TABLE OF CONTENTS
1.1 Background to the study
1.2 Statement of the Problem
l.3 Purpose / objective of the study
1.4 Research questions
1.5 Research hypotheses
1.6 Significance of the study
1.7 Scope and limitations of the study
1.8 Brief description of selected hotels
2.2 The concept of budgeting
2.3 Principles of budgeting
2.4 Prerequisites for effective
2.5 Budgetary system
2.6 Budgetary control
2.7 Behavioural implications of budgeting
2.8 Types of budgets
2.9 Budgeting techniques
2.11 Dynamic budgeting techniques
2.12 Budget and strategy
3.1 Restatement of research questions and
3.2 Research design
3.3 Sampling procedure
3.4 Data collection procedure
3.5 Questionnaire design
3.6 Statistical tools
DATA PRESENTATION AND ANALYSIS
4.1 Characteristics of the population
4.2 Presentation of data
4.3 Analysis of data
SUMMARY, CONCLUSIONS AND
1.1 BACKGROUND TO THE STUDY
There is the
need for optimization of the scarce resources available to organizations, that
is available resources are to be put to their most optimal or profitable use.
Since these resources are scarce, a plan has to be drawn to eliminate wastage
and arbitrary resource allocation. This trend of thought brings us to the
"concept of budgeting".
organization plans ahead in terms of sources of revenue and avenues of
expenditure within a specific time frame. Irrespective of the fact that it is
privately or publicly owned, organizations find it of utmost importance to
prepare budgets and put in place budgetary controls for the purpose of
achieving the best possible results.
(2001 :309) defines budgeting as "the plan of the dominant individuals in an
organization expressed in monetary terms and subject to the constraints imposed
by other participants and the environment indicating how the available
resources may be utilized to achieve whatever the dominant individuals agree to
be the organization’s 'priorities'.
In real world
policy- and decision-making, information is intertwined with, and therefore
reflects, interests and ideologies of various stakeholders (Weiss 1983). The
information-content of (performance) measurement systems has an impact on how
management and policy are defined, controlled, reported on and legitimized
information-content of budgetary control systems can be part of strategies to
create meaning, exercise control or establish legitimacy. (Meyers 1994; Rubin
identified three ideal-type budget functions: control, management and planning
and throughout the 20th century, other functions have been added to those
outlined by Schick, for instance achieving savings or increasing accountability
(Rubin 1996). As a result budget processes have gradually accumulated functions
(Caiden 1988). Contemporary budget systems can thus be understood as
multi-functional, multi-formatted and multi-procedural phenomena. Budget reform
then can be described as shifts in functions, formats and procedures.
1.2 STATEMENT OF THE PROBLEM
The focus on
improving financial control has resulted in introducing more sophisticated
financial accounting techniques in organizations, requiring long-term financial
planning, and more comprehensive financial statements and financial audits. The
performance oriented reforms at this level have focused on strategic and
performance planning, aligning budget formats to these performance plans,
linking performance monitoring with accrual and cost accounting and conducting
It is a
common practice for corporate bodies to prepare their yearly budget proposals
for approval, the budget approval in most cases is hinged on the performance
and actualization of the previous years' budgets.
underlying problem of the budgetary system is its strict implementation within
the dynamic of an ever changing business and political environment of the
corporate business world.
corporate management, budgeting and budgetary controls may be reviewed
periodically to attain given objectives with organizational goals.
of performance measurement against plans would make management able to take
remedial action against variances in order to bring the deviating
operations/departments back on course.
/ OBJECTIVE OF THE STUDY
of this study is to examine how budgeting and budgetary control has been used
as a tool for effective managerial planning and control in organizations in the
highlight the budgeting and budgetary control procedures as they apply to these
organizations and the recent innovation in budgeting and the constraints of
administration of budgetary control for effective decision making and
attainment of organisational goals/plans.
1.4 RESEARCH QUESTIONS
attempts to proffer answers to some relevant research questions, and is meant
to give a thorough insight into the analysis of the concepts and objectives of
the study that would enable the researcher to extract useful deductions from
the research work.
there qualified and experienced manpower adequate for the formulation of the
budgetary control techniques and budget preparation?
types of budgetary and budgetary control systems are available?
causes inefficiency in the budgetary process?
is the root cause of poor budget implementation and budgetary control in
are the available budgetary control techniques used by the organization?
other control techniques are available other than budgetary control methods
which the organization uses?
what extent does the organization’s budget control its activities?
1.5 RESEARCH HYPOTHESES Hypothesis 1
are not enough qualified and experienced manpower for the formulation and
implementation of the budgetary control techniques.
H1: There are enough qualified and experienced manpower for the
formulation and implementation of the budgetary control techniques.
organization’s budget to a large extent does not control its operations and
organization’s budget to a large extent controls its operations and activities.
1.6 SIGNIFICANCE OF THE STUDY
significance of this research project is that budget functions always involve
an element of control (top-down) as well as an element of accountability
(bottom-up). Control and accountability may thus be regarded as 'permanent'
budget functions. The way in which these permanent functions are defined
however, has varied according to time and place.
under scrutiny in this study is the hospitality industry where the purpose has
been to use the budget as a management policy tool and the concept of
accountability has been defined in terms of quality of service clients. Where
the purpose has been to use the budget as an instrument for financial control,
accountability has been defined in terms of detailed line-items. Where the
purpose has been to improve management, accountability has been defined in
terms of performance or results. These 'purposes' can be regarded as 'variable'
functions, whose dominance has been contingent with changes in the
administrative, political and societal context and in the perceptions and
behaviour of the all levels of management in the hospitality and tourism sector
of the economy.
1.7 SCOPE AND LIMITATIONS OF THE STUDY
concentrated on the problems associated with budgeting and budgetary control
which have brought about changes in policy from the use of a planning programme
covered practice and problems of the budget process in relation to
organizations in the hotel industry. Specifically the five selected hotels are
Sheraton Hotel and Towers, Federal Palace Hotel and Suites, Lagos Airport
Hotel, Ikeja Palace Hotel and Eko Hotel and Suites; all located in Lagos.
limitations of this study included the difficulty in getting extremely busy
financial executives and officials to fill the questionnaire and fear of
information divulgence. Non-disclosure letter, particularly to competitors was submitted
to allay fear by the researcher.
some respondents did not answer correctly some of the questions in the
questionnaire while a few others returned partially filled questionnaires.
1.8 BRIEF DESCRIPTION OF SELECTED HOTELS
Hotel, was established in 1942 as 'Grand Hotel', present owners bought it
through the Western Region Government in 1959 and it became a subsidiary of
Odua Investment Company. Incorporated in 1961 as a Private Limited Liability
Company. Located on Obafemi Awolowo Way, Ikeja. Presently it has 277 rooms and
suites, halls, restaurant, bars and swimming pool. Other hotels in Odua group
are Lafia Hotel and Premier Hotel, both located at Ibadan.
Eko Hotel and
Suites was established in 1974 but started operation in 1977, jointly owned by
Lagos State Government (25%) and OHA Ltd - a French company (75%). Located on
Adetokunbo Ademola Street, Victoria Island overseeing the Atlantic Ocean and
Kuramo Lagoon. Eko Hotel and Suites is made up ofEko Hotel, Eko Suites, Kuramo
Lodge and Ocean View Restaurant. Presently it has 604 rooms and suites,
ballrooms, restaurant, exhibition centre, bars, sports / health club and
Sheraton Hotel and Towers, a public quoted company, IS owned majorly by Ikeja
Hotels PIc. Sheraton was opened in 1985. It is managed and operated formally by
Sheraton Overseas Management Corporation and presently by Starwood Hotels and
Resorts Inc and located on Mobolaji Bank Anthony Way, Ikeja. Presently it has
332 rooms and suites, ballrooms, night club, discotheque, restaurant,
exhibition centre, bars, sports / fitness centre and swimming pool.
Palace Hotel and Suites, still undergoing renovation on one of two wings was
built in 1960 at the dawn of Nigeria's independence, incorporated in 1964 and
owned by the Federal Government of Nigeria until 1992 when it was acquired by
The Tourist Company of Nigeria. One of the wings was built to coincide with
Festival of Art and Culture (FESTAC) '77. Located on Ahmadu Bello Way, Victoria
Island overlooking Lagos Harbour. Presently it has about 632 rooms and suites,
ballrooms, restaurant, mini-bars, sports and health club and swimming pool.
Ikej a Palace
Hotel, is privately owned by His Royal Highness, Oba G.
A. Banjo, the
Ajalaye of Ilugun South, Alaro Ogun State, was established in 1979 located on
Toyin Street right at Toyin, Allen and Opebi Roundabout. Presently it has 20
rooms and casino, restaurant, bars, sports/ health club and houses many shops
including Courier Company, bureau de change and boutique.
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