Abstract

This research explored the role of strategic management accounting in target costing (TC) in real-estate investment industry. In contrast to the traditional target costing /strategic management accounting (SMA) in literatures that mainly view it as a system of cost management and profit planning, target costing in this research is seen beyond that. It is seen as the broad strategic management practices and involves more of a focus on market orientation/price dynamics in the real-estate investment industry. With the interview-based evidences on the target-costing-adopted real-estate investment firms, this research revealed that creating added value to increase prices was combined together with cost management in order to achieve expected profit margins. The findings also presented that the strategy of product price increase in this industry was not only at the level of a whole of construction batch, but also at heterogeneous products caused by the attributes of products within a batch. Finally, the research focused on the evaluations of target costing in accordance with differentiator and confrontational strategies in monopoly competition market, and then justified that target costing with more market orientation/price dynamics could support the strategies adopted by the companies under the circumstances and reached their goals.

Key words: Target costing, strategic management accounting, real-estate investment industry, product price increase.