c



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c
 


Following the uncertainties prevailing in the Nigerian business environment today, managers and

stakeholders must be poised and prepared to compete favorably under these rapidly shifting

conditions. In order to survive under these environmental complexities and vagueness, managers

and stakeholders of the manufacturing sector need sharp tools, proven management techniques to

forecast the major changes which are likely to affect the business while they choose future

direction and dimension of resources needed to attain selected goals.

Budgetary control as proven management tool (Chandler, 1990) helps organization management,

and enhances improved performance of any economy in different ways. Its primary function is to

serve as a guide in financial planning operations; it also establishes limits for departmental

excesses. It helps administrative officials to make careful analysis of all existing operations,

thereby justifying expanding, eliminating or restricting present practice. (Musselman and Hughes

1981).

Budgeting and control entails a distinct pattern of decisions in an organization which is capable

of determining its objectives, purposes or goals, and how these goals are achieved by

establishing principal policies and plans. However, the inability to recognize the problem

concerned and fixing a boundary off investigation creates an obstacle for the successful

implementation of budgeting and control. Some organizations only look for narrow ranges of

alternatives which they arrive at from their past expenses and present situation, other

management levels even avoid long-term planning and budgeting in favor of today¶s problems

thereby making the problems of tomorrow more severe (Steward 1993). The foregoing reflects
on the need for organizations to set up a formal mechanism for scanning its environment for

opportunities and give early signs of future problems, this course of action will improve the

system of budgeting and control, resulting in an expectation of improved performance, in the

food and beverage sector. This project is carried out in order to evaluate the relevance of

budgeting and budgetary control to manufacturing companies in Nigeria, and whether or not

budgetary control will improve organizational performance, positively.

 


A good number of organizations do not prepare budgets, and even when they do, it is as an

annual routine, not as a statement of concrete plan and the consequence has been poor or non-

implementation which translates to low profitability, and poor performance. This trend can be

attributed to either inadequate literature on budgeting and budgetary control matters or deliberate

attempt of management to circumvent plans for their ulterior motives. These deficiencies (in

management) can be addressed through the budgetary control techniques. Most companies do

not realize the effect of budgets and budgetary control in the performance of their company. This

research has been embarked on to correct the deficiencies, and show the importance of budgets

and budgetary control, on performance.

  c  



The main objective of this study is to establish a significant positive relationship between the

process of budgeting, and performance in the selected food and beverage companies. Other

objectives are;
 1.p To examine how budgeting fits into the overall framework of decision making, planning,

and control.

2.p To establish budgeting as an effective tool for planning and control

3.p To broaden knowledge of managers of selected food and beverage companies that

budgeting and budgetary control makes for profitability.

4.p To reveal the effect of budgeting on overall organization performance of selected food

and beverage companies.

5.p To establish the relationship between budgeting and potential growth in the selected

companies.

  
c  

The following research questions are pertinent to this study;

1.p Has budgeting been an effective tool for planning and control in the selected companies?

2.p Does budgeting aid effective decision making?

3.p Is there a significant relationship between budgeting process and organizational

performance?

4.p Has the budget system being maintained led to increased profitability?

5.p Will the process of budgeting and budgetary control increase potential growth in selected

companies?


  
c    

Therefore, the following hypothesis has to be tested, so as to ensure the successful achievement

and accuracy of the study.

 !"#$#%

H 0: There is no significant positive relationship between budgeting and potential growth through

performance of the selected Food and Beverages companies considered in the study.

H 1: There is significant positive relationship between budgeting and potential growth through

performance of the selected Food and Beverages companies considered in the study.

 !"#$#%

H 0: Budgeting is not an effective tool of planning and control in an organization.

H 1: Budgeting is an effective tool of planning and control in an organization.

 !"#$#%

H 0: Budgeting system in selected companies has not led to increased profitability.

H 1: Budgeting system in selected companies has led to increased profitability.

 &    c
c


The outcome of this research will aid the better understanding of the need for budgeting and

budgetary control as well as how it aids improved performance, through effective management

decision making, that translates to profitability. This study will serve as a plus to existing

literature. It will enlighten managers of selected companies as to the usefulness of budgeting and

budgetary control. It will also serve as a reference for further research concerning this topic.
The need for this study cannot be over emphasized in the wake of uncertainties prevalence in the

Nigerian business environment. It is pertinent for managers to pay serious attention to budgets

and budgeting control. The process of budgeting like any management process, involves

principally, planning and control. Beneficiaries of this study include;

1.p Managers

This study is set to add to the understanding of various management levels to give proper

knowledge of budgets and its effect on profitability. The end result of this, among others;

A.p Provide information that would be vital in management planning and decision.

B.p Provide ideas to managers of selected companies as to the usefulness of budgeting and

budgetary control.

2.p Manufacturing companies

They would benefit the most from this research because it would help them understand

and appreciate the value of budgets in improving organizational performance.

3.p Investors And Other Parties

Before any investor can be influenced to invest in an organization, he/ she has to consider

the performance of the organization. This information would inform investors of

budgeting techniques employed by manufacturing organizations, noting that companies

who do not implement them are heading for failure, and are therefore not sound

investments.

4.p Government

The better the performance of companies that translates to profitable companies, it results to

increased earnings from taxes and levies by government.

Other beneficiaries are;

 1.p The Society At Large,

2.p Fellow Researchers.

 'c

  
 


 ' c


In order break the barrier of some limitations, the scope of study would be applicable.

A.p ()* $+,# (-

Based on this research, the population studied would consist of all food and beverage

manufacturing companies listed on the Nigerian Stock Exchange, under the Nigeria

Manufacturing Industry.

B.p *.)"$/":

For practicability purpose, the researcher will be focusing on four selected organizations that

would be of great assistance in the progress of this research. In order, to make a valid

conclusion on the research work; these companies have been selected using judgmental

sampling technique. The organizations selected for this purpose are;

1.p o-up bottling company

2.p Nestle Nigeria plc

3.p Flour mills Nigeria plc

4.p Nigeria bottling company plc

c p "01*!$2*)c3"1*0"

This research will be carried out in Lagos state, Nigeria. This is because the selected

companies are located herein, and also, the familiarity of the terrain.

p $." 1$/+
 This project will be carried out for a brief period of less than a year. Data that would be used

for this research work will be obtained from October 2010 to April 2011.

 '   
 



The limitations of this research include some factors that limit the generalization of the

findings. They include;

1.p Difficulty in obtaining accurate data as sourced from questionnaires, due to the

sensitivity of the topic toward the survival of any organization

2.p This study is concerned with evaluating the effect of budgets and budgetary control

on the organization. The geographical coverage tends to be a limitation since the

study is only considering Lagos state.

3.p Inadequate time to carry out the research. Because of the nature of this research, in

measuring performance indicators, time appears to be a constraint.

4.p Location of the researcher: the researcher is a student of Covenant University, and

because of the rules of residency that is binding on the researcher, it is not easy to go

out of school easily to obtain information for the research.

 4

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The method of analysis for this study is the use of simple correlation analytical technique

specifically the Pearson Product Movement Correlation co-efficient which is computed to

establish a relationship between budgets and budgetary control and potential performance of the

five selected food and beverage companies in Nigeria. We shall make use of secondary data

precisely financial statement, of these companies, textbooks among others using turnover as the
budget variable and earnings per share (EPS), dividends per share (DPS), Net Asset per share

(NAS) as performance indicators, since they are all potential and growth ratios.

 5c




Data that would be used for this research will be secondary data.

Secondary sources are already analyzed data bringing about information and thus the researcher

does not have to generate this data himself from the field. They include financial statements, The

Nigerian Stock Exchange fact book, magazines, journals, text books, company¶s budgets

published documents as well as the past projects of other students.

 6
   

1.p 
% it is a financial plan for implementing the various decisions that management has

made expressed in terms of cash outflows and inflows.

2.p 

 c% it is a control tool used to monitor and enforce compliance with

budgets.

3.p 
 %it is concerned with the implementation of long term plan for the year ahead.

4.p
c   
 : it is a management function of planning, organizing, and using the

available alternatives to make decisions.

5.p 
: a long term plan is a statement of the preliminary targets and activities

required by an organization to achieve its strategic plans together with a broad estimate for each

year of the resources required.

6.p 

c  c
 : they are organizations that are involved with producing

from raw materials into either semi- finished or finished goods.

 o.p  
c

: this is a plan that is set or laid out in financial terms.

8.p 
cc: When the organization¶s overall goals and the individual manager¶s

goals coincide.

9.p
c

c: this is the period performance for the organization.


 c

Anthony A.A, S.K Robert & Co. (200o) '




, Prentice International Edition.

Colin Drury (2004). '


 


, 6th Edition, BookPower Publishers.

Issue 12 (2008).
 


 




 


Langfield Smit, Thorne, Hilton [2003] '

 


 
 
 
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McGraw-Hill Australia.

Lucey.T (1984) 
 
 



 '

. English Language Book Society/ OP

Publications Great Britain, 2nd Edition.

Akinsulire, C. O. (2010). 

 '

 Ceemol Nigeria Limited, 6th Edition.