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CHAPTER ONE
INTRODUCTION
1.1BACKGROUND OF THE STUDY
Effective budgetary control is essential for the financial health and
profitability of an organization. A budget serves as a financial roadmap,
enabling companies to plan, monitor, and control their resources. The
primary purpose of budgeting is to ensure that an organization operates
within its financial means while strategically allocating resources to areas
that drive growth.
Successful management is no longer just a matter of flair, skill and determination, a
conscious effort is needed to harness available resources towards the achievement of
enterprise objectives (Pandy, 1985).Therefore budgeting is one of the tools adopted by
management for effective cost planning, control and increase in productivity.
Wildarsky (1984:213) argued that because a budget served diverse purposes, it mean
different things to different people, among the various possible interpretations given by him
include; it is a plan, it is a prediction, and it is a link between financial resource and human
behavior to accomplish policy objectives.Also, it is a mechanism for making choices among
alternative expenditure.
Rufus Wizon (2012) observed that without a budget a business may in order aim
lessely. It may never know where it is going or where it should go. Even with a budget a
business may not reach its planned objectives or destination, but the exercise of budgetary
control will note the deviation from the plan and thus provide the opportunity for necessary
corrective action. The making of such plans and the continuous review and execution are the
essence of budgetary control.
1.2STATEMENT OF THE PROBLEM

Existing research on budget and budgetary control has primarily
focused on the Federal Government and profit-oriented
organizations, overlooking the critical role of budgetary control in
manufacturing companies. This gap results in ineffective budget
implementation, lack of accountability, misalignment of
objectives, and inadequate forward-looking analysis. To address
these issues, manufacturing companies should integrate
budgetary control into their organizational culture, provide
comprehensive training for managers, establish clear
accountability structures, adopt advanced budgeting techniques,
and enhance communication of objectives. These solutions can
significantly improve the effectiveness of budgeting processes
and overall financial performance.
1.3OBJECTIVES OF THE STUDY

The main objective of the study is based on the statement raised in the preceding paragraph.
They are:
a. To examine the impact of budgetary control on profitability in an organization.
b. To determine whether budgetary control is practicable in Samsung Electronics Nigeria Plc.
c. To find out the benefits of budgetary control toshareholders of an organization.
d. To find out whether budgetary control has been implemented in Samsung Electronics Plc.
e. To make useful recommendations based on research findings
1.4RESEARCH QUESTIONS
The following research questions are generated to guide this study:
1) What are the impacts of budgeting control of profitability in an organization?
2) What specific budgeting practices are most effective in enhancing profitability?

3) What are the benefits of budgeting control to shareholders of Samsung Electronics Nigeria Plc?
4) Does budgetary control is practicable in Samsung Electronics Nigeria Plc?
5) What role does employee involvement in the budgeting process play in achieving better
financial outcomes?
1.5RESEARCH OF HYPOTHESES
The following research hypotheses were formulated to guide this study.
H01:There is no significant relationship between budgeting control and profitability in an
organization
H02:There is no significant relationship between budgetary control and the benefits to
shareholdersin Samsung Electronics Nigeria Plc.
Ho3: There is no significant relationship between flexible budgeting practices and the
financial performance of Samsung Electronics Nigeria Plc.
H04: There is no significant impact of variance analysis on management decision-making

processes in Samsung Electronics Nigeria Plc.
1.6SIGNIFICANCE OF THE STUDY

It is the major way in which the organizational objectives are translated into specific plans,
tasks and objectives related to individual manager and supervisors; it should provide clear
guidelines for current operations.
It is an important medium of communication for organizational plans and objective and of the
progress towards meeting these objectives.
The development of budgets helps to achieve, co-ordinate the various departments and
functions of the organization.
Performance at all levels is systematically reported and monitored thus aiding the control of
current activities.
1.7SCOPE OF THE STUDY
This study centered on the impact of budgeting control on profitability of an organization

with a particular focus on Samsung Electronics Nigeria Plc. It examines how specific
budgeting practices, such as traditional and flexible budgeting, influence financial
performance in the Nigerian market. Key profitability metrics, including net profit margin
and return on investment (ROI), will be analyzed to establish correlations with budgeting
effectiveness.The research will cover a five-year period to identify trends and shifts in
profitability linked to budgeting strategies. Insights will be gathered from interviews and
surveys with financial managers and operational staff, highlighting the practical implications
of budgeting on decision-making. The study will also consider external factors, such as
economic conditions, that may affect budgeting practices.While centered on Samsung, the
findings could provide valuable lessons for other organizations in similar contexts. By
combining quantitative and qualitative methods, the study aims to enhance understanding of
how effective budgetary control can drive profitability in a competitive landscape.
1.8LIMITATIONS OF THE STUDY
This study encountered several limitations that may impact the findings and conclusions.
One significant challenge was the difficulty in obtaining data from the management of
Samsung Electronics Nigeria Plc. Concerns about disclosing sensitive management strategies
and financial information to competitors led to restricted access to crucial data. This
limitation may result in an incomplete picture of the organization’s budgeting practices and
their direct impact on profitability.
Additionally, time constraints posed a challenge during the research process. The need to
collect, analyze, and synthesize information within a limited timeframe restricted the depth
and breadth of the analysis. Consequently, some areas of budgetary control or profitability
metrics may not have been explored as thoroughly as desired.
Lastly, external factors, such as economic fluctuations and regulatory changes in Nigeria,
could also influence profitability and budgeting practices. These variables may not have been
fully accounted for in the study, potentially affecting the robustness of the conclusions drawn.
Despite these limitations, the research aims to provide valuable insights into the relationship
between budgetary control and profitability within the specified context.
1.9OPERATIONAL DEFINITION OF TERMS

1) PLANNING: Planning is defined as the activity where the managers analyzed the present
conditions to determine the way of reaching a desired future state.
2) FORECASTING: This is the procedures and techniques for predicting condition or event that
are expected to prevail in the future.
3) BUDGETING: This is a formulation of plans in a given period in numerical term.
4) BUDGET: This is defined as a future plan of action for the whole organization or a section
there of, which is expressed in monetary term.
5) BUDGETARY CONTROL: This is the establishment of budget, relating to the responsibility
of the executives to the requirement of the policy and the continuous comparism of actual
performance with budgeted level so as to secure either by individual or collective action the
objective of such policies.
6) PROFITABILITY: refers to the ability of an organization to generate
profit relative to its revenue, assets, or equity. It measures the
financial performance and efficiency of a business in converting
sales into actual earnings

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CHAPTER ONE

1.2STATEMENT OF THE PROBLEM

1.3OBJECTIVES OF THE STUDY

2) What specific budgeting practices are most effective in enhancing profitability?

H04: There is no significant impact of variance analysis on management decision-making

1.6SIGNIFICANCE OF THE STUDY

1.7SCOPE OF THE STUDY

This study centered on the impact of budgeting control on profitability of an organization

1.8LIMITATIONS OF THE STUDY

1.9OPERATIONAL DEFINITION OF TERMS

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