Evaluating Impact of Kaizen Costing on UAE Manufacturing Performance

This thesis investigates the impact of Kaizen costing on company performance within the manufacturing industry, particularly focusing on firms in the UAE. It begins with an introduction to Kaizen costing and its role in cost reduction and continuous improvement, highlighting its integration with value engineering. The research aims to analyze and evaluate the impact of Kaizen costing on successful leverage, assessing its effect on UAE manufacturing firms. The study employs a quantitative research approach, utilizing a positivistic philosophy to collect and analyze data, examining the relationship between Kaizen costing adoption and firm performance. The literature review explores the benefits of Kaizen costing in competitive markets, emphasizing its focus on quality, customer value, and cost reduction. Ultimately, the research seeks to determine whether the integration of Kaizen costing positively affects the performance of manufacturing firms in the UAE, contributing to a better understanding of cost management strategies in a globalized environment. Desklib provides access to this thesis and other resources for students.

IMPACT OF KAIZEN COSTING IN COMPANY’S PERFORMANCE
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Table of Contents
1.1 Introduction..............................................................................................................3
1.1.1 Purpose statement..............................................................................................3
1.1.2 Aim of this research..........................................................................................4
1.1.3 Research objective............................................................................................4
1.1.4 Research question..............................................................................................4
1.1.5 Research hypothesis..........................................................................................4
1.2 Literature Review.....................................................................................................5
1.3 Procedures and methodology...................................................................................7
1.3.1 Research philosophy.........................................................................................7
1.3.2 Research approach............................................................................................7
1.3.3 Research type....................................................................................................8
1.3.4 Data collection methods....................................................................................9
1.3.5 Research population and sample.......................................................................9
1.3.6 Questionnaire deign........................................................................................10
1.3.7 The credibility of the research.........................................................................10
1.4 Research findings and discussion...........................................................................11
1.5 Case study and implications...................................................................................11
1.6 Summary and implications and recommendations for further research.................12

1.1 Introduction
In Japanese the word Kaizen means continuous improvement which results in cost
reduction. This helps to maintain the current cost level of the products which are in
manufacturing process at present with the help of systematic efforts to attain desired cost
level. Cost management tools are known as business models which helps in reducing costs.
Cost maintenance, cost improvement and cost planning are the three types of processes which
is known as integrated Kaizen costing ad the value engineering.
Globalization comes with global transformation of the manufacturing firms in
different countries. Global transformation is happening in a daily life and very sector
regardless of their economic, political and social approach for transformation. Globalization
comes along with a lot of competitiveness. These changes includes the changes in the
paradigms as how the specific organization must run. At the end of adoption of those
adjustments, it seen that they have me their expectations. Many organizations have planned
different types of business plans which will keep the updated with the organizational goals.
Kaizen costing have been proved to be such a business model which would help
organizations to realize their competitive strategies and position (Kale, Raut & Talmale,
2015).
1.1.1 Purpose statement
The purpose of every organization’s managerial techniques have always been to raise
their performance and run the operations smoothly. A lot of modern strategies have been
developed for the cost management purpose. The most critical factor for the company success
has been the imperativeness of the cost management system. Few Japanese manufacturers
have introduced Kaizen costing into the system after World War II. However, UAE
manufacturers could not adopt it initially.

1.1.2 Aim of this research
The main aim of this research paper is to analyze and evaluate the impact of value of
engineering and Kaizen costing on a successful leverage.
1.1.3 Research objective
The research objective of this research paper is to evaluate the effect on UAE’s
manufacturing firm’s performance over the integration of Kaizen costing and value of
engineering by the firm.
1.1.4 Research question
Does the UAE’s manufacturing firm’s performance gets effected form the integration
of Kaizen Costing and value of engineering by the firm?
1.1.5 Research hypothesis
It has been noted that those manufacturing firm’s which uses the Kaizen costing have
a huge difference in their performance in comparison to those who have not adopted this
concept into their system (Hashim et al., 2013). The changes can be measured with the help
of different aspects. Adoption of Kaizen costing and the value of engineering of the costing
techniques form different manufacturing firms have shown many noticeable difference
according to Ugo and Carols (2006). Among this concept, one help those firms to identify
where cost reduction can be achieved by the firm and another helps to identify specific target
for the firm which would help them to get long-term profit. Therefore the considered
hypothesis are following:
H1: positive and significant effect on UAE’s manufacturing firm’s performance by
integration of Kaizen costing.
H0: no positive and significant effect on UAE’s manufacturing firm’s performance by
integration of Kaizen costing.

1.2 Literature Review
This section of research paper helps the researchers to get an overview of some
theoretical literature related to the kaizen costing and the company’s performance and their
relation with each other.
The traditional cost based pricing method was used by the manufacturing firms which
did not identify the cost management strengths. However, Kaizen costing method opens up
opportunities for the firms to look into their competitors and the strategically manage
their cost. This also helps to find out the relation between the price and cost. This concept is
very beneficial for the manufacturers to offer their product to the customers in a lower price
and still make profit from the cost. This method is very powerful in the current competitive
market. Kaizen costing method gives priority to the quality, customer value added and the
cost of the product as the powerful factor. It is believed by the researchers that manufacturing
firms who have adopted the Kaizen approach have realized that this concept offers much
better service at a lower market price which helps the firms to get popular in their home
market as well as in the worldwide market. This concept will change the mindset of the
manufacturers and differentiate themselves with others based upon the cost and quality and
reflects the long term success and their profit.
As per Okoye et al (2013), paper Osisioma (2010), the financial system of many
economies at least have experienced the downtown which happened in during the global
financial crisis in 2008 and all other events followed by it. Many of the economies are still
struggling to make some adjustments to get terms with effects of those crisis. Those firms
which are operating these economies have to plan their operations strategically so that they
get access to the finances which are triggered by the volatility of capital markets. Osisioma

(2010) have stated that many constructive and manufacturing firms have faced challenges
during this period like accumulation of unsold services and stock along with low demand and
low profits. At this stage cost management become one of the important subject for the
managers to consider. This concept was more supported with the situation when the existing
firms started to get threats from the substitute firms because there was easy entry and exit
option for every firm and customers had many options available for them in the market to
choose from with less substitution cost.
According to Sani and Allahverdizadeh (2012), this trend have observed one fact and
that is the customers are more attracted to the high quality products at a lower price.
Companies of that area have been forced to design and plan their operation and production in
such a way that the production cost decreases which would decrease the cost of the product.
It was noted this is only possible when the approach is redesigned. Mishra and Gupta (2010)
have changed their factors which would induce the uniqueness and the competitiveness of the
firm’s qualities and their delivery of the products to customers. Managers of those firms faces
two tasks that is they must ensure the continuity of the high quality of the product and they
should manage to lower the cost of production. According to them this concept is originated
from two words “kai” and “zen” which simply means change for better. Kaizen costing is
referred to one of the useful system which is applied for the manufacturing of any existing
product so that the production cost is at minimal. The designing and development of new
strategies will be done to make new product.
According to Rof (2012) this concept of Kaizen costing is becoming very famous
now-a-days and it is continuously in the improvement stage. The main aim of this concept is
to minimize the cost of the product while improving the quality of it. The product must meet
the expectation of the customers like the price and quality, original functionality of the
product and to sustain the competitive market. The designing of the production process can

be done strategically by eliminating those useless process which are ultimately increasing the
cost of the product rather than just contributing any value in the product. These small steps
contributes in maintaining the high quality of the product and also improve the value of it in
the competitive market.
According to Budugan and Georgescu (2009), they have suggested that this costing
technique helps the firms to focus into their operational process by hiring professional
planning team who would plan strategic operational steps and the organization would follow
them to achieve the customers’ expectations. Kaizen costing technique basically takes place
during firm’s manufacturing process. The main principle of this concept is to realize the
overall cost acquired during the process of manufacturing. This step also involves different
departments and people who are responsible for the contribution of cost of production.
1.3 Procedures and methodology
1.3.1 Research philosophy
Research philosophy is considered as a system which should be followed to collect
relevant data and information regarding any situation to analyze. Epistemology must
encompass the doxology which would justify various types of research approaches.
According to Galliers in 1991 there were two types of research philosophies which was
popular in the Western tradition of science known as positivist and interpretivist. Positivists
of the research philosophies used to believe that there is some kind of stability which can be
visible from the objective viewpoint and it can be studied without any interference. For the
purpose of this research paper, positivistic philosophy will be used study further details.
1.3.2 Research approach
Collecting quantifiable information and data with the help of some mathematical,
statistical tools and computational techniques to use the for the purpose of research study is

considered as the quantitative research. However, collecting information from some potential
and existing customers which can ultimately be used as the sampling with the help of online
surveys, questionnaires and etc. to get result in a numerical format can be known as
qualitative research. One of the important work during research approach is to carefully
understand the collected information and analyze them.
For the purpose of this research paper, Quantitative approach is used because it would
be more helpful for the researchers to evaluate the result. Deductive approach is more
concerned for developing a hypothesis which will be based upon the existing theory and then
designing a proper research strategy for the purpose of testing the hypothesis. For the purpose
of this research study, quantitative approach is adopted because it is more relatable here.
1.3.3 Research type
The main aim of any research paper is to find out the relationship and analyze the
effect of independent variable over the dependent variable. Researchers uses the three types
of criteria which helps to find out the causes and effects like the non-spuriousness,
associations and the time ordering in the research methods and statistics. Some classical
examples were used to define that these kind of criteria will be applicable to get the causes
and effect relationship straight forward. This could be identified as one of the challenging
aspect which would help in drawing the research study form the real world conditions.
Sekaran and Bougie (2010) have found out after investigation that research studies
can be divided into two categories namely correlational or causal studies. Correlational study
is the study of some important variables which are associated with the related problem.
However, the causal study can be used when there will be more than one variable which
causes problem like the cause and effect relationships. For the purpose of this research paper,
causal and correlational investigation would be conducted for the classification purpose.

1.3.4 Data collection methods
There are two types of well-known sources for collecting data for the purpose of study
and they are primary source and secondary source. Primary data is basically collected from
the questionnaire surveys, experiments, focus groups and interviews and the secondary data
can be collected from the internal records of the sources, their publications and from
database. Different types of methods can be used to conduct the positivistic research which
would involve some interviews and questionnaires.
For the purpose of this research paper, primary research can be used to gather
information like the workflow process of the firm, their costing methods, and their
performance along with the challenges they are facing. Concepts can be developed using the
data collected form the questionnaire surveys. This survey will help the researchers to get an
idea about the company’s costing, their workflow, and their operational strategies and suggest
some improvement for their activities and value engineering (Pešić-Tomić & Andrijašević,
2014).
Secondary research would be used to evaluate and for getting the knowledge
regarding the existing theories and their impact over the organizational structure. In this paper
the researchers would access the management reports of the firms like their annual reports
and their safety & quality reports. Here both the sources would be used to evaluate the result
and find out the quantitative strategies of the manufacturing firms.
1.3.5 Research population and sample
The manufacturing firms in UAE are the main populations which is needed to be
considered. The selection of this population would depend upon those manufacturing firms
whose management accounting system are different form the other operating service sectors
(Janeš & Faganel, 2013). This makes it easier for the researchers to draw only one

questionnaire for the selected manufacturing firms and not for both manufacturing and non-
manufacturing firms separately and get confused. The selected firms would be listed in the
sampling frame by the researchers for the purpose of drawing relevant samples.
For the purpose of the research, the researchers have visited the industrial register
office where they have listed almost 200 manufacturing firms under UAE. The sampling
frame would consist of 200 manufacturing firms (KAUR & KAUR, 2013).
1.3.6 Questionnaire deign
The questionnaire prepared by the researchers must be designed in a specific way
which would include the techniques of Kaizen costing and Value engineering and the firm’s
performance of those manufacturing firms in UAE. The questionnaire must contain five
sections. General information of the participating people and their general characteristics are
involved in the first section. The second section would involve the concerned Kaizen costing
techniques and their benefits (Okoye, Egbunike & Meduoye, 2013). Third section would
involve value engineering techniques and their benefits. Fourth section will be related to the
competitive strategy and the last section would be related to firm’s performance and that
would involve two kinds of questions for constructing the required questionnaire and those
are open-ended and the closed ended types.
1.3.7 The credibility of the research
Two major issues can be identified to reduce the risk of wrong answers which are
related to this research questions like the validity and the reliability.
Reliability is considered as one of the most primary concern regarding the research
findings and the stability of the measures. It is also regarded as one of the important aspect
for the positivistic study and the normal survey research would maintain the high reliability.
Whereas, validity is mainly concerned as the accuracy of research findings. It is found that

there are three kinds of validity which are used for the purpose of measuring the goodness
and they are criterion, constructing validity and the inclusion of the contents. Here is this
research study, content validity is mainly focused to achieve the evaluation and use it for the
purpose of suitable judgment which will be helpful for the purpose of assessing the standards
(Mariana & Elena-Simona, 2019).
1.4 Research findings and discussion
This section of the research paper has focused in testing out the hypothesis of the
study. Path analysis is used for the purpose of testing those hypotheses which will disclose
and evaluate the effects of the independent variable over the dependent variable (Erez, 2016).
The moderators’ effects in the relation between variables would be through the structural
equation modeling (SEM).
SEM is considered to be equal to multiple regression (Omotayo & Kulatunga, 2016).
However, it is more powerful because it takes into account those modeling of the interactions
between nonlinearities, variables, measurements errors, correlated independents, multiple
latent independents measured by the multiple indicators, correlated error terms and one or
more than one latent dependents along with multiple indicators (Omotayo & Kulatunga,
2015). SEM can also be used as one of the most powerful alternative for the factor analysis,
multiple regression, and path analysis, analysis of covariance and time series analysis. All
these procedures are known as special cases of SEM and this is why SEM is considered to be
one of the GLM (general linear model) and multiple regression is just a part of it
(Mohammed & Knapkova, 2016).
1.5 Case study and implications
This section of research paper discusses and concludes the major findings form this
study followed by some contributions and managerial implications. The implication of

Kaizen costing and the value of engineering adopted by the manufacturing firms have shown
that they have achieved positive effect over their firm’s performance (Garza-Reyes et al.,
2018). The Null hypothesis have been accepted and alternative hypothesis have been rejected
because there is a significant relation and effect of the Kaizen costing over the firm’s
performance. The implication of this technique was compared with those manufacturing
firms who have not adopted this technique and it was noted that those firms have not
benefitted much and achieved great operational performance. Hence, firms of UAE should
adopt this concept to get maximum benefit (AccountingTools., 2020).
1.6 Summary and implications and recommendations for further research
This is the final section of the research study and this states the research finding and
eh brief summary of the full research paper. After studying both the hypothesis and
evaluating the findings with the help of path analysis it was noted that the independent
variable have a positive and significant effect over the dependent variable and that shows a
positive relation between both of the variables. Structural equation modeling (SEM) using the
AMO structure have helped the researchers to ultimately conclude that Kaizen costing and
value of engineering would positively affect the performance of firm (Kaur, 2014).

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