Benefit Of Budgeting As A Management Tool In Organization; A Case Study Of Nigeria Bottling Company Ltd
The study examined the benefit of budgeting as a managerial tool in an organization, which focus on Nigeria Bottling Company Plc. The survey method was extensively used together data for the study and a simple through questionnaire and oral interview and discussion conduct with some of the study participants.
The study establish the benefit of budgeting as a management tool in an organization so that it can contributes to the realization of organization goal and objectives. They should conclude with useful recommendations that can help the Nigeria Bottling Company Plc to improve in their budgeting in an organization.
1.1 Background to the Study
In Nigeria today, there is rapid growth experience in the area of industrialization. A lot of business has failed to recognize that budgeting as a management tool is effective enough to reposition the organization among their competitors. In the opinion of many authors budgeting is a check necessary in an organization, the planning policy put in place will be defective. The aim of managers is to effectively put up a budgeting policy as a means of making practical’s budgets in the organization. Business budgeting is a basic and essential process that allows businesses to attain many goals in one course of action. There are several goals that many businesses seek to achieve (or should be trying to work toward) when they create and implement a budget. These goals include control and evaluation, planning, communication, and motivation (Lucey, 2004). (Kariuki, 2010), suggests that budgeting is a process of planning the financial operations of a business. Budgeting as a management tool helps to organize and formulize management‟s planning of activities. Budgeting as a financial tool is useful for both evaluation and control of organizations for the planning of future activities. Application of these tools can greatly impact the performance of a company (Larson, 1999). Budgeting as a tool in financial management regularly prepares performance plans and budget requests that describe performance goals, measures of output and outcomes in various activities aimed at achieving performance goals. This helps in the sense that annual plans set forth in measurable terms form the levels of performance for each objectives in the budget period (Larson, 1999). For instance, it indicates how money is distributed by the management to the different departments and key areas to focus on. This helps the management in planning and forecasting in order to reduce costs and unnecessary spending and also to increase profits so that the company may fulfill its corporate vision and mission and also to enable the company to fulfill its debts if any and to ensure the company’s long term technical and financial viability. (Horngren, 1990).
1.2 Statement of the Problem
Budgets are necessary to prudently manage scarce financial resources and at the same time serve as means of expenditure authorization, control and evaluation base. Profit making organizations consider budgets and budgetary controls important elements in their policy making. The success of their Organizations depends largely on good budget preparation and effective budgetary controls.
The aim of this research is to find solution to the following research problems.
- To examine the effect of budgeting policies as a tool in production level of the organization performance.
- To examine we their budgeting policies can cease a positive impact in production level of the organization.
- To examine if management monitor her budget to the point of implementation.
1.3 Objective of the Study
This study aims to achieve the following objectives to see the extent to which organization budget before embarking on their operations.
- To assist management in budgeting planning to effect a change bring in Nigeria bottling company
- To look at the problem that is associated with budget implantation mutation in Nigeria bottling company.
- To ascertain the effect of budgeting policies as a tool in production level of the organization performance
1.4 Research Hypotheses
For the successful completion of the study, the following research hypotheses were formulated by the researcher;
- H0: there is no management in budgeting planning to effect a change bring in Nigeria bottling company
H1: there is management in budgeting planning to effect a change bring in Nigeria bottling company
- H02: there is no problem associated with budget implantation mutation in Nigeria bottling company
H2: there is problem associated with budget implantation mutation in Nigeria bottling company
1.5 Significance of the Study
It is important to know that the pursuit of this project will enable the management of an organization to know that budgets are useful and form an important part of planning and control process budgets also indicates the expenditure , revenue and profit planned for a given future time span. They are usually in monetary terms, providing a common ground for a variety of organization activities management can use budget to provide a major means for control and co-operation. It also helps to detect deviation easily.
1.6 Scope and Limitation of the Study
This study is looking at budgeting generally, using the Nigeria bottling company Benin City, Edo State as a case study. It will enable us look at benefit of budgeting as a management tool in an organization. The researcher encounters some constrain which limited the scope of the study;
a) Availability of Research Material:
The research material available to the researcher is insufficient, thereby limiting the study
The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
c) Organizational Privacy:
Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.
1.7 Definition of Terms
For easy in standing and use the following function had been defined as use. According to Adeniyi (2004)
It is a noticed issue from the finance department to inform other department in preparing their budget estimates.
2. Budget Centre:
This is a unit inside the finance department which carry on involve all budget estimate from other department.
3. The Budget Holder:
This is the head of department in change of budget preparation.
4. Budget Duration:
According to Adeniyi (2004) this is the period in which the budget would be prepared and it should not be a tempt period.
5. Budget Manual:
This is an information manual about the way budget operation in a particular organization one been prepared and the reason for budgeting.
6. The Budget Time Table:
According to Adeniyi (2004) is a time of planning activities of a specifics time schedule established for initiating and completing certain phases for the budget planning process.
7. Budget Committees:
It is a committee given a responsible for the task of developing a co-coordinating budget.
This is the underlying activities tasks that must generally be carried out to attain maximum usefulness of a budget plan.
9. Budget Preparation:
This is the preparation of all various sub-budgets that made up the master budget in the organization e.g. sales budget and sales forecasts etc.
1.8 Organization of the Study
This research work is organized in five chapters, for easy understanding, as follows
- Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
- Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
- Chapter three deals on the research design and methodology adopted in the study.
- Chapter four concentrate on the data collection and analysis and presentation of finding.
- Chapter five gives summary, conclusion, and recommendations made of the study
Summary, Conclusion and Recommendation
It is important to ascertain that the objective of this study was to ascertain benefit of budgeting as a management in organization. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of benefit of budgeting as a management in organization
This study was on benefit of budgeting as a management in organization. Four objectives were raised which included: To assist management in budgeting planning to effect a change brings in Nigeria bottling company, to look at the problem that is associated with budget implantation mutation in Nigeria bottling company, to ascertain the effect of budgeting policies as a tool in production level of the organization performance. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of Nigeria bottling company plc, Edo state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made human resource managers, production managers, senior staff and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
There is active participation of all the departments in the budget preparation as every department submits their inputs into the annual budget proposals. Departmental heads are invited to budget committee meetings to defend their proposals and this encourages active participation in the budget preparation and implementation at Nigeria bottling company leading to improve financial performance. budgeting is one of the fundamental decision making process at Nigeria bottling company as it serves numerous purposes, as it aids planning, co-ordination , communication, control and performance evaluation. During budget formulation targets are set for each department of the Assembly and the resources required to achieve these targets are estimated
Nigeria bottling company should intensify financial capacity building for revenue collectors, budget officers, Finance and Administration sub-committee members, the Presiding Member and the Management. There is the need for continuous training on budgeting to ensure that officers keep abreast of the new developments in the field of public finance budgeting. It is imperative that there must be capacity building in budget controls at all levels if effectiveness is to be attained. Capacity building should be continuous process and among other things should include how to evaluate budget performance and deal with budget deficits. Training in financial management would ensure that budget control is not regarded as only a management function but as an act of financial discipline
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