelevant interaction costs related to interfirm strategic alliance. This study is targeted at identifying the efficacy of value chain analysis in strategic alliances when firms adopt total-life-cycle costing on an interfirm basis. I am interested in identifying processes on the efficacy of value chain analysis in coordinating interdependent tasks, eliminating value irrelevant cost, and facilitating interfirm information sharing when TLCC is used.

Keywords: Value Chain Analysis, Strategic Alliances, Total-life-cycle Costing, Modern Costing Technology

The International Journal of Technology, Knowledge and Society, Volume 3, Issue 4, pp.63-68. Article: Print (Spiral Bound). Article: Electronic (PDF File; 503.179KB).

Gang (Henry) Wu

PhD Candidate, Department of Accounting and Business Information Systems, The University of Melbourne, Melbourne, Victoria, Australia

Gang (Henry) Wu is a final-year PhD candidate in accounting at the University of Melbourne, Australia. He received his Bachelor of Management (1st Class Honours) from Peking University in 2003. Before his doctoral study, Henry was a research assistant at China Europe International Business School (CEIBS), a leading business school in the Asia-Pacific region. Henry served as a doctoral fellow at the 2006 AFAANZ Doctoral Consortium and a discussant at the 2006 AFAANZ Annual Conference. His studies have been accepted by the Third International Conference on Technology, Knowledge and Society (Cambridge University, UK) and the 2007 University of Technology Sydney (UTS) Summer Accounting Symposium (Sydney, Australia). He has been frequently involved in teaching assistantships and research assistantships in his department, and holds an auditor’s position at Pitcher Partners, Melbourne, Australia. His research interests include auditing, management accounting, business information systems, and corporate governance. He is indebted to Colin Ferguson, Anne Lillis, Axel Schulz, Paul Coram, Shannon Anderson, Jennifer Grafton, and all participants at the Advanced Managerial Accounting seminars in 2005 for their comments and support on this paper.


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