Academic journal article Journal of Management Research

Extent of the Target Cost Application in Commercial Banks in Aqaba Special Economic Zone

Academic journal article Journal of Management Research

Extent of the Target Cost Application in Commercial Banks in Aqaba Special Economic Zone

Article excerpt

Abstract

This study investigates the method of target cost and the difficulties that commercial banks face in Aqaba Special Economic Zone. The study depends on a questionnaire to collect the primary data and analyze them statistically to come out with the results. The results show that banks in ASEZ do analyze the customers' needs and market with some concentration on service design but the banks lack to the strategy of team work. The sub-constituents were compatible with the dimensions that they are related to with some exceptions in which services price is not determined by the customers' capability. In addition, there are no continuous studies which identify competitors' new services. Furthermore, the number of employees involved in determining the appropriate form of service is not sufficient. The study revealed that there are no obstacles which hinder application of this approach except the internal organizational clash of departments target and the management doesn't take into consideration the employees' suggestions in the following modern ways in cost management.

The study recommended that banks in ASEZ should consider the customers' abilities in determining services price and conduct continuous studies to identify competitor's new services. In addition, the banks should embrace enough number of employees to determine the appropriate form of service to act in the spirit of teamwork. The management should make use of employees' opinions and experiences and aware the employees of their important role in taking decisions in cost reduction. The management should also lessen the internal organizational conflicts resulting from department objectives clashes through cooperation in tasks execution. The management should consider the employees' suggestion in pursuing and applying modern approaches which help in cost management.

Keywords: Target cost, Banks, Aqaba, Jordan

1. Introduction

The interest of the establishment in the past regarding costs was focused on calculating objective cost of different costs, to use in some administrative decisions relating some matters such as pricing, performance assessment, supervision and planning, the used methods and techniques in the costing process lacked precision, and did not find adequate attention from management for several reasons, the most important reason was the unwillingness of the administration. But the role of cost calculating has recent developed due to the increased need for some accurate information, both in its financial and non-financial sides and for the various activities and operations of the business, for several reasons, the most important ones are developments and increased competition.

The continued increase in the intensity of competition, led to the search for effective and sophisticated methods to manage and reduce costs without affecting the quality of the product, or the wishes of the customers. Information technology helped this development. This has led to the emergence of so-called target cost method. It requires several components and principles, to apply this method accurately, this method integrates with many things that belong to management costs.

Targeted cost method is Associated form the beginning with the industrial sector, but it has been used in all sectors, such as the service sector and the banking sector which is facing severe competition in terms of quality, price and time, so it resort to the application of this method so that it can face the competition and earn satisfied customers.

2. The problem of the study

The study problem revolves around the banking sector and ways to improve the observed cost, because of the need of advanced methods and costs systems for emerging challenges,, i.e., that the problem of the study is that the used costs methods in Aqaba banks are not clear, especially regarding target cost method, is this method is being applied and to any extent, and if the ingredients to apply this method is available, and what difficulties face the banks in the application of this method. …

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