A Study on Regaining Profitability and Competitive Advantage with Target Costing in a Local Shipbuilding Company in Japan

from the Perspective of the Practices of Company A and Parallels between the Japanese, Chinese and Korean Shipbuilding Industries

Abstract

　This investigation covers how the decrease in demand in the marine shipping market after the Lehman crisis in September 2008 created a buyers market in the shipbuilding industry, and put considerable competitive pressure on companies. Research was conducted on a fairly large shipbuilding companyʼs strategical cost management techniques that were instituted to address the critical situation in order to improve its profitability. Especially after 2010, the company made serious efforts to include target costing. Even though this technique was used, new shipping companies did not improve their profitability. The company in this case study was unable to reach its profitability goal as well. The results from this paperʼs examination show that the profit shortfall was due to pressures from outside the industry and internal factors.