Abstract
This study used contingency theory to examine the key enablers of target cost management (TCM) at the Malaysian context. Using a single case study approach, a questionnaire survey was conducted on users of TCM at Company A, a Malaysian automotive company. The respondents were required to determine whether enablers, namely, an advanced manufacturing technology (AMT) implementation, confrontational strategy, customer orientation, an information-sharing network, lean manufacturing implementation, supplier relationships, teamwork oriented organizational culture, top management support and commitment, and training havepositive relationships with the successful implementation of TCM. The findings show that only teamwork, top management support and commitment, and training are the key enablers for the successful implementation of TCM in the case company.
Highlights
Many Japanese companies use target cost management (TCM) as an important competitive tool to increase their competitiveness and improve their long-term profitability (Ansari et al, 2006; Cooper & Slagmulder, 1999)
This paper aims to examine whether these nine enablers - advanced manufacturing technology (AMT), confrontational strategy, customer orientation, information-sharing network, lean manufacturing, supplier relationship, teamwork oriented organizational culture, top management support and commitment as well as training - have positive relationships with the successful implementation of TCM in Company A
Conclusions there are many TCM enablers suggested by various researchers, there are still lack of empirical studies concerning the enablers that influence the successful implementation of TCM, in the non-Japanese context
Summary
Many Japanese companies use target cost management (TCM) as an important competitive tool to increase their competitiveness and improve their long-term profitability (Ansari et al, 2006; Cooper & Slagmulder, 1999). About 80% to 100% of Japanese manufacturing companies were already implementing TCM in the 1990s (Kato et al, 1995). An in-depth case study on a Malaysian car manufacturer reveals that the key TCM practices were quite similar to those Japanese practices, but the detailed implementation process were different due to certain modifications being made to adapt to the Malaysian contextual environment (Baharuddin & Jusoh, 2019). The contingent factors or enablers influence the management accounting system of an organization (Otley, 1980) Factors such as strategy, organization structure, and environment that are specific to the industry may influence the nature of TCM being implemented (Feil et al, 2004; Tani et al, 1994). TCM implementation requires involvement from the whole value chain to achieve the target cost by eliminating the nonvalue added cost, excess and unevenness (Helms et al, 2005)
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