BUDGETING AS AN ESSENTIAL PRACTICE IN THE ACTUALIZATION OF GOALS IN A BUSINSS ORGANIZATION
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BUDGETING AS AN ESSENTIAL PRACTICE IN THE ACTUALIZATION OF GOALS IN A BUSINSS ORGANIZATION
Chapter one
INTRODUCTION
1.1 Background of the Study.
Wants are plentiful, but resources are few, and the human factor engaged in the production of goods and services has a strong inclination to waste or underutilize the limited resources. With so many enterprises competing, only a few will be able to produce at the lowest feasible cost and survive the market’s expanding competitiveness.
As a result, it is critical for every serious business to produce at the lowest possible cost in order to stay in business while still meeting the corporate goals of profitability and stability. In light of this, there is a strong need to plan the firm’s actions realistically, taking into account the limiting factors and long-term goals.
Budgeting, as a planning and control tool, becomes essential to accomplishing this. Budgeting is widely used and has long been seen as an essential tool for business management.
A budget is described by the Chartered Institute of Management Accountants (CIMA) as “a financial or qualitative statement prepared and approved prior to a defined period of time for the purpose of achieving a given objective.” It may comprise income, expenditure, and capital utilisation.”
CIMA also defined budgetary control as “the establishment of budgets relating executives’ responsibilities to the requirements of a policy and the continuous comparison of actual with budgeted results, either to secure by individual action the objectives of that policy or to provide a basis for its revision.”
A budget, according to Horngreen (1982), is “a quantitative expression of a plan of action and an aid to coordination and implementation”. According to the Oxford Advanced Learners dictionary, a budget is an estimate of one’s financial resources and how they will be used over time.
Both Horngreen and the dictionary highlighted the word plan, but planning is present in all aspects of human activity; hence, planning is a blueprint for company growth and a road map for development that aids in the determination of quantitative and qualitative goals.
It entails defining a goal based on the objectives and managing resources. The planning process involves corporate managers to serve like fortune tellers, attempting to anticipate the future course of action to be taken. The predictions of the so-called fortune tellers will determine whether or not the firm’s aims are realised.
for functions such as sales and manufacturing, or for financial and resource items such as cash, personnel, acquisitions, capital expenditures, and so on, which are used because they are scarce in all sectors of the economy when compared to necessities.
Budgeting is a crucial managerial tool in today’s increasingly complex business environment and fierce market competitiveness. Management must understand where it wants to be at the conclusion of a specific time period and how it intends to get there.
It is not enough for a corporation to know how much of the market it wants to capture; it must also plan how to attain that goal. Unfortunately, many business ventures have yet to embrace this invaluable financial instrument, which has guided a number of successful enterprises over the years.
The situation becomes more perilous for Small and Medium Scale Enterprises (SMEs), and it takes on a scary dimension in single or sole proprietorship concerns. The scenario is apparent: these businesses run without a clear financial strategy that illustrates where they are physically today and where they want to be in the future.
They have little or no plan for their anticipated financial income and expenses. Budgeting for an individual may not be a formal plan, but his or her activities may be based on some level of budgeting and planning if control is to be exerted.
Firms’ business and other organisational operations must be adequately planned so that they can run effectively and efficiently, use all resources as economically as possible to achieve their goals.
Governments at all levels must budget for the earnings and expenditures that will be generated utilising their limited resources to ensure the general well-being of their citizens. Budget indiscipline on the part of any of the three components of the economy would undoubtedly result mis several issues.
1.2 Statement of Problem
Budgeting challenges are at the root of many business failures in Nigeria. The following are mentioned in passing:
· Failure to create budgets before operations.
· Create unrealistic budgets.
· Non-compliance with established budgets.
· Budget limits hinder financing.
· Inconsistent budgeting procedures, responsibilities, and timescales.
· Failure to track and analyse deviations.
The danger is that if the scenario is allowed to continue, there would be a high rate of business extinction owing to poor financial performance. The purpose of this study is to look into budgets and their impact on organisational success in a sample of manufacturing enterprises in Delta State, Nigeria.
1.3 Object of the Study
The primary goal of this research is to determine the importance of budgeting in the achievement of organisational objectives. Specifically, the study intends to
1. Analyse the impact of budgeting on achieving organisational goals.
2. Examine the issues of budgeting.
3. Understand the necessity of budgeting.
4. Provide solutions to the difficulties.
1.4 Research question
1. Does budgeting have any meaningful impact on accomplishing organisational goals?
2. What are the obstacles in budgeting?
3. What is the importance of budgeting
4. What solutions can be proposed to these problems?
1.5 Research Hypothesis.
Ho: budgeting has no substantial impact on organisational goals.
Hello: budgeting has a huge impact on accomplishing organisational goals.
1.6 Significance of the Study
The current research has several implications, some of which are addressed in this context.
1. The research has advised organisations and business establishments to guarantee that their administrators and managers adopt thorough
Budgetary practices.
2. It is important to promote the implementation of household financial practices in order to achieve sustainable family living.
3. It establishes the foundation for better economic and business practices at the individual, organisational, state, and national levels.
4. The research has provided prospective and current investors with the ability to foresee potential future economic scenarios, allowing for effective business adaption.
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