Three routes for target costing

Suggests that many Western managers find target costing hard to understand, gives an overview of the Japanese approach and explains three paths towards rational cost decrease: cost improvement, cost cutting and cost shifting. Emphasizes the importance of cost improvement in a total cost management (TCM) programme and the other strategies which should support it, e.g. comprehensiveness, integration, flexibility and dynamism. Recognizes that the weaknesses which may develop in a TCM programme can divert cost improvement into cost cutting or cost shifting but sees this as no more than a short‐term solution.