Cost Management Practices and Profitability of Milling Companies Registered by Cereal Millers Association in Nairobi City County, Kenya
DOI:
https://doi.org/10.47604/ijfa.3263Keywords:
Cost Management Practices, Profitability, Milling Companies, Cereal Millers Association, Nairobi CountyAbstract
Purpose: The objective of the study was to examine relationship between cost management practices on the profitability of milling firms in Nairobi City County, Kenya.
Methodology: The study employed a descriptive research design. The target population entailed 15 milling companies in Nairobi City County, Kenya registered under the Cereals Millers Association (CMA). A census method was also utilized to select the senior, middle and junior level managers in the selected milling companies. This research utilized a structured questionnaire to gather data from targeted participants and the data collected was analyzed using SPSS statistical software which generated descriptive and inferential statistics.
Findings: The research results revealed that direct material, direct labour, factory overhead and administrative overhead cost management practices had a negative and significant relationship with profitability. Hence, the study concluded that cost management practices have a negative and significant impact on profitability of milling companies in Nairobi city county, Kenya.
Unique Contribution to Theory, Practice and Policy: The study was guided by the theories of Transaction Cost, Resource-Based View and Profit Maximization. This research recommended that management of milling companies should continuously develop strong relationships with suppliers to negotiate better prices and ensure consistent quality and supply of materials. This can help in stabilizing costs and avoiding unexpected expenses. To increase employees' effectiveness and productivity, they should also continuously offer training and development opportunities. Policymakers in the milling industry should also advocate for comprehensive cost management training programs in all milling companies so as to ensure that employees in all levels of management are equipped with knowledge and skills necessary to implement cost-saving measures effectively.
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