Balancing Significant Cost Cutting And Maintaining Profitable Operations In A Cost Reduction Exercise. A Case Of Mega Pak (Pvt) Ltd

ABSTRACT

The study was carried out to find ways to balance significant cost cutting while maintaining

profits in a cost reduction exercise of Mega Pak (Pvt) Ltd. The need for the research emanated

from the company’s total costs that were rapidly increasing as well as the projected decline in

profits and increase in costs as a result of price controls that were instituted by Delta, the

company’s major shareholder and customer which contributed 55% of the company’s revenue.

The research method used was a case study and questionnaires and interviews were used as

primary data gathering instruments and financial statements were used as secondary data. The

sample size used consisted of 33 respondents of which 26 responded to questionnaires and

7responded to interviews. Tables were used to present data gathered and graphs, pie charts and

bar charts were used to analyse data and interviews were summarised. The major findings of the

study showed thatthe company was not utilizing all the cost reduction strategies that were

reviewed by other authors, scholars and journals.Theoretical views were used alongside findings

to provide recommendations to Mega Pak (Pvt) Ltd. The research recommended the adoption of

the ABC costing and lean production, continuation of energy saving through use of filters,

replacement of wooden pallets with plastic pallets and collection of used plastic bottles for use in

recycling as it will significantly cut costs. The research further recommended introduction of

new products from the recycled material as a way of increasing revenue, hence increasing

revenue base of third party customers and profits.