SUMMARIZE THROUGH HIGHLIGHTING MAIN POINTS AND KEY SUPPORTING POINTS. ptrategic cost management is understood in different ways in literature. Cooper and Slagmulder (1998a:14) argued that strategic cost management is "the application of cost management techniques so that they simultaneously improve the strategic position of a firm and reduce costs". They suggest three sorts of cost management initiative, based on whether the impact on the organization's competitive position is positive, negative or neutral. An example of a cost management initiative that strengthens an organization's position is illustrated as follows. A hospital redesigns its patient admission procedure so it becomes more efficient and easier for patients. The hospital will become known for its easy admission procedure so more people will come to that hospital if the patient has a choice. The strategic position of the hospital has just been increased over its competitors. The second example of a cost management initiative that has no impact on the organization's competitive position is explained as follows. An insurance company decides to reevaluate its accounts payable system to make it more efficient. The evaluation has no positive benefits to the insurance company in the external market. The objective of the change is to make the organization more pro The third example of a cost management initiative that will weaken the organization's competitive position is illustrated as follows. A large airline company only has two desks for administering and selling tickets. This set-up induces long lines for the airline customer which can ultimately result in high dissatisfaction and a bad reputation for the airline. This may reduce the amount of ticket sales when compared with the airline's competitors. Even though having only two desks available for customers may initially be cost effective, in the long run, it harms the company. As a general rule, an organization should never undertake any practices that are predicted to weaken the position of the organization. Furthermore, Cooper (1995a:89) argued that strategic cost management needs to include all aspects of production and delivering the product; the supply of purchased parts, the design of products and the manufacturing of these products. So, strategic cost management should be inherent to each stage of a product's life cycle, i.e. during the development, manufacturing, distribution and during the service lifetime of a product. According to Welfie and Keltyka (2000:33) strategic cost management is an area that holds exciting possibilities for accountants. They also emphasized that strategic cost management attempts to improve the strateg position of an organization and reduces costs at the same time and it is important because global competition means that firms must be constantly aware of their strategic position. An organization must compete in the areas of cost, quality, customer service, and flexibility with any cost reduction efforts contributing to an improved strategic position (Seal 1989:117). A sophisticated understanding of an organization's cost structure can go a long way in the search for sustainable competitive advantage, this point is emphasized by Shank and Govindarajan (1993:6ff.) who define strategic cost management as "the managerial use of cost information explicitly directed at one or more of the four stages of strategic management: (1) Formulating strategies, (2) communicating those strategies throughout the organization, (3) developing and carrying out tactics to implement the strategies, and (4) developing and implementing controls to monitor the success of objectives