Strengthening of Controls and the Reduction of Costs: A Case of Rai Plywoods (K) Ltd

The strengthening of internal controls with the aim of cost reduction is a strategy employed by many firms. This paper analyzes this control approach to determine its effectiveness by looking at a manufacturing firm in Kenya, Rai Plywoods (K) Ltd, which implemented a number of control measures aimed at cost minimization. The study compares the lubricant costs of a one-year period prior to the implementation of the controls and a one year period after the implementation of controls using a paired sample ttest approach. It was found that the control measures were effective in lubricant cost reduction. This study also sought to determine whether the control measures were cost efficient and economical and this was analyzed using a cost- benefit approach. It was also found that the control measures were efficient and economical. The study concludes by making relevant recommendations which could be adopted by similar sized firms.