Target Cost Management in Automotive Industry

TARGET COST MANAGEMENT, STRATEGY AND ORGANIZATION IN THE AUTOMOTIVE INDUSTRY

Associate Professor GRADUATE SCHOOL OF BUSINESS OSAKA CITY UNIVERSITY Sugimoto, Sumiyoshi, Osaka 558 JAPAN TEL [phone] FAX [phone]

HIROSHI OKANO

Draft for 1996 IMVP Sponsors Meeting Figures included at the end of the document.

I. INTRODUCTION
Target cost management (TCM) is an innovation of Japanese management accounting system and by common sense has been considered with great interest by practitioners. Nowadays, TCM related dissertations, papers, articles are widely being published in special journals both in North America and Europe; this may explain why seminars and workshops about TCM are so frequent1. Even in the academicians ' seminars and other meetings of research organizations, TCM related articles have a high probability to be accepted and reported. Last year for example, the American Accounting Association 's seminar held in Boston about "Japanese cost management"2 was focused on the formulation of TCM (Okano-Shimizu, 1994; Kato, 1995). The above situation shows that the attention put on TCM is very different from that one put on JIT- "Japanese production system"- in the 1980s. So far, there were debates concerning the a priori that "The competitiveness of Japanese industries" is the outcome of the management system excellence. With many problems facing Japanese industries recently, the originality in the research and development system prior to the introduction of a new product becomes a point of great importance. Nowadays ' fiery competition is likely to speed up the TCM system. Nevertheless, many of the published cases about TCM system have been made in special journals. Academic journal publications are few in comparison. Academic researches about TCM are now in the embryonic stage3. In the light of that situation, this paper seeks to examine the importance of the relationship between strategy, organization, and TCM. Three directions of TCM are

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