Study Of Bosch Automotive Products Changsha Co., Ltd's Activity-based Target Costing Management

Since 2008 global economic recession, the “price battle” has become the main theme of both international and domestic automotive markets, where OEMs are exposed to high cost pressure resulting from multiple factors such as transition from seller 's market to buyer's market, manufacture capacity surplus, fierce competition for market share, etc.On one hand, OEMs try to ease the cost pressure by improving production efficiency and optimizing internal value stream, on the other hand, cost burden is transferred to tier manufactures, namely, automotive component suppliers. Facing the fact that sales price is most likely determined by market, best way for tier manufactures to maintain profitability and secure long-term growth is adapting top notch business management concept and evolving from oversimplified traditional cost management to more refined cost management.Bosch Automotive Products(Changsha) Co., Ltd. is a typical tier manufacture. Aiming at resolving major problems and weaknesses existing in the cost management area of this company and with reference to advanced cost management theories as well as methodologies, this paper introduced an integrated cost management method, which incorporated ABC into target cost management. The method is called “activity based target cost management” and is being implemented in a pilot workshop in this company.