Analysis Of The Effects Of Cost Cutting Measures On Financial Performance: A Case Of Zetdc

ABSTRACT

The purpose of this research was to investigate the effects of cost cutting measure on

financial performance using ZETDC as a case. The research objectives outlined the nature of

cost cutting techniques, how cost cutting affect financial performance and challenges faced in

the implementation of cost cutting. The descriptive survey research design was used and data

was gathered through the use of structured questionnaires and interviews and a total

population of 41 employees which included the top management, Accountants, HR and

internal auditors was sampled using convenience and purposive sampling. A case study

approach was undertaken using both qualitative and quantitative data hence the study is

therefore a mixed design approach. The research was designed in a way that allows both field

research and secondary sources to be used. Research instruments considered for the purposes

of this research are questionnaires which had 88% response rate and interviews which yielded

100% response rate. The data gathered was presented through histograms, bar graphs, pie

charts and tables. The data accumulated was analysed using descriptive statistics specifically

percentages and mode and rational conclusions were drawn from this. Upon data analysis, it

was revealed that ZETDC cost cutting measures positively affects the financial performance

in the long run but in the short run the financial woes will worsen before they improve. The

recommendations passed by the researcher included the improvement of current cost cutting

measures and continuation with the application of the cost cutting measures. The researcher

also recommended ZETDC to implement controls so as to make sure that all current cost

control procedures and policies are adhered to, budget formulation and introduction of

incentives and bonuses for meeting budgets and lastly renegotiating existing transfer prices in

contracts agreed with other subsidiaries of ZESA.