This study explores the applicability of the top-down target costing (TC) method in the Taiwan real estate development industry by considering one new element ¡V creating buyer¡¦s perceived product value. The top-down method determines the target costs by subtracting target profit from less controllable sales price. It has been extensively studied in the context of assembly manufacturing industries. On the other hand, the real estate developers produce more heterogeneous products in monopolistically competitive market conditions. In order to adapt to this different user group, TC as an accounting and strategic management tool is expected to have unique characteristics once adopted in the real estate development industry.
This study adopts a descriptive research design. By presenting evidences gathered from six real estate development firms it sheds lights on how the creation of buyer¡¦s perceived product value can be embedded into the target costing mechanism. By examining nine propositions, the study confirms the modified TC model is effective in stabilizing profits due to its focus on creating buyer¡¦s perceived product value. The contributing factors include the ability to charge premium prices as well as effective cost reductions. The findings revealed three unique characteristics of real estate development industry which may influence the adoption of TC model. Firstly, due to stronger bargaining power of the buyers and land owners as well as low entry barriers, the users of TC framework strive towards providing added product value higher than the product price in order to sustainably charge premium prices. It supplements the traditional accounting and strategic management literature in which expected profit margins were primarily achieved by managing costs. The study also reveals that the TC framework is more compatible with the differentiator and confrontational marketing strategies in real estate development industry. Secondly, the modified TC framework may better facilitate firms¡¦ profitability objectives especially during economic recessions. Thirdly, TC is more applicable at preliminary stages of product planning e.g. land investigation, but is less effective for component- level cost management due to certain market and operational limitations.
Given the different needs of the property developers, the adaptation of the top-down target costing model in Taiwan real estate development industry is characterized by emphasizing on the creation of the buyer¡¦s perceived product value, as opposed to a pure cost focus in previous target costing literatures.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0116112-020500 |
| Date | 16 January 2012 |
| Creators | Wu, Chi-Ling |
| Contributors | Pei-How Huang, Chi-Cheng Wu, Ming-Chi Chen, Yeun-Wen Chang, Ruey-Dang Chang |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | Cholon |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0116112-020500 |
| Rights | user_define, Copyright information available at source archive |
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