ABSTRACT
Firms that adopt a confrontation strategy must learn to manage costs as aggressively as possible. Cost management plays an important role in the success of many Japanese firms. Japanese firms that have extended experience with the confrontation strategy form of competition have developed sophisticated cost management systems to help them manage costs aggressively. Managing the cost of products is important because it is the only way to ensure that products will be profitable when launched. Firms have developed three feedforward cost management techniques to help them manage the costs of products: target costing, value engineering, and interorganizational cost management systems. Target costing is the discipline that ensures that new products are profitable when they are launched. Value engineering (VE) requires identification of each product's basic and secondary functions and analysis of the functions' values. Operational control requires holding people responsible for the costs they control and determining how well they manage them.
