Abstract

The main aim of this study was to investigate the impact of budgeting, planning and control on the profitability of Source Du Pays S.A. in Cameroon. Specifically, the study sought to investigate the impact of budgeting on the profitability of Source Du Pays S.A. in Cameroon, to understand the role planning on the profitability of Source Du Pays S.A. in Cameroon and to examine the impact of control on the profitability of Source Du Pays S.A. in Cameroon.

This study used a descriptive research design and data was collected and analysed quantitatively using SPSS version 22. With a sample of 50 staffs the study administered 50 questionnaires Purposive to those who are involved in t budgeting, planning and control processes of the company. Results show that busgeting, planning and control all affect profitability of a firm significantly.

CHAPTER ONE

GENERAL INTRODUCTION

1.0 Introduction

This chapter highlights the background of the study, the problem statement, the research objectives and research questions. It also highlights the justification of the study as well as the significance of the study. It also sheds light on the scope of the study, and finally the organisation of the study.

1.1 Background to the study

There is a popular saying which goes thus, “if you don’t know where you are going, any road will get you there”, perhaps there is also truth in the thought’ if you don’t know where you are going, no road will get you there”. Whichever view is taken, it is clear that individual and organizational activity without a plan is likely to be ineffective. However, a more popular and by now a universal cliché tells us that “failing to plan is planning to fail”.

This cliché clearly conveys the importance of planning. Individuals, groups and organizations need to plan if they are to avoid failure in any activity since they know that their environment is constantly changing and these changes could bring opportunities which they are expected to exploit and at the same time, the environment could pose threats which the organization should strive to reduce or out rightly eliminate and perhaps, change the threats into opportunities.

The unpredictable changes occurring in this environment of organization include sociocultural change, economic change, technological change, and political environment. The most readily example is information technology (IT) that emanates from our technological environment which is surely going to affect the operation and performance of our business organizations.

Changes in IT frequently require organizations to redesign entire work processes and work relationship. Inflation which is an example of economic changes in the organizational environment is also a factor that could affect the operation of our business since the business organizations know that it has the money to purchase the raw materials (inputs), machine and so on which are not readily available since inflation is an economic condition which there is more money chasing few goods and services.

The traditional budget has long been criticized for the aforementioned inefficiency as a resources organization control. Criticism of its insufficient performs in a dynamic professional nature arose back in the mid-1980s by the Johnson & Kaplan, (1987) influential the book Relevance Lost. We can to see on or after the effort of Allen (1998) who argued that prompt change in Today’s trade climate is far from stable. Not at all has it helped a long time, in his view, to compare the actual results of what is predicted with whatever up to 15 months ago. He says among the necessities of the most suitable plan, it can be the construction of an accounting obligation to elucidate the difference among the definite and the Deliberate performance.

This requires direct reporting time. Therefore, there is a requirement to incorporate premeditated administration and create a budget. We can opinion to the works of Adams et al (2003) in this work. These writers feel that in order to be prompt, budgets need to be associated with organizational strategies, planning, and controlling on profitability of manufacturing company.

The effort of Blumentritt, (2006) can be observed as an additional contribution to the beyond tan ding as he sees the requirement for administrations to incorporate premeditated organization as well budget. Whatever appears unfortunate rendering to Tim Blumentritt (2006) is the detail that many administrations quiet manage different budgets and premeditated organization procedures also, a huge portion of lesser and medium initiatives do not enter strategic planning (Tim Blumentritt 2006).

The motive for this reading is as well comes from the study of Herath & Indrani, (2007)who examined “the roles of Budget Management System (BCS) as part of the Management Control System (MCS) building and maintaining competitive advantage “. They determined that although BCS might play a key part in creating effective MCS in building a justifiable competitive advantage, the budget determination not work alone. “Instead, it can be used with great success by combining it with emerging strategies business” (Herath & Indriani, 2007).

1.2 Problem Statement

Budgeting is very important to every business. Budget is a planning tool used by management to allocate limited resources to different functions of the organization. The term budget or budgeting is a system of forecasting expected revenue and expenditure in quantifiable terms; time and personnel, space, building or equipment usually expressed in monetary value

However, most businesses still faced difficulties to draft a clear budget. They have problems in the course of the budgeting process. In source du pays SA, there is usually shortage in resources needed in the production process and this is attributed to poor budgeting allocated to the purchase of resources which are needed in the production process.

This shortage significantly affects production and in the long run reduce sales and cuts the profitability of the business. The modern view of the management system is based on the influential work of Robert Anthony who draws the line between management control, strategic planning and performance management he recognizes language of accounting as the basis for general commonalties in the system.

1.3 Research Objectives

1.3.1 The main research objective

To investigate the impact of budgeting, planning and control on the profitability of Source Du Pays S.A. in Cameroon

1.3.2 Specific Research Objectives

This is divided into the following Specific research objectives;

1. To investigate the impact of budgeting on the profitability of Source Du Pays S.A. in Cameroon.
2. To understand the role planning on the profitability of Source Du Pays S.A. in Cameroon.
3. To examine the impact of control on the profitability of Source Du Pays S.A. in Cameroon.

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