Management Andapplication Of Target Cost Of Dongfeng Motor Co.,Ltd

Under the background of social economy, minimizing cost has been an important wayfor companies to strengthen its competence, increase their market share and obtain higherprofit. With the reason, it is a hot issue currently for companies how to carry out its costreduction strategy in its operating activities. From the middle of1990s, motor companiesall over the world had gradually established relatively complete quality security systemthanks to the rapid development of technological level in the worldwide motor industry.As a result, the main competence between motor companies has transferred from productsquality to products price. That is to say, the most significant part is to gain great profiteven though the market price is decreasing. Target cost management system helpscompanies to gain higher price strength. This thesis is going to study the application oftarget cost management system in the case of DongFeng Motor Corporation, Ltd.Guided by the target cost management theory, this article references a large numberof literatures that study the methods of target cost management and the implementation oftarget cost management in well-known enterprises at home and abroad. It presents thesignificance of the target cost management. And it lays out the target cost managementsystem from multiple aspects, namely the concepts and characteristics, basic ideas,principles, methods and so on. A cast study of Dong Feng motor co., LTD., shows thedrawbacks in its traditional cost management model, which emphasizes postmortemanalysis of product cost and manufacturing process control. The drawbacks includedifficulty in product profitability analysis, low product cost accounting accuracy, oversimplified cost accounting project etc. Considering the information needs for cost ofproduct for business decisions and Dong Feng going global, this article demonstrates thenecessity of introducing target cost management to Dong Feng. Through examples, itdescribes the application of target cost management system in Dong Feng, theimplementation details, the application process and the results.