Target costing is a business technique which is aimed at the setting of the most objective prices on the production in order to be able to complete on the market and satisfy customer’s expectations. Target costing is not a reduction of the price but the avoidance of its unnecessary increasing. The majority of companies set enormous prices on their production which the intention to gain high profit, though they spend little resources and efforts to produce the goods. Today the competition on the market is very high and companies have to brainstorm new and new effective methods of production and pricing if they want to survive. Target costing is the policy which increases the quality of the product, improving its characteristics and design and reducing the cost of its service to the minimum. For example, speaking about automobiles, the repairing of the car produced under the effect of the target costing will cost less than of the ordinary one.
The policy of target costing does not mean that the businessmen do not achieve high profit, it means that they involve the new technologies and labor force which influence the reduction of the price without the reduction of the quality of the product. The founders of the target costing are the Japanese companies which started to compete with the American and European corporations and produce the goods of the same quality but for much lower price. The purpose of target costing is to attract customers and achieve high profit simultaneously and to be the leader on the chosen segment of the market.
The method of target costing is quite useful, because it embraces many spheres (engineering, design, advertising, etc) which can win the leading place for the company on the market reducing the expenditures on the production and increasing profit of the company. A well-organized target costing case study should be informative, interesting and present brand new facts about the chosen case. One should analyze the cause of the problem and collect up-to-date reliable data for the research. Then, it is important to define the effect of the problem on target costing and evaluate the impact of the whole problem on the company. The student should summarize the case objectively and analyze the importance of the policy of target costing for business.
The difficulty of case study writing is quite evident and students try to improve their writing skills with the help of the Internet. One can read a free example Toyota case study target costing and understand the process of writing from all sides. Furthermore, due to a good free case study on target costing as a strategic tool one can learn more about the topic and organize the logical structure and format for the paper.
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