Cost management practices and financial performance of multinational corporations: a case of Coca-Cola beverages Uganda limited.

Abstract

The study examined the relationship between cost management practices and financial performance of Coca-Cola Beverages Uganda Limited. Specifically, it examined the relationships between activity-based costing, target costing, value-chain optimization and financial performance. The study used a cross-sectional research design. The target population comprised 100 full-time employees drawn from production, operations, marketing, finance, information technology, human resources, legal and management departments. A sample of 80 respondents was determined from the population of 100 using the Krejcie and Morgan (1970) sample size table and was distributed across the departments using appropriate sampling techniques. Quantitative data were collected using questionnaires, while qualitative data were obtained through interviews. Data were analysed using descriptive statistics and Pearson correlation analysis. The findings showed a strong positive and statistically significant relationship between activity-based costing and financial performance (r = 0.772, p < 0.001), a moderate positive and statistically significant relationship between target costing and financial performance (r = 0.615, p < 0.001), and a moderate to strong positive and statistically significant relationship between value-chain optimization and financial performance (r = 0.692, p < 0.001). The three null hypotheses were rejected. Activity-based costing had the strongest relationship with financial performance, followed by value-chain optimization and target costing. The study concluded that effective cost management practices were positively associated with financial performance at Coca-Cola Beverages Uganda Limited. The study recommended that the management of Coca-Cola Beverages Uganda Limited should; strengthen the use of ABC information in management decisions, improve coordination among departments in achieving cost targets, strengthen monitoring of logistics processes, and regularly identify and eliminating non-value-adding activities.