MIT Sloan Management Review

 

About the Research

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.