Effect of Cost Control Techniques on the Survival of Manufacturing Companies in Nigeria

Abstract:

The study evaluates the effects of cost control on the survival of the manufacturing companies in Nigeria. The study adopted finance cost, salaries and wages and cost of goods sold to determine the extent to which the various techniques of reducing cost have manifested in the industry. The study reviewed relevant theories such as “growth rate fitter theory”. Data on salaries and wages, finance cost and cost of goods sold were collected from the five selected manufacturing companies, and the data were analyzed using fixed effects model in panel regression to examine the influence of these costs on the growth or survival of the companies. Following the results of the analysis, findings revealed that the manufacturing companies have been able to control the cost incurred on salaries and wages and cost of borrowing known as finance cost or interest on loan. The cost of sales has been difficult to control. The study concludes that finance cost, salaries and wages cost and cost of sales have significant impact on the profitability of manufacturing companies in Nigeria. The study recommends that adequate management and alternative sourcing of raw materials should be pursued by manufacturing firms in Nigeria. This alternative can be achieved by encouraging large scale mechanized production of the primary raw materials and create a source of supply for foreign raw materials.