FINANCIAL PLANNING AND CONTROL A KEY TO MANAGEMENT EFFICIENCY (A CASE STUDY OF NIGERIAN BREWERIES PLC)]
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FINANCIAL PLANNING
AND CONTROL A KEY TO MANAGEMENT EFFICIENCY
(A CASE STUDY OF
NIGERIAN BREWERIES PLC)]
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
It is obvious that we
are living in an era of planning and control. Whether it be a student with his
or her daily upkeep or the industrialist with his responsibilities to
shareholders, planning and control are daily lives activities and it is an
essential factor in national business and private life.
In a competitive
world where the key factors are costs, price turnover and profit, planning and
control enable every individual to have a sound appreciation of the financial
implication of his plane and actions, and this financial plan and control can
be used by any type and size of organization. As a tool of management, it can
increase the efficiency of the organization as a whole since all the
departments are involved. The efficiency and effectiveness of any organization
depend on a number of factors which may be categorized as clarify of purpose,
managements planning, control and communication. There is need to have a
knowledge of the objectives of the organization otherwise it will not be
possible to identify goals and set target for their achievement.
According to Ekweueme
P. “Finance is the art and science of managing money, it is concerned with the
process, institutions, markets and instrument involved in transfer of money
among and between individuals business and government.
According to Orji J.
“finance function deals with raising of fund and investing them in assets. He
went further to say that financial management is the management activity that
is concerned with the planning and controlling of the firms financial resource.
The duty of the financial manager is to implement the acquisition, allocation
and management of the resources. Finance therefore spreads into all segments of
the firm’s activities thus its function must be understood by all segments of a
firms activities and the function must be understood by all the managers in the
firm.
Having known the
future financial needs of a firm and its financial policies, the question then
is how are these finance or fund raised? In taking this decision, it required
the knowledge of the financial markets and how to make sound investment decision
and to stimulate efficient operations in the organization.
This needed fund are
sourced through internal and external source but before looking outside a firm
for fund, the possibility of providing such funds internally should be
examined. This source is mostly used for the firms expansion and should not be
overlooked when planning finance. They are generated from the operations of the
firm and is mostly made up of undistributed profits, depreciation provision tax
provision and reduction in current assets. The external sources on the other
hand are made up of two main types namely short-term funds and long-term funds.
The short-term fund
consist of trade credit, bank overdraft, bank loans, promissory notes etc. the
long-term, refer to funds obtained either from loans with maturity dated
several years in the future or from the owners of the business. This long-term
fund is made up of equity fund and debt.
Equity fund represent
the total interest of the owners of the business in the form of original share contribution
plus subsequent addition either by way of additional investment or by ploughing
back profit or reserves into the business. Debts are the long-term debt
obligations of the business and it is usually made up of secured and unsecured
debentures and bonds. The main sources of these long-term funds are the banks
and the capital markets.
Financial planning
and control therefore is said to be the name given to a system which is being
used to increase overall management efficiency. It is concerned with planning
for allocation of resources, monitoring the usage of these resources to assist
in achieving the objectives of effectiveness and efficiency in both large and
small scale organization.
The need for
financial planning therefore arises because financial resources are limited and
costly and even where the resources are available, the areas into which they
could be applied profitable are diverse. Planning and control act as a device
that enables management to anticipate change and adapt to it. No business
exists without this two concept and success in business is proportionate to its
planning and the skill with which it is controlled.
1.2
STATEMENT OF PROBLEM
In spite of all the
write up concerning the raising of fund and their utilization, most
organization however take the sledge hammer to crack nuts while trying to
achieve their goals. This study will therefore try to answer such
question like:
-
What problems affect the implementation of financial planning and control
system in a company?
-
Do you think the fund manager of Nigeria Breweries exercise prudence in their
work? If not does it affect planning and control in the company.
-
What kind of control should be applied and how effective is this control?
1.3
OBJECTIVE OF THE STUDY
The major objective
of this project is to develop a realistic picture of how financial planning and
control can help make an organization more efficient, effective and successful
since it helps managers to know the financial implications of their plans and
actions.
1.4
RESEARCH QUESTIONS
-
What do you think is the
major problem that affects the implementation of financial planning and
control; system in the company.
-
Do you think the fund manager of Nigerian Breweries exercises prudence in their
work? If not does it affect planning and control in the company.
-
What is the implication of poor financial planning and control.
1.5
STATEMENT OF HYPOTHESIS
HO:
The present economic situation is not the major problems that affects the
implication of financial planning and control system in the company.
HI:
The present economic situation is the major problems that affects the
implementation of financial planning and control system in the company.
HO:
The attitude of fund managers of Nigeria Breweries as regards to exercising of
prudence in their work does not affects planning and control in the company.
HI:
The attitudes of fund managers in Nigerian Breweries as regards to exercising
of prudence in their work affect planning and control in the company.
HO:
Poor planning and control does not affect the maximization of profit in the
company.
HI:
Poor planning and control affect the maximization of profit in the company.
1.6
SCOPE OF THE STUDY
This project write up
intends to explain how the financial function can assist in the planning and
control of large scale organization in Nigeria.
However, the study
will cover only one organization “Nigeria Breweries Plc.
1.7
SIGNIFICANCE OF THE STUDY
In a competitive
world, the key factor are costs, price, turnover and profit and these re
factors which no manager can ignore. No business can survive for long time
unless it makes an adequate profit, otherwise the investors who supply the
capital will take steps to wind it up and the overall measure of efficiency and
the sign of success.
The importance of
this study will lie in the development of methods of using financial planning
and control to help management in making relevant policy decision which if well
applied will increase their efficiency and effectiveness. This will in turn
help create an opportunity for the firm to achieve their maximum profit which
will be beneficial to the share holders employee future project writers and the
community at large.
1.9
DEFINITION OF TERMS
CONTROL:
Is the measurement of accomplishment of event against standard of plans and the
correction of deviations to assure attainment of objectives according to plan.
EFFICIENCY:
Is concerned with the quality of people and the resources required to achieve
an organisation’s goal.
EQUITY
FUNDS: Funds made available to a firm by the investing public in exchange for
part ownership, of the firm.
FINANCE:
Act of sourcing, allocating and investing of funds with a view of achieving the
corporate objectives of the owners of the business.
INDUSTRIALIST:
A person who owns or runs a large factory or industrial company.
MANAGEMENT:
The process by which a co-operative groups directs actions towards common goal.
OBJECTIVE:
The goal organization or individual sets out to achieve.
ORGANIZATION:
A complex social system which brings together a number of individuals proper.
PLANNING:
It involves selection from alternatives. It is deciding in advance what to do,
how to do it, when to do it and who is to do it.
POLICIES:
Plans of action, principles on which an organization is being run.
TURNOVER:
The rate at which goods or services of an organization are sold and replaced by
others.
VARIANCE:
Is the difference between the standard or budgeted cost and the comparable
actual cost for a particular period.
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