ABSTRACT
Firms that adopt a confrontation strategy must learn to manage costs as aggressively as possible. Eight cost management techniques are used to reduce costs aggressively. The first three of these techniques focus on managing the cost of future products. The next three manage the costs of existing products. The final two harness the entrepreneurial spirit of the workers. Firms have developed three feed-forward cost management techniques to help them manage the costs of future products: target costing, value engineering, and interorganizational cost management systems. Managing the cost of existing products is the second way costs are reduced. It includes three feedback techniques: kaizen costing, product costing systems, and operational control. Another way to create pressure to reduce costs is to implement cost management techniques that harness the entrepreneurial spirit of the work force. The first technique creates pseudo micro profit centers from cost centers, and the second technique converts the firm into a large number of real micro profit centers.
