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Learning Project: Contemporary Management Techniques Research Paper
Liberty University
BUSI601-B04
Hannah Maritz
June 29th, 2021
Author Note
Hannah Maritz
I have no known conflict of interest to disclose.
Correspondence concerning this article should be addressed to Hannah Maritz
Email: hmaritz@liberty.edu
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Learning Project: Contemporary Management Techniques Research Paper
Introduction
In the previous learning assignment, the organization of Apple Inc. was discussed. A large
part of the project was devoted to studying the many aspects of the organization, including
strengths, weaknesses, opportunities, and dangers, in connection with the essential factors of
success. A more detailed examination of the balanced scorecard, Financial and Non-financial, is
provided together with the SWOT analysis. Success measures have also been implemented.
Initially, the Apple PC was only available as a desktop. While there have been a few
bumps in the way, Steve Jobs has never seen his vision come to fruition. A few years later, Steve
invented the Apple laptop computer in the United States. However, most consumers could not
afford the cost of the laptop, and the company began operations only with the debut of the iPod
in 2001 (Apple's Branding Strategy, n.d.). The iPod accelerated the company's growth, and Apple
changed its name. The product was established in order to supply a huge majority of
technological products to the United States and other countries.
The brand image of Apple is extremely respectable and displays the client base of one of
the numerous gadgets and/or products released by Apple Inc. Apple's brand and consumer
acceptability have influenced Apple purchases all around the world (Raj & Roy, 2015). As a
result, competition from other suppliers is unavoidable, and it is critical to determine the target
costing to guarantee Apple’s products and services are priced competitively.
Contemporary Management Technique
Samsung is Apple's biggest competition. Many of the goods Apple. created, albeit at
considerable prices, were provided by the business to customers. These two big businesses
provide many of the same clients worldwide with cell phones. Therefore, Apple also must
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maintain similar prices for its goods in order not just to promote its product and give the services
that people want.
Little firms typically employ traditional pricing calculations since calculations are
straightforward and cost-effective. Although traditional costs rapidly establish the costs, Hicks
(2010) explained that improved advantages and information may be acquired using cost
approaches such as goal costing and business-based costing. Objective costs are a fundamentally
distinct and unique method of seeing the price-cost connection. A costing target is a costing
approach that establishes the cost at which a product must be produced to provide the necessary
return rate. Blocher, Stout, Juras, and Cokins (2021) say that target costing is an economic tool
that decreases the total cost for a product by satisfying consumer requirements and needs and
fulfilling corporate profit objectives successfully.
The target costing providing numerous benefits, according to Tepes-Bobescu and Rakos
(2015), for firms who decide to use it, such as cost optimization, systemization, and profitability.
Target costing systems allow businesses to manufacture or buy items at the lowest possible cost,
providing cost optimization. The approach of target costing is formal and methodical, allowing
for finely tailored and comprehensive findings. In addition, target costing eventually provides
firms with increased profitability, considering both production costs and client prices.
Target costs are the approach chosen for Apple. The target cost that Henry Ford best
described in his 1920's view of selling automobiles was initially reduced, so the price is never set
enough to make the sale and yet earn a profit. He concluded that the cost is just a perspective
because one can never specify what the cost of a vehicle is. In addition, the target costing for the
product or service is regarded as the permissible target cost of a firm while delivering a
competitive market pricing, to benefit the company. Samsung aims to compare the design,
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Learning Project: Contemporary Management Techniques Research Paper
service, quality, customer service, and pricing with the iPhone, for instance, on Apple's iPhones.
Although Apple has a renowned reputation, like Ford years before, the competition is always
there for either cost and services to take the place or strategically position themselves.
The target costs are set mostly by the economy. One might claim that there are numerous
elements to be recognized, but not simply the competition when utilizing the target costing
approach. The cost of production and the financial realities of the organization are decided in
subsequent debates. In the final analysis, it is the economy that imposes the selling price
regardless of the expenses of production and manufacture. Due to the economic crisis, target
costing was significantly improved. Many companies and organizations, along with reductions in
expenses and improved productivity, had to rethink the pricing methods.
Ebuk & Balcioglu (2011) states “target costing enables product-development teams to
determine the right cost for achieving the required profit from a product” (Ebuk & Balcioglu,
2011, p. 303). Increasing the business of the supply chain while maximizing efficiency at the
minimum financial cost, also generating items that consumers are prepared to pay for.
In the case of Apple and the small modifications which might improve the company's
profit while assuring new consumers. To do so, you may apply the goal costs to the new product,
by subtracting the undesirable programs by preserving the iPhone's external look. Apple may
thus use two equations to achieve competitiveness and financial benefits. Firstly, the sales price –
profit target = cost target (Ebuk & Balcioglu, 2011). This strategy is driven by the price of
ensuring that the market is competitive. The second equation is the target cost = price of the
market – the profit margin necessary. It enables the sector to give precisely what the consumer
wants and can afford by emphasizing and paying for it. Another word is not just the consumer
pricing, but also the functionality that would be offered. Fewer characteristics are equal to less
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Learning Project: Contemporary Management Techniques Research Paper
production time and cheaper production costs. While providing clients what they could afford to
effectively meet their requirements.
Implementation Process
Management and design teams must begin the process to adopt target costs. As said
before, the notion of matching the customers' requirements and price of the product, equivalent
to their competition, is one approach for Cannon to succeed and remain an industry leader in
photographing equipment. With its consumers, Apple may very well provide such a product and
pricing the telephone as such. Every year Apple creates a new iPhone regularly on a the verge.
The price of these telephones is, however, so high astronomically that several mobile operators
provide customer payments plans. The iPhone price plan is crucial if you want to remain
competitive (Abdelhadi, 2012).
The Other Organization's Application
As Ford said earlier in the 1920s, while the target cost approach never was used by a
particular brand as a real financial benefit and was competitively aligned with its technology.
Their low pricing boosts foot traffic in their lots and showroom floors to see the extent to which
the consumer's cash can go, what they have to offer, and what type of customer care they can
buy. The following shows how Japan its their costs low compared to the USA.
United States
•
Market research
•
Engineering
•
Product strategy
•
Product features
•
Sourcing costs
Japan
•
Return to the design stage if
costs are too high.
•
Manufacturing
•
Periodic cost reduction
•
Market research
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Learning Project: Contemporary Management Techniques Research Paper
•
Product strategy
•
Target costs
•
Target costs compel vendors,
designers, and engineers to
fight and bargain
•
Manufacturing
•
Constant cost savings
(Fortune, August 12, 1991)
Japanese automakers are also proposing to utilize target costs in a differently. The
Japanese carmaker utilizes identical tactics at first, as can be observed. At first. However, before
the actual construction, design and supply, price, and profit are taken into account, whereas the
US designs, engineers, and sources cost before determining the cost of the car. The US assesses
at that time if the costs are too high and return to the design stage. Needless to add, even though
anyone uses target costs in their cars, Japanese carmakers tend to think about the full cost of the
product before it is produced. They also use cost reductions constantly, while the United States
only uses this technology regularly. That is why Toyota car manufacturer sells and lends its cars
over and above Ford. Henry Ford recognized the target costing approach but did not officially
identify it as such, and so did competitors as the car business advanced. Toyota then identified
what Ford said and the notion of target costing was pioneered in the 1960s. You might
accomplish so by delivering high-quality, reliable automobiles with many distinct features at
affordable and competitive prices to customers. Although Toyota has had several setbacks with
the numerous Prius recalls, it was able to weather this remembrance nonetheless by giving
complete roadside support to consumers. They also provided considerable cash compensation for
the damages sustained by their customers (Ingram, & Viswanatha, 2014).
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Canon is another important industry thar employs the target costing method. They
measure the cost of their items by the many functions each has, so that the consumer may
estimate how much it would receive at its expense. In a further phrase, the consumer may not
want to expand their lens or exactly the opposite way, so that they are able to add other lenses
and Canon has paid a different price for these two cameras to ensure that they are a competitive
advantage. The warranties are another essential aspect of Canon. Many people may read reviews
and know that Canon gives excellent guarantees and services, like the Apple iPhone when they
buy good-quality items. Dell is another firm using this kind of strategy. Dell’s clients order the
item, be it size, form, color, memory, and storage quantity as well as manufacturing costs for
each feature, as well as production and delivery, as the customer wishes. All the items and
services Ford, Canon, and Dell provide consumers the newest and the exact customer they want.
Applicability to the Organization/Segment
Target costing for iPhones and perhaps PCs applies with Apple. The alterations that may
take place with iPhone production are the first stage, especially if older crowds are appeased and
the earnings are increased while the client population is increased as well. If the iPhone
maintains its exterior shell and the apps in the device decrease, the price point may also be
decreased. Apple might, for example, limit the memory and gigabytes that are not needed by
many elderly users. In addition to other symbols that impose a lot of information, which many
people do not need.
For the success of any business or company, customers are important. Apple is renowned
for marketing wealthy individuals (Edwards, 2014). There are also several mobile phones with
many of the same features and benefits, but at a significantly cheaper cost. Apple may therefore
boost earnings by restricting the number of applications while keeping a competitive edge above
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other competitor. The proportion of clients decrease by 50% between 50 and 64 years of age, and
then increases ownership percentages beyond 65 years of age to 26%, according to Gralnick
(2012). Apple may cut the quantity of supplementary information and decrease the price and
expand its client base.
Plan for Implementation
Apple has a leading position in technology services and products and has joined up with
leading companies like IBM to provide businesses and organizations with extra services.
However, the strategy is especially applicable for cellular devices like the iPhone for this project.
The target demographic of the rich was initially launched with the iPhone; thus, it was expensive
for consumers. Kharpal says (2015) that telephones from one to the next series only have a
minimal production cost change, however, the consumers spend hundreds more than the true cost
of manufacture. As indicated above, mobile firms have made an arrangement to make telephones
cheaper for the common person. Therefore, Apple Inc. would profit by identifying the target cost
at the start of manufacture of the next iPhone.
Target costs are the first of four ways of costing best defined as "the early part of the
product life cycle to assist build a product intended for a targeted benefit." By redesigned the
front end of the car and make the car safer if involved in a front-end collision that the customer
wants, Toyota was able to take advantage of redesigning the Toyota Camry. By expanding the
design of the iPhone, Apple may use a comparable design while providing customers with a
choice of the functionality they require. Creating a product that can be used by all consumers and
not be overpowered by the numerous undesirable features without which certain adults select.
This would allow Apple to include more customers, notably elderly people who do not eagerly
buy the latest and biggest iPhone since various icons/functionalities on the phone frighten them.
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Learning Project: Contemporary Management Techniques Research Paper
The objective of target costing is equal to competitive pricing but always achieves a
targeted profit. The target costing can take up two options for achieving the goal cost according
to Blocher, et al., 2021. The first is to re-examine new production technologies, starting with
activity-based costing, to modify production. Secondly, the product or service itself was
redesigned. The business therefore may recognize and modify the cost amount throughout the
production process, similar products and services that are supplied. An option can be utilized
alone or in combination, depending on Apple's needs.
In the beginning, Apple can provide an iPhone that benefits the many unfamiliar masses,
while providing them the convenience of owning an iPhone. By this approach, they can always
build an iPhone, but they can make more money instead, as more customers especially older
consumers would be encouraged to buy a telephone. This is the way many people don't want or
need it. Second, retaining the same iPhone design may potentially make the phone more
inexpensive by removing some of the numerous functions. At the discretion of the consumer,
Apple would then be allowed to leave alternatives for more apps or services vs an overwhelming
number of applications when purchased. There are several places where it is necessary to assure
outstanding achievement of the target costing approach. Apple spends a lot of money and does
not use as much as its rivals in the field. The process begins with research and development. The
second phase comprises the design process involving the pricing of the target. While not
expressly specified in the cost objective, the other three approaches have a significant effect on
costs. To minimize costs, for example, production (the third step) is crucial. Apple is well
established for the fourth phase of marketing and distribution Bill Gates used to charter specific
plane and watercraft fleets to ensure that its items were delivered in time before important
vacations. To ensure client loyalty, the last step of customer care is crucial. Companies that cater
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for outstanding customer service are more likely to repeat consumers and urge others to buy their
products, for example, their families and friends.
Apple would benefit in two ways, expand the population of its consumers and boost
profit since it would provide the same phone without the various telephone applications. This is a
step-by-step representation of the Apple process which may be used for the target costing.
The first phase is like that of any major enterprise with a growing level of competition.
Determine for the target audience, the proposed market price of the product (Blocher, et.al.,
2021). Once a competitive market price has been established, the following step may be selected.
In the second stage, the targeted profit would be determined by Apple. This may be proved in
several ways according to Ebuk & Balcioglu (2011). The economy nevertheless has an important
impact on the purchasing capacity, and if the old one is operating properly, many customers will
choose for a new phone or goods. The firm must thus guarantee that they provide at the correct
price what the client requires and yet make a profit. The calculation of the goal cost is dictated
less by the market price than the intended profit, as previously indicated. This includes
production expenses, production services to assure the area of profit attained. The intended
pricing for the next iPhone, which will be competitive in the market to make a profit, is one
method Apple may decrease the expenses of manufacture. Fourthly, the engineering phase
includes reducing production costs. Once management has found means of improving
manufacturing efficiency, cost reduction is inevitable, and profit increases. Finally, there is a
constant improvement in target costing also known as kaizen. This is an asset which, with its
Just-in-time productivity, the Toyota firm is doing well. Unlike many US firms, Toyota
continually redesigns and improves manufacturing, with the aim of eliminating waste and
reducing costs of productivity (Blocher, et.al., 2021). This is readily used by Apple to increase its
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customer happiness and to reduce production costs. It is also important that, while maintaining
effective productivity, Apple not only identifies consumers that may enhance their profitability.
Conclusion
Apple is a renowned corporation that provides different technical equipment. But only
particular demographics are not marketable to the masses. The marketing and target costing
technology might offer up a new consumer route for improving revenues and earnings. It is
extremely improbable that those over 50, like the younger generation, will want a high-tech
telephone, but if the possibility was offered by satisfying their requirements, then it could only
be. Once this new concept has been opened, the objective costs of profits will become
unavoidable and perhaps exorbitant while retaining a competitive edge. When every generation
becomes older, it becomes more intelligent, and ultimately the knowledge of younger
generations increases. Although currently, the elder age is less adept in technology and Apple
seldom meets its demands. Psalms 71:9 “Cast me not off in the time of old age; forsake me not
when my strength failed”. It is, therefore, a blessing that the elderly, like young people, are
looked after.
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