Implementation of target cost management in a non-Japanese environment

Drawing from dynamic capability theory, this paper aims to examine the implementation of target cost management (TCM) in a non-Japanese environment.

Based on a case study at Company ABC, an automotive manufacturer in Malaysia, this paper investigates the differences in the TCM implementation process between Company ABC and companies operating in the Japanese business environment. The data were collected through in-depth interviews, direct observation and document reviews.

Using a single-case study approach, the findings show that although the case company follows similar fundamental steps of TCM as highlighted in the literature, it has modified the detail of the TCM steps to some extent to match with the company’s resources, business processes and strategic routines.

As the study used a single-case study approach on an automotive company, the results cannot be generalized in other settings. The findings give an insight into the TCM implementation in a developing country such as Malaysia. Better understanding of TCM as a business competitive tool may help to promote TCM application in other developing countries. The findings help new potential TCM companies in the same industry to mitigate and leverage the risk of failure in implementing TCM by modifying the TCM implementation process to suit their contextual environments.

This paper attempts to explain in depth the TCM implementation process in the case company and highlights how the dynamic capabilities can cause differences in TCM practices compared to those practiced in the Japanese context.