A STUDY ON THE IMPACT OF BUDGETARY CONTROLS ON THE PERFORMANCE OF AN ORGANIZATION
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A STUDY ON THE IMPACT OF BUDGETARY CONTROLS ON THE PERFORMANCE OF AN ORGANIZATION
CHAPTER ONE
INTRODUCTION
1.1. BACKGROUND OF THE STUDY AND THE PROFILE OF THE ORGANIZATION
Given the current uncertainties in the Nigerian business climate, managers and stakeholders must be poised and ready to compete favourably in these fast shifting conditions.
To survive in the face of environmental complexities and ambiguity, managers and stakeholders in both the private and public sectors require sharp tools and tried-and-true management techniques to forecast major changes that are likely to affect the business while deciding on future direction and resource dimensions required to achieve selected goals.
Budgetary control, as a proven management instrument, assists organisation management and improves the performance of any economy in a variety of ways. Its principal duty is to provide as a guide for financial planning operators; it also specifies departmental excesses limitations.
It assists administrative officials in conducting thorough analyses of all existing operations in order to justify extending, abolishing, or regulating current practise.
Budgeting and control comprises a particular pattern of decisions in an organisation capable of setting its aims, purposes, or goals, as well as how these goals are executed through the establishment of primary policies and plans.
However, the failure to recognise the problem and fix a boundary off investigation presents a barrier to successful budgeting and control implementation.
Some organisations only seek for small ranges of possibilities based on their past spending and current circumstances; some management levels even reject long-term planning and budgeting in favour of today’s difficulties, making tomorrow’s problems worse.
The preceding reflects on the need for organisations to establish a formal mechanism for scanning their environment for opportunities and early warning signs of future problems; this course of action will improve the system of budgeting and control, resulting in an appropriate expectation of improved performance, as seen in this study.
Various budget and budgetary control studies have clearly demonstrated that organisations must pay close attention to budgetary procedures, budgets, and budgetary controls.
In light of the various issues that organisations face as a result of poor/mismanaged budgetary control systems/budgets, the researcher went on to conduct additional research on the topic, and came up with a number of recommendations and findings to help organisations address the issues they face with their various budgetary control systems.
The first and informal stages of this study included interviews and casual discussions with managers, employees, government agencies, and others. When sufficient materials were obtained and reviewed by the researcher,
it evolved into a full and comprehensive academic research. This study thoroughly addresses a variety of issues influencing budgetary processes, budgets, and budgetary control.
This study was primarily performed to assist organisations in Nigeria in growing, hence assisting the Nigerian economy in growing, because when companies and businesses do well, the economy does well.
1.2. STATEMENT OF THE PROBLEM
Companies have recently performed poorly as a result of a lack of effective and efficient budgets and budgetary control systems to effectively and prudently allocate resources to satisfy organisational goals and maximise performance.
According to a study conducted by Boquist (2001), organisations continue to stumble and fail because they have defective budgetary planning and control systems that they fail to recognise. Some organisations recognised weaknesses in their budgeting analyses but viewed them as individual issues rather than systemic flaws.
They distort efforts and increase frustration. As a result, despite poor financial performance, company strategy and capital allocation become misaligned and remain so.
Some businesses are unaware of the relationship between budgetary management and performance, which has a negative impact on their results. Various organisations,
ranging from small to large, fail to recognise the influence of budgets and budgetary control over performance outcomes. These organisations proceed without paying greater attention to enhancing their budgetary performance.
1.3. AIMS AND OBJECTIVES OF THE STUDY
The following are the study’s objectives:
Determine the relationship/link between budgetary control and organisational performance.
Identifying issues with finances and financial control in an organisation.
Identifying approaches to increase organisational performance through fiscal controls.
1.4. SIGNIFICANCE OF THE STUDY
The goal of all study is to increase knowledge, and this research activity aims to do just that. More crucially, this research is required to comprehend how budgetary control is developed, as well as how it affects organisational performance.
It is a tool that measures an organization’s managerial performance and encourages excellent morale and harmony inside the organisation. It enables the organisation to determine whether or not all members understand the organization’s plans and to implement corrective steps where deviation or under deviation occurs.
Because a budget is a planning tool, and financial planning is crucial to a businessman, it allows the organisation to predict the future effects of current decisions in order to avoid surprises and grasp the link between present and future decisions.
1.5. SCOPE OF THE STUDY
The investigation would focus on the Diamond Bank branch in Asaba, Delta State’s capital city. The study would look into Merchant Bank’s budgetary processes and policies, as well as how their performance is affected and maximised.
1.6 LIMITATIONS
The limitations encountered throughout this investigation are mostly focused on issues relating to:
Difficulty in obtaining appropriate, adequate, and reliable information from respondents- Respondents prefer to supply information that they believe the researcher would appreciate, which may not be accurate.
Financial constraint- Inadequate funding tends to hamper the researcher’s efficiency in locating relevant materials, literature, or information, as well as in the data collection process (questionnaire and interview).
Time constraint- The researcher will conduct this investigation alongside other academic activities. As a result, the amount of time spent on research will be reduced.
1.7. RESEARCH QUESTIONS
The following research questions will be utilised to attain the aforementioned objectives:
What is the connection between financial control and organisational performance?
What are the issues in your organisation with budgets and financial controls?
How may financial control measures help to improve organisational performance?
1.8. RESEARCH HYPOTHESES
H0: Budgetary controls have no major impact on an organization’s performance.
Budgetary restrictions have a substantial impact on an organization’s performance.
Budgetary restrictions have no meaningful association with organisational success.
Budgetary restrictions and organisational performance have a substantial relationship.
1.9. DEFINITION OF TERMS
BUDGET: the money available to a person or organisation, as well as a plan for how it will be spent over time.
ORGANISATION: a collection of people who form a business, club, etc. in order to pursue a specific goal.
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