PROFIT MAXIMIZATION: A STRATEGIC TOOL FOR SURVIVAL OF BUSINESSES IN NIGERIA (A Case Study of Dangote Cement Industry)


PROFIT MAXIMIZATION: A STRATEGIC TOOL FOR SURVIVAL OF BUSINESSES IN NIGERIA (A Case Study of Dangote Cement Industry)

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PROFIT MAXIMIZATION: A STRATEGIC TOOL FOR SURVIVAL OF BUSINESSES IN NIGERIA (A Case Study of Dangote Cement Industry)

ABSTRACT

As we all know the objective of any business venture is to maximize profit. Hence all the decisions with respect to new projects, acquisition of assets, raising capital, distributing dividends e.t.c  are studied for their impact on profits and profitability.

Profit maximization theory is based on profits and profits are a must for the survival of any business. Therefore, this research work focused on the effectiveness of profit maximization on Dangote Cement Plc as a case study.

The data used was gathered with the aid of a questionnaire and Chi-Square

(x2 ) method of data analysis was applied in analyzing the data.

Based on the findings, the research reviewed that profit maximization occurs with efficient and effective use of resources by the employees in an organization. It also brings to the fore an organizations Strengths, Weaknesses, Opportunities and Threats in an attempt to be relevant and meet customer needs.

It was also discovered that cost volume profit analysis is the technique that is being used at Dangote Cement Plc when planning for profit cost. Hence, it is recommended that Business owners and Organizations interested in maximizing profit must review their cost structure regularly, must be diligent in cutting frivolous cost and boost productivity amongst employees. Furthermore, they must ensure that they make adequate provisions for contingency funds to help control risks and external factors that could hinder the progress of the business.  

 

 

 

TABLE OF CONTENTS

     Pages

Title Page                                                                                  i

Certification                                                                             ii

Dedication                                                                                iii

Acknowledgement                                                                     iv

Abstract                                                                                   v

Table of Content                                                                        vi

 

CHAPTER ONE: Introduction

1.0     Background of the Study                                                  1

1.1     Statement of the Problem                                                 2

1.2     Objective of the Study                                                      3

1.3     Research Questions                                                                  4

1.4     Statement of Hypothesis                                                  4

1.5     Significance of the Study                                                 5

1.6     Scope of the Study                                                           6

1.7     Limitation of the Study                                                    6

1.8     Organization of the Study                                                          6

1.9     Historical Background of Dangote Cement Industry          8

1.10   Definition of terms                                                                    9

 

CHAPTER TWO: Literature Review

2.0     Introduction                                                                    13

2.1     Current Literature Review                                                         14

2.2     Meaning of Profit                                                             11

2.3     Types of Profit                                                                 16

2.4     Approaches to Profit Maximization                                   17

2.5     Theory of Profit                                                                18

2.6     Profit Maximization in Business                                       24

2.7     Limitation of Profit Maximization as an Objective in Business25

2.8     Importance of Profit                                                                   27

2.9     Justification of Maximization in Business                        28

 

CHAPTER THREE

3.0     Introduction                                                                    31

3.1     Restatement of research Questions and Hypothesis          32

3.2     Research Design                                                             32

3.3     Characteristics of Study Population                                 33

3.4     Sampling Design and Population                                               33

3.5     Source of Data                                                                35

3.6     Method of Data Collection                                                         35

3.7     Administration of Data Collection Schedule                      36

3.8     Procedure for Processing Data                                          36

3.9     Statistical Method                                                           37

3.10   Justification of Statistical Tool                                         37

3.11   Limitation of Methodology                                                          38

 

CHAPTER FOUR: Data Presentation Analysis and Interpretation

4.0     Introduction                                                                    39

4.1     Presentation of Respondents Bio-Data                              40

4.2     Presentation of Research Questions                                 43

4.3     Test of Hypothesis                                                           49

4.3.1  Statement of Hypothesis 1                                                         49

4.3.2  Statement of Hypothesis 2                                                         52

 

CHAPTER FIVE: Summary, Conclusion And Recommendation

5.0     Introduction                                                                    55

5.1     Summary                                                                        55

5.2     Conclusion                                                                     56

5.3     Recommendation                                                           57

Bibliography                                                                  59

Questionnaire                                                                61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 CHAPTER ONE

INTRODUCTION

1.0   BACKGROUND OF STUDY

 The ultimate goal of every firm in business is profit i.e. (Profit Maximization) and cost minimization in order to maximize shareholder wealth. Many industries today are facing problems due to the expansion through increases sales and the introduction of new product. Some on the other hand are facing problem of contraction owing to the introduction of substitute material.  It is vital that management should be in position to plan for these changing levels of activities.

Apart from the problem of contraction and expansion during economic depression, an enterprise may be faced with the alternative of closing down or selling it at a price below the total cost.

Hence profit planning and control becomes difficult as a result of product offered and the action of competitor. In order to solve the problem created by the above situation profit, planning, cost, and their behaviour at different separating level, one of the most important tools developed by accountants to assist management in meeting the challenges is cost volume profit analysis.

According to I.M Pandey the analytical technique used to study the behavior of profit in response to changes in volume, cost and price, is called “Cost volume profit analysis” It is  a device used to determine the usefulness of the profit planning process of the firm.

The entire field of profit planning has become associated with the cost volume profit relationship in organization. In micro-economics course, profit  maximization is frequently cited as the goal of the firm; Profit maximization stressed the efficient use of  capital resources but it is not specific with respect to the time frame over which profit are to be measured; Profit maximization function largely as a theoretic goal with  economist using it to prove how firms behave rationally to increase profit.

Unfortunately, it ignores many real-world complexities that financial management firms must deal everyday with. Two major factors not considered by the profit maximization are Uncertainty and timing.

1.1   STATEMENT OF PROBLEM

The rising magnitude of the incessant profit or loss in Nigeria business organization over the year has become a thing of concern to managers; government, Policymakers, academia, entrepreneurs, financial analysis, economist and other stakeholders in the country’s economy. Various studies have been carried out to explain with empirical evidence, the factors driving profit and loss in business organization

The challenges facing most firms is numerous particularly during the period of economic depression or recession characterized by high liquidation of many companies, merger and acquisition, low technological powers, shortage of foreign exchange to buy needed raw material, high cost of production, erratic powers supply, high volume of imported goods and the advanced state of competition has affected drastically the maximization profit and cost maximization in most business organisation.

In a competitive world the key factors are cost price turnover and profit and these are factors which no business organization can ignore.

1.          Management is faced with the problem of how to make effective and efficient use of their available scarce resources in order to achieve the objective of profit maximization.

2.          Most management and organization lack under-standing on the importance of cost minimization as an effective tool or technique that has help in the sustainability on most business organization.

3.          Most organization is faced with high cost of production which has led to inefficient utilization of the cost volume profit analysis technique. 

 

1.2   OBJECTIVE OF THE STUDY

Profit planning and control are essential ingredients of every successful business in the world. The efficiency of management is measured by the amount of profit or loss in a given accounting year. The general objective of this study therefore will be;

1)          To find a way of making use of scarce resource in order to achieve profit maximization.

2)          To highlight the importance of profit using cost volume profit analysis over other forms of technique.

3)          To identify the problems encountered in the economy that leads to lack of practical application of profit maximization.

4)          To evaluate the extent to which the use of profit maximization on Dangote Cement Plc has been efficient.

 

1.3   RESEARCH QUESTIONS

1)          Does your organization use cost volume profit analysis as a tool for profit planning and control?

2)          Apart from cost volume profit analysis; what other techniques do you employ in the profit planning and control?

3)          What problems does Dangote Cement Plc encounter in the profit planning and control?

4)          In what ways specifically has the application of cost volume profit analysis helped the organization to achieve efficiency and effectiveness?

1.4      STATEMENT OF HYPOTHESIS

1.     HO:   Cost volume profit analysis as a tool for profit planning and control is not used in Dangote Cement Plc.

        H1:   Cost volume profit analysis as a tool for profit planning and control in Dangote Cement Plc.

2.     HO:   The application of cost volume profit analysis has not helped Dangote Cement Plc to be efficient and effective in its operations.

        H1:   The application of cost volume profit analysis has helped Dangote Cement Plc to be efficient and effective in its operations.

 

3.     HO:   Dangote Cement Plc does not employ other techniques in  profit planning and control apart from cost volume profit analysis.

        H1:   Dangote Cement Plc employs other techniques in profit

        planning and control apart from cost volume profit analysis.

 

1.5      SIGNIFICANCE OF THE STUDY

It is hoped that this study will be of importance to students (Accounting, Banking and Finance, Business Administration, Economics etc) staff and management of business organization, the individuals in banking profession and the shareholders of the companies.

The students are to be aware of the role played by profit maximization in business organization. Profit maximization is an essential tool in all business organization.

In a competitive world, the key factors are cost, price turnover and profit, and these are factors which no business organization can ignore. Therefore, the significance of the study is as follows:

1.  How the study of profit maximization and cost minimization of Dangote Cement Plc knows how their profit margin is increasing over time.

2.     It is useful to student in schools since it will serve as a source of reference to them in the nearest future.

3.     It is useful to the state since it is used by government in making decision for improvement of the states.

4.     It is useful to the economy as a whole since it is used by policy makers to maximize profit in the economy.

5.     It is a basis for understanding, contribution, margin pricing, related short run decisions and transfer pricing.

 

1.6   SCOPE OF THE STUDY

This study is to analyze the effectiveness of profit maximization tool in business growth in Nigeria as a tool for profit planning and control in general but with particular reference to Dangote Cement Plc. This is with the view of finding out how the company, has been able to manage cost in order to maximize profit.

 

1.7   LIMITATION OF THE STUDY

The study of the effectiveness of profit maximization as strategic tool in business growth in Nigeria using Dangote Cement Plc., Lagos State. In carrying out this study, I was faced with number of constraints some of which are:

FINANCE: Inadequacies of funds affected expenses on distribution and collection of questionnaires to respondent and from respondents; printing of questionnaires and other transport expenses in conducting the research.

TIME: There is need to observe lots of protocols in respects to levels of management before the collection soring that the primary data collected would be dependable to some extent, also the rationing of time so as to accommodate my other courses.

Nevertheless, these constraints were taken care of and with limited errors and variances. 

PROFIT MAXIMIZATION: A STRATEGIC TOOL FOR SURVIVAL OF BUSINESSES IN NIGERIA (A Case Study of Dangote Cement Industry)

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As we all know the objective of any business venture is to maximize profit. Hence all the decisions with respect to new projects, acquisition of assets, raising capital, distributing dividends e.t.c are studied for their impact on profits and profitability... entrepreneurship project topics

PROFIT MAXIMIZATION: A STRATEGIC TOOL FOR SURVIVAL OF BUSINESSES IN NIGERIA (A Case Study of Dangote Cement Industry)

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  • CATEGORY : ENTREPRENEURSHIP
  • TYPE : PROJECT MATERIAL
  • FORMAT : MICROSOFT WORD
  • ATTRIBUTE : Documentation Only
  • PAGES : 68 Pages
  • CHAPTERS : 1 - 5
  • PRICE : ₦ 3,000.00

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