Question

A very serious problem for an organization is that while target costing may be met there may be increased development time because of repeated value engineering cycles to reduce costs, which may lead to a product being late getting to market. Are there any tradeoffs between continuing to reduce target costs and being late to market? Why or Why not? What can an organization do?

Answer 1

• It is the common business practice for some organusation to treat the cost as the basis for determining the product's price. The Primarily focused area is to provide product on time-to-market.
• However, this approach is not successful in competitive environmebt and the demand of your product will be affected by new participants in the market.
• On the other hand, few organisation are focusing on cost reduction with better quality, but this emphasis is not possible until ptoduct is being late in development cycle. Project cost are based on manufacturing estimates and if cost is too high in comparison to competitive market product then changes are made to reduce cost This will lead towards extention of development cycle.
• Therefore, development is needed for an organisation to survive in competitive market. And supply of product in market as per requirement is also needed to run an organisation.
• Every customer is now buying latest product with all new technologies, features and performances and to fulfill their needs, organisations must have direct contact with customers to understand their true needs and knowledge of competitor's product pricing in the market.