ABSTRACT
Miyota Co. Ltd., founded in 1959, was a wholly-owned subsidiary of Citizen Watch Company, Ltd. In 1995, its sales were just over ¥36 billion. Founded in 1930, Citizen was the world's largest watch manufacturer, producing over 200 million units in 1994. Citizen comprised Citizen Watch Company, Ltd., which was responsible for manufacturing, Citizen Trading Company, Ltd., which was responsible for marketing and sales, and other subsidiary companies. Citizen's cost-reduction program for watch movements encompassed the entire production chain, including subsidiaries and outside suppliers. The short-term cost-reduction negotiations occurred within the framework of the long-term cost-reduction objectives. Although the two sets of negotiations were obviously interrelated, they could be different in the short term. The 5% cost-reduction target was the group's short-range and long-range objective. Tanashi engineers were aware that cost-reduction potentials were different for each type of movement and part supplied.
