Impact Of Budget On Effective Planning And Control In An Organisation (A Case Study Of Kwara Hotel Ilorin)
Budget is an estimate of probable future income and expenditure, it is mechanism for deciding what will be spent and realized in future. Budget is the expression of management master operating of financing plan that is the formalized outline of company objectives and means of attaining them.
It can be said that budget are formal statement of organization resource set aside for the purpose of carrying out specific function or activities over a given time period. Budgets are useful and form an important part of the planning and controlling process.
Budget also indicates the expenditure revenue and profit planning for a given future time span.
Budgets are usually stated in monetary term, this providing a common ground for a variety of organization activities.
Management can use budget to provide a major area of control and planning.
Budget as various authors describe it. B. B. Howard and M. Upton in their book define budget as “the formal presentation of the process of planning for future financial requirement to achieve solvency and profitability”.
Also B. Murphy in his book defines budget as plan which is prepared to show how resources will be required and used over a period of time.
A well structural budget must necessarily lead to improve control of a firm. This is possible because the supervisor would have now had on indication of what would be done; also the supervisor with the accountants’ help can be more easily sport that is being ineffectively done. A good technique of control with a budget helps the manager to take decision on the most intricate problem.
The control process according to John Storey “ Uses arrange of devices, operating activities or procedure and organization structuring in order to assist manager in implementing their organization budget, the purpose of control is to ensure that performation optimized defined organization budget financial budgets represents the firm’s plan for the coming year. Summarized in projected financial statement since budgets are plans, they become the critical by which managerial performance is measured and therefore, the basic for the control system; where as budget have a double role which is plan and performance.
Generally, they are viewed as synonymous with control and not with planning; Moreover, it is their use as control devices that have made budgets. The focus of much criticism by some school of thought which view them as a coercive tool used by top management to enforce its objectives on the participants of the organization.
According to John Storey, the challenge to management control, 1980 USA page 56. It is obvious that organization operate in a world of uncertainty in which the ability to anticipate and budgeting.
Organizations are adapted to their dynamic environment. It is therefore, the manager lot to participate, manage and forecast their environment plans if they are to be effective, they should display certain characteristics.
They should be flexible enough to allow for changing condition and provide a basis for coordinated behavior. Every planner must always recognize that the future is uncertain and that budget is an important tool for aiding, to a reasonable degree plan and cents forward the achievement of the organization objective.
1.1 Statement of the Problem
The purpose of this research work is basically on how the hotels especially Kwara Hotel Ltd. Ilorin has been able to discharge its social responsibility to its environment and staffs at large and how his social responsibility has affected the neighboring in terms of good health, creation of scholarship to youth, to mention but a few.
All these tend to raise the return has positive impact on the profitability of the Hotel. This research work is meant to see how budge serves as a tool for effective planning and control so as to maximize its profit.
1.2 Aims and Objectives of the Study
The following are the aims and objectives of the research work.
- To help organization in budgeting, so that they can know that budget can be part of planning and also a measure for effective control in the organization.
- To review the role of financial budget in a cooperative planning and control process by re-examine the relationship between the controller and the controlled.
- To look at the way budgeting is made as a tool for effective planning and control in kwara hotel limited, Ilorin
- The write-up is not only to aid the Hotel but also may help other organization to know that budgeting can be used as a means of effective planning and control.
1.3 Test of Hypothesis
- H0: Budget is an effective tool for planning and control.
- H1: Budget is not an effective tool for planning and control.
1.4 Significance of the Study
A fundamental importance of the study is to find the most profitable course through which the effort of the organization may be directed in meeting its primary objectives.
This study will assist the management in holding the business as nearly as possible on its chartered course.
Since the organization operates in a dynamic environment, this study will help the managers to participate manage and forecast enable environment which will form the basis upon which are made.
1.5 Scope of the Study
This study will cover all the budgetary control in Kwara Hotel Limited Ilorin. It will also review the budget of various departments in reaching conclusion of its research study.
This write-up will also look at the formulating of the organization budget and emphasize budget as a management used for effective planning and control.
1.6 Organization of the Study
It has already been stated that the purpose of this study is to use budget as a measure for effective planning and control so that organization can achieve. There will be a brief of introduction of the topic in chapter one stating definitions and use of budget for effective planning and control.
This will be followed by a discussion on a conceptual frame of budgeting highlighting some of the popular theories, which will be second chapter.
The third chapter will include the historical background of the Hotel and its organization set up.
Data presentation and analysis about the study will be included in chapter Four.
Chapter five will state the summary, recommendation and conclusion.
5.0 Summary, Conclusion and Recommendation
It is one thing to make a budget and quite another to achieve it. If the budget is to be achieved, it is essential that progress should be monitored and monitoring calls for performance measurement in term of the budget.
It should be noted that performance measurement as well as comparison with budget are not ending in themselves.
On the basis of such comparison management would take steps to rectify and divergence from plans. They will in order words attempt to control event making up the operation result of the organization by taking corrective measures on deviation highlighted.
An approval budget transforms from a document of interest to actual commitment of management of investors. Even though expressed in figures they represent the application of human resources to a blend capital and a material, view of this regular supervision which is synonymous with control is necessary. This recognized the facts that all business activities should be controlled if the desired result are to be obtained.
Budget therefore, represent planning and control which enable the management to anticipate change and adapts to it.
Budgeting and however does not bring realization of the plans. Control over operation is necessary in order that the deviates from the plans may be noted and corrected so that the business may be kept on the planning course.
Kwara Hotels have its budget success and failures. The success could be linked to the opportunity accruing to the hotel while failure was a result of its weakness and threat.
The result of operation of the hotel in the last few months had been favorable. To improve on these situation for the remaining period.
The hotel should adopt these various strategies.
- The hotel should continue to monitor the expectation of their customers so that necessary adjustment can be made to meet their demands.
- It is also necessary that hotel strives hard to acquire more business opportunity by canvassing for conference business from Abuja and Lagos and await themselves the opportunities offered by the marking and republic relation of Arewa Hotels (DEU) ltd.
- The hotel should encourage more wide publicity through available mean of media, boards, handbills and sponsoring of programmes to advertise hotel products and facilities.
- Effort should not be related to ensure that staffs are motivated by way of and off the job training and fair compensation for good service rendered.
- The hotel can also encourage entertainment package especially during slack periods and festivals to keep the hotel busy all year round.
- There should be a strict control on the both operating expenses and capital expenditure. It should be ensure that planning and programming of budgeting system is designed to enhance control is budgeting process.
- The hotel should be receptive to economic changes may be necessary as business operation in today’s economic environment is complex and competitive many change occur and the rate of grows of these economy as a whole fluctuates.
- These fluctuation effects companies operations if the hotel can plan ahead the budget and control process can provide management with better basis for understanding the hotels operation in relation to the general environment.
Impact Of Budget On Effective Planning And Control In An Organisation (A Case Study Of Kwara Hotel Ilorin)
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