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Managing property, plant and equipment factors affecting decisions about their replacement in Libyan manufacturing companies

Al-Abiyad, Shala Abulgacem

Authors

Shala Abulgacem Al-Abiyad



Abstract

The accounting literature to date has not provided sufficient details related to the factors that affect the decision for replacing non-current assets (fixed assets). Therefore, the aim of this study is to investigate the factors affecting decisions regarding replacement of property, plant and equipment (tangible fixed assets). The research has been carried out in the context of Libyan manufacturing companies. In order to achieve this aim, this research must answer the following research questions: who has the responsibility for making the decision for replacing non-current assets in the Libyan manufacturing companies? Which information related to the non-current assets’ life cycles is available for the decision makers in Libyan manufacturing companies? Do Libyan manufacturing companies plan for their non-current assets replacement programme? How do these Libyan manufacturing companies finance their non-current assets replacement? What is the effect of internal factors, such as lack of motivation, and available capital on the decision for replacing non-current assets? What is the impact of external factors such as political developments, the economy and culture on the decision for replacing non-current assets? In order to answer these questions the following methods were used.

Qualitative data was collected by four methods, namely: a questionnaire, followed by a semi-structured interview, indirect observation and documentary evidence. The result shows that all the selected manufacturing companies are using obsolete property, plant and equipment and a number of them are working at reduced capacity because some of their machines have broken down. This is in large part due to a number of internal factors, such as the availability of funds, management inefficiency, and lack of motivation, poor recruitment strategies and a lack of asset registers.

In addition, there are a number of external factors that impact the decision for replacing non-current assets, namely: delay in obtaining authorisation from the Central Authorities, occasional changes in government policy (this coupled with changes in import restrictions and privatization policies prevent them from making any improvement in their work) and difficulty in finding alternative sources for their equipment. Overall, political, economic and cultural factors, coupled with poor management were the fundamental factors affecting the decision for replacing non-current assets. Moreover, this thesis presents a general model of factors affecting the replacement decision. The use of this model indicates how decisions come to be taken.

Thesis Type Thesis
Deposit Date Jan 5, 2022
Public URL http://researchrepository.napier.ac.uk/Output/2832159
Related Public URLs https://ethos.bl.uk/OrderDetails.do?did=1&uin=uk.bl.ethos.506347
Award Date 2008

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