To test the assumption that a large percentage of a product’s costs are locked in during the design stage, we conducted in-depth observations at the consumer-products division of Olympus Optical Co. Ltd. We chose that research site for four reasons. First, Olympus Optical was known to operate in a highly competitive market that demanded aggressive cost management. We chose such an environment to ensure that the cost-management systems documented were a critical aspect of company survival.i Second, Olympus Optical was reputed to have a mature and sophisticated cost-management program.ii Third, the consumer-products division was known to operate as a lean enterprise. The adoption of lean design principles increases the effectiveness of cost management during the product-development process, such as through the application of target costing.iii Finally, the Olympus Optical division produced high technology products with a short life cycle, which favors a high level of designed-in costs and implies that there are fewer opportunities for cost management during the manufacturing phase.
For our study, we selected a specific product: the new Stylus Zoom, a point-and-shoot compact camera containing components that are optical (the lenses), mechanical (the body and other discrete manufactured parts) and electronic (the circuit boards that control the shutter and other lens assembly functions). We chose Stylus Zoom based on two criteria: First, Olympus Optical management viewed... To read the complete article, login or sign-up using the form below.
Become a premium subscriber today to read this and all MIT Sloan Managmeent Review articles.
Buy this article. Purchase one or more copies of this article in PDF form.
Become a premium subscriber today to read this article and the entire archive of MIT SMR articles.
Upgrade your existing subscription to premium
Sign in if you are a premium subscriber.
Do you subscribe the MIT Sloan Management Review in print? Enter the email address and password you used when ordering. Don't remember? Lookup your subscription account information
- Register for free access to recent articles and the current issue of MIT Sloan Management Review.
- Subscribe and read articles from the past three years online.
- Premium subscription give you access to the entire archive of articles.
