Kenji Yasukata, Eisuke Yoshida, Ichiro Yamada and Keisuke Oura
– This paper aims to examine the implementation of target cost management (TCM) at a Japanese shipbuilding company.
Abstract
Purpose
This paper aims to examine the implementation of target cost management (TCM) at a Japanese shipbuilding company.
Design/methodology/approach
Using Rogers' Diffusion of Innovation as a framework, the paper presents a longitudinal in-depth case study of TCM implementation project to show the issues involved in implementing TCM.
Findings
The paper finds that the diffusion of TCM is a consequence of a deliberate managerial activity – which in this case is the control over the TCM implementation. The TCM implementation project in our case ended in failure. The paper shows that the lack of appropriate controls over the TCM implementation project was the main reason for its failure.
Originality/value
The paper shows how TCM implementation is a part of the process of TCM diffusion within an organisation. In the previous studies of TCM, researchers have noted how well-managed TCM implementation projects were; thus, suggesting how TCM implementation should take place. The paper focuses on the control over the TCM implementation, simply because TCM does not naturally diffuse throughout an organisation.
Details
Keywords
This study aims to analytically explore the economic role of transfer pricing in a vertically integrated supply chain with a direct channel, specifically when it uses cost-based…
Abstract
Purpose
This study aims to analytically explore the economic role of transfer pricing in a vertically integrated supply chain with a direct channel, specifically when it uses cost-based transfer prices, as is frequently observed in management practices. We compare two representative transfer pricing methods: full-cost and variable-cost pricing. Although many firms open a direct channel, which affects the optimal decision on transfer prices, prior literature has not considered this case.
Design/methodology/approach
We demonstrate the results using a non-cooperative game theoretical approach.
Findings
The results show that full-cost pricing is more profitable than variable-cost pricing when the fixed cost allocation to the marketing division is low, contrary to the established position in prior studies, from which I select their benchmark case. Moreover, we obtain a counterintuitive result, whereby, the firm-wide profit of a vertically integrated supply chain increases with fixed cost allocation.
Originality/value
This study considers the direct channel and internal transfer pricing in a vertically integrated supply chain, while prior research only considers one or the other. This model suggests an optimal choice of cost-based transfer pricing in managerial decisions. In addition, the authors demonstrate the positive effect of increasing fixed cost allocation, which prior management studies do not show. The findings of this study have implications for managerial practice by providing insights into supply chain design and showing that firms should consider the competition between channels when making decisions about transfer pricing methods.