ABSTRACT
Cost management has traditionally had an intra-organizational focus and has thereby had the firm as the main unit of analysis. Entities beyond the firm were perceived as ‘opponents’ with whom they traded in a more or less competitive market. In Chapter 15 Lars Bråd Nielsen discusses the strategic importance of business affiliates. As firms focus on increasingly smaller parts of the value chain, the necessity of cooperating with other companies on activities throughout the value chain has increased (Hopwood, 1996). This does not imply an increase in the number of partners that the company engages with. Often more intense cooperation with business partners is followed by a decrease in the number of partners (viz. Dekker, 2003). It is the complexity of the product and the increased dependency of these fewer partners that create the need for more intense co-ordination along the value chain and thereby require a more focused exchange of information than normal market transactions allow. Thus the managerial challenges and the conditions for cost management will change under such circumstances (e.g. Chenhall, 2003, p. 139).
