Presently, the UK is among the top five countries developing product durability and innovation, particularly in the area of fire resistance material, where the UK is the world leader.
Textile industry within the UK is localised.
The major regions for textile companies are the East Midlands, the North West, London and Central Scotland.
The major regions for textiles are the East Midlands, the North West, Central Scotland, Yorkshire and Northern Ireland. London has relatively few textile companies.
The majority of the largest retailers have branches in all of the major cities, however, their head offices are generally concentrated around London and the South East.
From the above discussion it is clear that manufacturing companies play an important role in the UK economy. This holds true for small companies also. However, these small companies exist amidst ever-increasing competition not just from large companies but also from other small companies. The success of a company is based on its ability to delight its customers by manufacturing the right mix of products that are high in quality and low in price. This entails a company being able to use modern and realistic methodologies including modern financial techniques, such as costing techniques, in its approach to handling competition. In this light, studying the extent of adoption of state of art costing methodologies like activity based costing in small textile manufacturing companies in UK as representative manufacturing companies throws light upon certain critical factors which will have an impact on the future growth of the sector.
Main Findings of the Study
The main findings of the study are summarised below:
Most of the small manufacturing companies are aware of the need to need to move to Activity Based Costing system as against traditional costing system. Table 1 highlights the awareness of need for Activity Based Costing among the senior financial managers interviewed. More than 70% respondents had thought about Activity Based Costing at one point or the other. Almost 43% intended to use Activity Based Costing but because of certain impediments and circumstances, discussed later, they were unable to do so. Nearly 60% of the total respondents were either using Activity Based Costing or intended using it. However, a substantial percentage of the respondents had never considered activity based costing. It is also interesting to note that at least 1 respondent (representing 14.3%) rejected Activity Based Costing in the present competitive times.
The figures presented in Table 1 clearly indicate that there is a need to investigate why small manufacturing companies in UK did or did not consider Activity Based Costing and the basis of accepting or rejecting Activity Based Costing.