IMPACT OF BUDGETING, PLANNING AND CONTROL ON THE PROFITABILITY OF A MANUFACTURING COMPANY

CHAPTER ONE

INTRODUCTION

1.1. Background of the Study

For any organization to operate meaningfully there has to be clear direction of where it is leading to or what it is aiming to achieve the standard of objectives and a means of monitoring derivatives from standard requires. These considerations can only be met through budgeting, planning as well as controlling.

 A budget has been defined as a quantitative plan usually in monetary terms for the forth coming accounting year of the ensuring period. Budgeting planning/short term planning is the process of preparing detailed, short term (usually 1 year) plans for the function, activities and departments of the organization thus converting the long term co-operate plan into yearly action. Budgeting services as a very important tool for planning and control increase in productivity, in that budgeting aids planning for the future, if services as a control function through management by exception which is the assessment of performance for the purpose of controlling. It helps in co-coordinating of the work management in order to coordinate the activities of the organization.

1.2. Statement of Problem

Generally, organization whether manufacturing or service, required good budgeting for increasing productivity. Budgeting as a tool for planning and controlling does increase productivity. This is the problem of qualified personnel that are required for the purpose of preparation implementation and execution of budgeting, areas of responsibility will be decided by management and also budgeting pressure is another problem. The study will therefore be focused on whether budgeting contribute towards increasing productivity in organization or not.

1.3. Objectives of the Study

In view of the glaring problems as mentioned above the researchers main purpose of this study is to look carefully as the system of budgeting. This will enable the researcher to discover and bring to light any loop hole and lapses that may contribute on their little ways to aggregate private sector problem. Therefore, the objectives of the study are as follows:

To examine the system of budgeting, planning and control in order to assess adequacy in productivity.

To find out the extent budgeting serves in planning and increasing productivity.

To examine facts about the organization and it mode of operation with regards to productivity.

To identify the fact about operation and mode of operation.

1.4. Significance of the Study

The significance of this study is essential on its benefit and contribution to individual and organization first and foremost. This study will serve as important objectives reference to top executive of organization who wants to achieve efficiency in production. It will also be significant to students who want to carry out further research on the area of study secondly, the finding of this study will be useful to both the organization and any other similar organization as well as general public in the field as it depicts the nature of problem associated with budgeting in this part of the country. Finally, this study will also cover the public as an essential requirement for the award of higher national diploma

1.5. Research questions

What is the system of budgeting, planning and control?

To what extent does budgeting serves in planning and increasing productivity?

What are the facts about the organization and it mode of operation with regards to productivity?

What is the fact about operation and mode of operation?

1.6. Research Hypothesis

H0: budgeting planning and control does not influence the productivity of an organization

H1: budgeting planning and control influences the productivity of an organization

1.7. Scope of the study

This study is on the impact of budgeting, planning and control on the profitability of an organization with Nigerian breweries Lagos serving as the case study.

1.8. Limitation of the study        

The study limitation was inability of management to divulge certain information which they consider sensitive and fear of publication which might be detrimental to their operation.

 Distance and its attendant cost of travel in order to obtain information which to write this study was also a major limitation. Another limitation to the study is short time factor which did not give time for thorough research work, hence gathering adequate information becomes very difficult.