CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
OF THE STUDY
According
to Enudu (1999), the business environment is characterized by a lot of
uncertainties ranging from such factors as: Economic environment, political and
legal factors, social environment, supply and demand forces, competition,
consumers' attitude and technological changes.
A
critical look at the performances of some of these manufacturing business
organizations will reveal a lot of business failures as a result of lack of
proper planning against these uncertainties.
According
to Drury (2000), proper planning of business helps in reducing uncertainties
thereby providing the management of these enterprises with a clear direction by
determining their courses of actions in advance.
According
to Pandey (2010), for any enterprise to achieve these goals and objectives,
they must be managed effectively and efficiently. Management is efficient if it
is able to accomplish the objectives of the enterprise and becomes effective
when it accomplishes the objectives with minimum efforts and costs. One of the
ways in which the management can achieve these objectives is though profit planning
and control or budgeting.
According
to Nweze (2011), Budgeting in its true word is the design of the future state
of an entity and the effective ways of bringing it about. Budgeting or planning
involves the determination of the future course of actions for accomplishing the
objectives of the enterprise.
According
to Lucey (2002), the main purpose of budget planning is to provide the
necessary guidelines for making decisions. With the proper budget planning, the
enterprise can no longer be under the mercy of whims of Fickle economic and
social forces thereby relying on the ability to sense what is required. (Nweze
2011).
The
value of budgeting control of any organization can never be over-emphasized as
these organizations and companies have limited resources and these scarce
resources impose limits on the number of extent and range of end result the
organization was set out to achieve.
According
to Nwoha and Ekwe (1999), some of these goals include maximizing profit or
achieving some satisfactory level of performance, profit satisfaction achieving
continual growth or ensuring the survival of the organization avoiding risk in
making investment and performing a social services desired by others.
According
to Nweze (2011), A budget therefore co-ordinates the separate plans of
different departments in an organization be it manufacturing concerns or
non-manufacturing concerns and provides means of bringing both the marketing,
production and financial activities of the organization together. The proper
co-ordination of the various activities of these organization especially
manufacturing concerns by their management is the main concern of this study.
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