EFFECTS OF COST REDUCTION AND PRICE DETERMINATION (CASE STUDY OF DANGOTE CEMENT FACTORY OBAJANA)

CHAPTER ONE

INTRODUCTION

1. Background to the Study

The changing nature of present times has placed much emphasis on business that their sustainability must be sought for and ensured. That business strength progressed or outpaced its competitors depends largely on the quality and strength of its management. People always make enquires pertaining to the issues that arouse their interests-How, where, when, how and what it will cost to get the necessary information, that will aid the attainment of the organizational goals.

Cost is hardly evasive in present day business transactions from day to day. Daily expenses are resolved in terms of cost-what cost, how cheap, how costly. In offices cost savings, cost of materials, overhead service cost, labor cost and many others are passively considered. In an economist’s point of view, the same dictions-marginal cost, opportunity cost, cost curve, total cost among others.

The above submissions attempt to suggest that cost perhaps is a most important concept in our everyday lives and most diversely conceived. Hence, the objective of every business organization is charged with both financial and non-financial objectives, which drive them towards the actualization of their set organizational goals

According to Pandy, the financial motives of an organization comprises of:

•        Maximization of shareholders wealth

•        Profit maximization and

•        Service to customers.

Above all, profit maximization ranks the most prominent of the reason of going into business organization. For business to attain its aim, it tends to cut across cost reduction, thereby meeting its minimal cost budgets-profit.

However, Okafor (1983:142) opines that profit is the ultimate measure of overall performance. When management has planned, organized and controlled its human and material resources properly, corporate activities attain a level of effectiveness, which shows up in profit. Probably, profits are acid test of the individual firm’s performance.

EFFECTS OF COST REDUCTION AND PRICE DETERMINATION (CASE STUDY OF DANGOTE CEMENT FACTORY OBAJANA)’