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An Assessment Of The Effect Of The Cost Control And Cost Reduction On The Performance Of A Firm

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A business can be defined as the total of those activities that have their main purpose of creations, maintenance and extension of a concern, with continuing to exist because it earns a profit or then benefits.

Business is set up to achieve certain objectives, these objectives may range from a maximum of the organizer, wealth, rendering of certain essential service to the community, capturing of a larger share of the market for its product or services to maximization of profit or minimization of cost.

In achieving these goals, resources inform of human and material have to be employed these resources employed are measured in quantitative terms and then translate into what is known as cost.
A rational businessman has in his mind apart from another aim in his business undertaking, the maximization of profit and minimization of cost.

But the business operating environment is dynamic and complex.

Some factors, internal and external, may affect the cash flows position of the firm and posses a threat to the going concern intention of the organization of the business.

The major problem of this study is to find out the effect of cost and reduction of maximization of cost.

Undoubtedly, it will lead to a decline in operating profit or low return on invested capital and gradually culminate into cash flows or liquidity problems.
A continuous high operational cost with less revenue will harm the break-even position of an organization.

Because of the above, there will be a need to put in place effective operational and control strategies to overhaul and revamp the operational performance of the business to have a stable and stand financial stand.

Although strategies are never set where a business has no problem of any form, they may be set to improve the operational standard of a business enterprise.

Many strategies can be put in place to solve a business problem. Among the strategies for solving the business economic problem are cost control and cost reduction is used to achieve the corporate objectives.

More so, the cost control techniques have the broad objective of curtaining cost within a predetermined target but cost reduction is an active and dynamic concept that attempts to extract more from the factor of introduction without loss of effectiveness.

It also aims at reducing costs from accepted standards and at the same time maintaining the effectiveness of the product or services.

Strategies in a business organization.

Also, the problem of the cost reduction in the economy of Nigeria’s business organization and the effort made in solving the economic problem of the cost reduction in Nigeria’s business organization.

However, the fulfilment of this intention in totality is very subjective and unrealistic as a result of inevitable environmental factors which have a direct or direct impact on the business.

The environmental to have effects on the cost structure of the organization, they are determinant of the operational cost of activities or services being carried out by a business enterprise as they influence more or most significantly the management policies.

For example, taxation, which is one of the government fiscal policies in the annual budget, will in no doubt, affect the operational cost of a company.

This is one of the operating environment factors and it is uncontrollable by the management of a business.

More so, the organization and operational policies of a company will have a favourable or adverse effect on the cost structure of such an organization.

Therefore, an incessant increase in the operational cost will negate the aim However, the success of this strategy will depend on the style of planning the business uses.

The inability of a company to encourage “GOAL CONGRUENCE” is one of the associative problems militating against the successful employment of these schemes.
In an attempt for an organization to achieve its goal for satisfaction of individuals in the firm must be created.

The achievement of goal congruence requires consideration by the firm, a broad range of human needs in addition to those that can be satisfied by economic rewards.

Where the above cannot be achieved, the effects of cost control and cost reduction scheme might not augur well for the business, therefore, cost control and reduction strategy must be meticulously used and implemented on achieving the desired objective of the schemes.

The techniques involved in the strategies shall be fully considered in the subsequent chapter.


The purpose of the research is to find out what are the effect of cost control and cost reduction strategies on the overall performance of a firm.

It will reveal the short-coming in these strategies for solving business economic problems.
The research will also attempt to define and explain the meaning of cost control and cost reductions, the technique involves as well as the differences in their applications.
However, the result of the research will serve as a single guide to policymakers in the business organization in taking decisions as regards this topic.


Cost control and cost reduction strategies do not lead to the achievement of corporate objectives and cannot be used to solve business economic problems.
Hi: Cost control and reduction strategies can be used to achieve a corporate objective and also used to solve business economic problems.
Hi: Cannot be used.

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