A Proposal for Effective Target Costing for Local Shipbuilding Industry in Japan to Recover Profitability and Competitive Advantage: A Case Study of a Shipbuilding Company in Nagasaki Prefecture

Abstract

This paper introduces a case study of the division of a well-established shipbuilding company in Nagasaki Prefecture referred to in this paper as “A” company, to examine its use of target costing techniques established in June of 2010 to increase its competitive advantage and profitability in the face of strong international competition. Specifically, this case study research uncovered that the target costing techniques put in place since June of 2010 were ineffective in reaching “A” companies desired profitability goal because of external factors and internal organizational deficiencies. The author utilized this evidence to propose a new approach of target costing to achieve the profitability goal and competitive advantage of this and other Japanese shipbuilding companies.