CRITICAL EVALUATION OF TARGET COSTING, COST REDUCTION, AND PRODUCT DEVELOPMENT: A CASE OF UK MANUFACTURING COMPANIES

Abstract

The study is tailored towards unravelling the effects of target costing on product development and cost reduction for U.K. The increased competition among the firms has made it essential for the companies to focus on strategies which could help them in terms of gaining the competitive advantage in the industry. Among these strategies, target costing has become an essential management practice among firms after its success in the Japanese automotive sector. Therefore, this study has carried out the critical analysis on target costing, cost reduction and product development in the context of manufacturing firms of UK. In this manner, the data has been gathered from the primary sources of information and has been analysed qualitatively with the help of content analysis. The analysis identified that the target costing has become a regular practice among the management of the companies. With respect to the factors, it is determined that competitors, cultural factors, firm size and management support influence the effectiveness of target costing. Moreover, it is recommended for the companies operating in manufacturing sector of UK to increase their emphasis on target costing during the product development phase.