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(A CASE STUDY OF NIGERIA BREWERIES PLC, ABA)
ABSTRACT
An assessment of financial planning and control as a key towards management efficiency as a factor that cannot be used mined in general development of organizations in the Nigeria economy. Financial planning and control basically plays a dynamic role especially in the formation of organizational policy. The method of data collection which the researcher used for the purpose of this study is primary data which is obtained through personal interview and questionnaire administered on the sample form. The findings of this study buttresses the conclusion that business organizations should set out targets to achieve plans on how to achieve the stated objectives and control such plan.
TABLE OF CONTENTS
COVER PAGE ii
APPROVAL PAGE iii
DEDICATION iv
ACKNOWLEDGEMENT v
ABSTRACT vi
CHAPTER ONE
INTRODUCTION 1
1.1 BACKGROUND OF THE STUDY 1
1.2 PROFILE OF THE COMPANY OF CASE/NIGERIAN BREWERIES PLC ABS. 3
1.3 SCOPE OF OPERATIONS 4
1.4 STATEMENT OF THE PROBLEM. 6
1.5 OBJECTIVE OF THE STUDY 7
1.6 ASSUMPTION OF THE STUDY 8
1.7 RESEARCH QUESTION 8
1.8 RESEARCH HYPOTHESIS 9
1.9 SCOPE AND LIMITATION OF THE STUDY 10
1.10 THE DEFINITION OF THE TERMS 12
CHAPTER TWO
2.1 REVIEW OF LITERATURE 15
2.2 WHAT IS FINANCIAL MANAGEMENT AND CONTROL IN NIGERIA BREWERY PLC ABA. 15
2.3 PLANNING HORIZON 19
2.4 BUDGETING AS A PLANNING TOOL 22
2.5 THE IMPORTANCE OF BUDGETING IN PLANNING AND CONTROL IN NIGERIA BREWERY PLC ABA. 25
2.6 WHY NIGERIA BREWERIES PLC ABA ENGAGE IN PLANNING AND CONTROL 26
2.7 SUMMARY OF LITERATURE REVIEW 28
CHAPTER THREE
3.0 METHODOLOGY 29
3.1 RESEARCH DESIGN 29
3.2 AREA OF STUDY 30
3.3 POPULATION OF THE STUDY 31
3.4 SAMPLE AND SAMPLING TECHNIQUES 32
3.5 METHOD OF DATA COLLECTION 33
3.6 INSTRUMENT FOR DATA COLLECTION 34
3.7 VALIDITY OF THE INSTRUMENT 34
3.8 RELIABILITY OF THE INSTRUCTION 35
3.9 METHOD OF DATA ANALYSIS 35
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS OF FINDINGS AND RESULT 37
4.1 ANALYSIS OF RESEARCH QUESTION 37
4.2 TEST OF HYPOTHESIS 42
4.3 DISCUSSION OF FINDINGS 54
CHAPTER FIVE
5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS 56
5.1 RESTATEMENT OF THE PROBLEMS 58
5.2 SUMMARY OF FINDINGS 58
5.3 LIMITATION OF THE STUDY 59
5.4 CONCLUSION 59
5.5 RECOMMENDATIONS 60
5.6 SUGGESTIONS FOR FURTHER RESEARCH 61
BIBLIOGRAPHY 62
APPENDIX 63
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
All firms and business organizations are aimed towards profit maximization which serves as their main objectives and earning higher returns from investment. This main expectation is followed or guarded towards achieving the objectives of the firm therefore to create value for its shareholders, manage resources efficiently. Funding economy and effective use of capital.
To achieve these stated objectives, the company should work hard and maintain proper planning for the utilization of available resources to earn higher market price of the company’s wealth. The objectives of enhancing achieve efficient management portfolio can be achieved if the management adopt appropriate polices in the firm’s investment, financing and dividend decision. Accountability Financial planning external control and financial monitoring are the bases for assessing financial planning and control in order to achieve management efficiency. According Van Horne (2002) he states, “For the firm to succeed, therefore must acquire assets whose expected return exceed their cost”.
To finance with those instrument where is a particular advantage e.gtax, interest and to undertake a meaningful dividend policy for shareholders. This research work focused on the financial management in respect to planning and control of financial resources to achieve management efficiency in business organization. Its most knowledge is based on the fact that the goal of management is to minimize shareholders wealth which can be narrowed down into a range of possible aims such as:
i. To make much profit
ii. To have at least one production in a given market
iii. To maximize sales
iv. Fast growth
v. To operate in wide range of the market
vi. To provide availability of information to the shareholder.
The noble objectives advanced by Needham and Dranfiied (2000) can be realized if the firm’s earning exceeds their expenditure at a greater rate. Certainly, most organizational which stand as their standard for achieving Excellency
Hussy (2002) posits, “The Company that fails to make adequate
Profit will die, either because of the shareholders dissatisfaction or because the company cannot generate funds for growth and
Corporate renewal on which the future of every companydepends on. “In this study, the researcher intends to investigate on crow the adoption of financial managementtechniques had influenced the efficient operation of the Nigeria Breweries PLC Aba.
1.2 PROFILE OF THE COMPANY OF CASE/NIGERIAN BREWERIES PLC ABA.
Nigeria Breweries, a subsidiary of Heineken international is a brewing company of Nigeria. It manufactures markets and distributes alcoholic beverages and non-alcoholic beverages. The alcoholic beverages includes: Gulder Lager beer, Legend extract stout, Heineken Lager beer, Gulder Max. While the non-alcoholic beverages include: Amstel Malta, Madtina sip-it, Farouz etc.
The company primarily operates in Nigeria where their head quarter is in Lagos.
1.3 SCOPE OF OPERATIONS
Nigeria breweries PLC, the pioneer and largest brewing company in Nigeria, which was incorporated in 1946 and recorded a landmark when the first bottle of star lager beer rolled of the bottling line in its Lagos brewery, in June 1949. Aba breweries which was commissioned in 1957, Kaduna brewery in 1963 and Ibadan brewery in 1982. It was followed that in September,1993 the company acquired its fifth brewery in Enugu while in October 2003, a sixth brewery sited at Ama Enugu State was commissioned which was formally called Diamond brewery plc.
AmaBrewery is biggest in Nigeria and the most modern in the world. The Ama brewery in Enugu State discontinued its operation in 2004, which the federal government took over till date.
COMPANY’S EQUITY
With about 117,156 shareholders, the authorized share capital of the Nigeria Breweries PLC is N4 billion dividend into 8 billion shares of 50kobo each. The issued share capital as at 31st December, 2012 stood at N3, 781,352,216 dividend into,781,352,216 dividend into 7,562,7O4, 432 ordinary share of 50k each. Heineken N .V. has a majority shareholding of approximately 54.09°Io while Nigeria and foreign individuals and associations hold 45.91%.
SOCIAL RESPONSIBILITIES
Nigeria Breweries PLC is a socially responsibility corporate, citizen with a very good record of corporate philanthropy in the areas of education, the environment (water) and sports among others. The company in 1994 established an educational trust fund (ETF) of 100 million to take more active part in the funding of educational and research facilities in higher institutions, all in an effort to provide and encourage academics in Nigeria.
Nigeria Breweries are the foremost spouse of the sports by variety in the country Rwegasira (2000) and Sullivan (2000).
1.4 STATEMENT OF THE PROBLEM.
Business organizations adopt serial measure to enhance efficiency and availability returns to shareholders. Often times, these firms do not generate the expected returns rather they are faced on future with the problem losses and its attendant effect on future resources, imminent extension the corporate life of the establishment and discouragement of personnel or workers.
The following problems associated with the assessment of financial planning of management in business organization are:
1. Many business organizations fail due to neglect or improper financial planning and control in their business operations
2. Many projects remain uncompleted after the initial cash outlay as a result of inadequate finance and control.
3. Many enterprises do not harmonize their cash flow which means that cash inflows do not equate with cash out flows budget.
4. Some organizations carry more funds than it required for discharged of its operations thereby incurring high interest cost.
1.5 OBJECTIVE OF THE STUDY
The management of business enterprise is greatly simplified by availability of relevant data and community of decisions based upon these data. In order to fulfill these obligations, management depends on accounting, which is the language of the business to provide the useful information to the users of the accounting information. This research work intends to verify the impact of financial planning and control on the efficiency of business organizations, which forms the basis for its assessment. Basically certain purpose are therefore associated with its conduct such as:
a. To ascertain the effect impact of financial planning and control on the management of the business organization.
b. To create opportunities for investors thereby creating the goodwill of the organization as a result of efficiency in management portfolio.
c. To explore the essential features of financial planning and control in practice in most firms with special reference to Nigerian Breweries plc Aba.
d. To make recommendations towards establishing, enhancement of efficiency to business organizations.
1.6 ASSUMPTION OF THE STUDY
It is strongly show that planning and control are very essential functions for effective financial management. The functions of planning sets the goals arms of the organization while controlling function attempt to bring back the organization to the right course of action. The study is conducted to assess the impact of financial planning and control in business organization, which will be carried out by investigation the operating results of Nigeria Breweries plc between the years 2002 to data. This study is therefore important to users of financial management such as shareholders, prospective investors, employers, customers, potential leaders and even government. It is also an academic work needed as one of requirements for award of Higher National Diploma inaccountancy.
1.7 RESEARCH QUESTION
The study will give answers to the following questions:
1. Can the use of financial planning and control enhance organizational efficiency?
2. Is there any relationship between effective planning and application of resources and organizational profitability?
3. Is there any relationship between internal control and operational efficiency?
4. Is the assessment of financial planning and control for organizational objectives purely internal or external excises?
1.8 RESEARCH HYPOTHESIS
To ascertain the importance of financial planning and control aimed at the attainment of organizational objectives, the following hypothesis would be formulated and tested.
HYPOTHESIS 1:
HO: Financial planning and control is not a mechanism for enhancing an organizational efficiency.
Hi: Financial planning and control is a mechanism for enhancing an organizational efficiency.
HYPOTHESIS 2:
HO: There is no relationship between effective planning for application of resources and organizational profitability
Hi: There is relationship between effective planning for application of resources and organizational profitability.
HYPOTHESIS 3:
HO: There is no relationship between controlling organizational operations and attainment of its objectives.
Hi: There is relationship between controlling organizational operations and attainment of its objectives.
HYPOTHESIS 4:
HO: The firm did not slow down its production operation based non-availability of fund.
Hi: The firm slow down its production operation based on non-availability of fund.
1.9 SCOPE AND LIMITATION OF THE STUDY
The scope of this research work covers the study of the assessment of the financial planning and control to enhance the efficiency of the business organizations in various techniques and methods adopted by financial managers. The domain of these studies will preview the planning and control phases as well as the budgeting models in business organizations. There are certain factors, which make the task very tedious and are hereby regarded as limitations, which are the following:
1. Dearth of research materials irrespective of proliferation lest in business management and finance, the availability of current and relevant publication planning and control in various institutional libraries distorted the flow of this study.
2. Finance: The effect of finance felt in consideration of high cost of research materials, price of academic journals of relevant information were linked by more than 3%. All these tendencies cost the student nightmare since the meager fund available were grossly insufficient for a study of this scope.
3. Apathy of respondents: In the conduct of a pilot survey, a lot of bureaucratic bottlenecks were uncounted, some officers who received questionnaires did not return as to include their view(s) on these issues in the analysis. Some completely refused to accept the questionnaires.
4. Approximation of Research Findings: The study could not cover an investigation of all relevant variables necessary for exclusive analysis. This inadequate application of variables tends to limit the findings of this work as being comprehensive representation of practical experiences in Nigeria. In this research study, the researcher intends to explain how the financial function can assist in planning and controlling of a large-scale organization in Nigeria. The coverage of only one enterprise out of the numerous industries in the same category is to make sure that the work is completed within the short period allocated for the discharge of the project, which is to cover financial operation of the Nigerian Breweries PLC Aba.
1.10 THE DEFINITION OF THE TERMS
a. Financial planning: This is the systematic approach were by the financial planner helps the customer to maximize his existing financial resources by utilizing financial tools to achieve his financial goal. In other words, financial planning is the process of meting your life goal through proper management to your finances.
b. Financial Forecasting: This is the projection of the future activities and position to establish the financial needs of the organization, cost of funds, the movement of funds and the availability of the capital.
c. Internal Control: methods and procedures to meet its mission goals and objectives and serve as the first line of defense in safeguarding assets. Preventing and detecting error, fraud, waste abuse and mismanagement.
d. Controlling: these represent a situation through which management check and compare their actual performance to establish standards of performance deviates from standards, corrective action is taken to get things back to their desired stage.
e. Management: This is the process of planning, organizing, actualizing and controlling and coordinating of the human and material resources essential in the effective and efficient attainment of objectives.
f. Financial Management: These connote responsibilities for obtaining and effectively utilizing the funds necessary or efficient operation of an enterprise. It is also defined by CAMA as the strategies capable of maximizing the organizational net present value, the allocation of staff capital resources among competing opportunities and the implementation and monitoring of chosen strategies so to achieve stated objectives.
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