The ability of Nigerian manufacturing firms to increase their revenue and control their cost structure through budget control strategies determines their profitability. It appears that many industrial businesses are unaware of these expenses and how they affect profitability.According to Akintoye, et al. (2015), the major competitive disadvantage faced by the majority of manufacturing enterprises is due to insufficient infrastructure, which increases prices and degrades product quality.
According to Adeleke (2014), a significant number of manufacturing firms in Nigeria have shut down, while other, more illustrious businesses have either acquired them all or, at the very least, amalgamated with them. Some have moved their operations hub to nearby nations (Abdul &Isiaka, 2015). Few manufacturing firms that are still active in the Nigerian market have succeeded in sustaining their profits through cost reduction. Any profitable business that wants to stay in business, especially in the current downturn, is expected to implement cost control strategies. This is because no company will survive if it does not put precise controls in place to monitor its costs and ensure that they do not exceed projected budgets.If charges are not thoroughly examined, the effect may be harmful to the efficient operation of the company. The management of the company must attempt to keep costs within the expected forecasts at all times by reconciling planned and actual expenditures.
The survival of every company entity depends on profitability, which is of great interest to the stakeholders (owners, government, employees, and their host communities). In recent years, many businesses in Nigeria, particularly those in the manufacturing sector, have failed to live up to this expectation of their owners, the government, their workforce, and their host communities.(Nwosu, 2014). A corporation can only meet its commitments to stakeholders, pay taxes to the government, distribute dividends to shareholders, pay enhanced wages to employees, and invest in corporate social responsibility in its operational environment when it is profitable. For unprofitable businesses, the situation will be the opposite. The ability of the business to increase earnings while controlling costs through cost-cutting measures is a major factor in profitability.Manufacturing businesses won't stop being complacent and accepting ordinary profits when much more can be made until they comprehend the true costs of raw materials, how they affect profitability, and how to weigh the advantages of alternative strategies(Prempeh, 2016). Several, according to Adeleke (2014), had been acquired or merged with larger organizations in order to continue operating. All of these lead to higher workforce turnover rates in industrial companies and further undermine the premise of the learning curve.
According to Edom, Inah, and Adanma (2015), efficiency and profitability are not the same thing. The efficiency and effectiveness of cost control play a significant role in how effective the profit maximization objective is. Cost-control measures can include restricting phone calls to those made exclusively for business, controlling internet and electricity costs, and managing staff payroll. Outsourcing and professional services could both be modified(Abdul &Isiaka, 2015).Budgetary control, according to the orderhand, is the process that constantly compares actual performance to the budget in order to make sure the plan is carried out or to serve as a foundation for its adjustment (Nwanyanwu&Ogbonnaya, 2018). Budgetary control allows management to make sure that the organization's operations are well directed toward the accomplishment of its long-term objectives.The budgetary control allows an organization to improve the achievement of better results, generating good performance. This gradually influences the firm's performance, so in the long run. Budgetary control can be thought of as a method of cost management that includes creating a budget, assigning responsibilities to departments, comparing actual performance to the budget, and acting on the results to maximize profitability(Frow, Marginson& Ogden, 2019). Many businesses have collapsed as a result of a lack of understanding of efficient budgetary control. Additionally, the unstable economic climate forces companies to rely too much on equity and hold onto large amounts of liquidity, both of which have an impact on profitability (Redman, 2010). It is based on this background that the present study seeks to examine the impact of budgetary, planning and control on the profitability of manufacturing companies listed on Nigerian exchange group.
In the years following their independence, many African emerging nations undertook substantial planning projects of various kinds, producing a sizable body of planning literature. Although it is widely accepted as the primary tool for allocating resources to describe ongoing and development activities, budgetary control has received little attention. Yet, the budgetary system has received greater attention recently, and there is now more literature accessible on managing public expenditures. The budget is increasingly recognized as the most crucial tool for managing the economy (Kiringai, 2002). It is also recognised that a nation can still achieve its original goal while maintaining a stable budget and financial system. This demonstrates how the rules of the game governing the creation and execution of the budget are equally important and have an impact on the outcomes. This realization has led to a number of budget reforms that place a larger emphasis on the control of public spending.
Despite earlier research on the effect of budgetary limits on the financial performance of other organizations, there hasn't yet been any study on the profitability of manufacturing businesses. As a result, the researcher carried out a comparison study with a focus on the business, where other researchers have not previously looked at best practices for budgetary restrictions. In light of this, the study seeks to impact of budgetary, planning and control on the profitability of manufacturing companies listed on Nigerian exchange group.
The main objectives of this study is to examine the impact of budgetary, planning and control on the profitability of manufacturing companies listed on Nigerian exchange group. Other objectives of the study include;
The following questions were derived to give direction to the present study;
The following were hypothesized in the study;
H0: Budget planning of the budget control of raw materials does not have significant impact on the profitability of manufacturing companies in Nigeria
H1: Budget planning of the budget control of raw materials have significant impact on the profitability of manufacturing companies in Nigeria
H0: Budget planning of the Selling and distribution expenses does not have significant impact on the profitability of manufacturing companies in Nigeria
H1: Budget planning of the Selling and distribution expenses have significant impact on the profitability of manufacturing companies in Nigeria
H0: Budget control of salaries and wagesdoes not have significant impact on the profitability of manufacturing companies in Nigeria
H1:Budget control of salaries and wages have significant impact on the profitability of manufacturing companies in Nigeria
H0: Budget control of research and development does not have significant impact on the profitability of manufacturing companies in Nigeria
H1: Budget control of research and development have significant impact on the profitability of manufacturing companies in Nigeria
H0: Budget planning of training does not have significant impact on the profitability of manufacturing companies in Nigeria
H1: Budget planning of traininghave significant impact on the profitability of manufacturing companies in Nigeria
There is presently a high incidence of Industrial failure due to world-wide economic recession. For a country like Nigeria, the problem has become a daunting one.
The pegging of exchange and interest rates are invariably increasing the cost of operation ofthese three related Business organizations, hence decreasing their profit.
The findings of this study will enable managers of organizations to know the impact of budget control on the profitability of of manufacturing companies in Nigeria
Therefore, it is very necessary for every organization to plan its expenditure and ensure costs and still operate profitably in terms of having a return over and above cost of operation.
It is the determination of the contribution of budgetary control in this regard that comprises the significance of this study.
This study is limited the impact of budgetary, planning and control on the profitability of manufacturing companies listed on Nigerian exchange group. This study is limited three manufacturing industries in Nigeria namely Unilever Plc, Cadbury Plc, PZ Cussons Plc, Honeywell Flour, and Flour Mills Plc were adopted in this study
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