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Target costing in a traditional enterprise
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics. (CMAR)ORCID iD: 0000-0003-0378-2995
Brock University, Canada.
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics.
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics.
2015 (English)In: Paper presented at the 11th Asia Pacific Management Accounting Association Annual Conference, Bali, Indonesia, October 26-29, 2015, APMAA - Asia-Pacific Management Accounting Association , 2015Conference paper, Published paper (Refereed)
Abstract [en]

This study examines how Target Costing (TC) was attempted as an addition to a traditional stage-gate product development process in a large, traditional enterprise that we call CEHaul.  CEHaul is a profitable enterprise, and one of the dominant participants in its industry. CEHaul has attempted a number of cost reduction methods over the last ten years as adjuncts to their overall product development approach. They experienced moderate project-specific results, however the methods have failed to make deeper inroads in the organization and there is widespread dissatisfaction among organization members with the organizations’ ability to develop the routines needed to consistently manage cost.

Implementing TC as a separate tool in a stage-gate model raises the possibility that the sequential and rigorously “gated” design process will conflict with the iterative nature of TC. In typical descriptions of TC, it is the dominant product development method when used, not a part of the toolset of a larger method. This study examines how Target Costing (TC) has been attempted in the context of the traditional stage-gate product development process in a large, traditional enterprise that we call CEHaul. Target Costing is still a relatively unexplored financial control method, especially in how it integrates with existing methods.

We find that there is conflict with the stage-gate method and TC that is consistent with criticisms of stage-gate raised by Sethi and Iqbal (2008). This includes reduction in learning through truncation of sub-projects without the iterations in TC. As well we find evidence to support Sethi and Iqbal’s finding that the extremely rigorous gate-evaluations reduce flexibility in the development system. Additionally, some core organization-supplier relationships that are mandatory for TC appear to be precluded by the CEHaul version of stage-gate.

Place, publisher, year, edition, pages
APMAA - Asia-Pacific Management Accounting Association , 2015.
National Category
Business Administration
Research subject
Economy, Ekonomistyrning
Identifiers
URN: urn:nbn:se:lnu:diva-46119OAI: oai:DiVA.org:lnu-46119DiVA: diva2:868846
Conference
11th Asia Pacific Management Accounting Association Annual Conference, Bali, Indonesia, October 26-29, 2015
Available from: 2015-11-11 Created: 2015-09-06 Last updated: 2017-02-17Bibliographically approved

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CiteExportLink to record
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Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
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More styles
Language
  • de-DE
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