BUDGET AND BUDGETARY CONTROL SYSTEM, ITS LINK TO THE PERFORMANCE OF AN ORGANIZATION
CHAPTER I
INTRODUCTION
Following the uncertainties prevailing in the Ghanaian business environment today, managers and stakeholders must be poised and prepared to compete favourably under these rapidly shifting conditions. In order to survive under these environmental complexities and vagueness managers and stakeholders of both private and public sectors need sharp tools, proven management techniques to forecast the major changes which are likely to affect the business while they choose future direction and dimension of resources needed to attain selected goals.
Budgetary control as a proven management tool helps organization management, and enhances improved performance of any economy in different ways. Its primary function is to serve as a guide in financial planning operators; it also establishes limits for departmental excesses. It helps administrative officials to make careful analysis of all existing operations, thereby justifying expanding, eliminating or restricting present practice. Budgeting and control entails a distinct pattern of decisions in an organization which is capable of determining its objectives, purposes or goals, and how these goals are achieved by establishing principal policies and plans. However, the inability to recognize the problem concerned and fixing a boundary off investigation creates an obstacle for the successful implementation of budgeting and control. Some organizations only look for narrow ranges of alternatives which they arrive at from their past expenses and present situation, other management levels even avoid long-term planning and budgeting in favour of today’s problems thereby making the problems of tomorrow more severe. The foregoing reflects on the need for organizations to set up a formal mechanism for scanning its environment for opportunities and give early signs of future problems, this course of action will improve the system of budgeting and control, resulting in an appropriate expectation of improved performance, in the manufacturing sector as seen in this study.
1.1 BACKGROUND OF THE STUDY AND PROFILE OF THE ORGANIZATION
Various researches on budgets and budgetary controls have clearly shown that organizations need to pay serious attention to budgetary processes, budgets, and budgetary controls. In light of these various issues facing organizations as a result of poor/mismanaged budgetary control systems/budgets, the researcher went ahead to research more on the topic, and came out with various recommendations and findings to help curb the problems organizations have with their various budgetary control systems.
Interviews and casual discussions with managers, employees, government agencies etc, formed the initial and informal stages of this study. When enough materials were gotten and reviewed by the researcher, it later developed into a full and complete academic research. Various issues affecting budgetary processes, budgets and budgetary control are fully addressed in this study.
This study was mainly undertaken to help organizations in Ghana to grow, thereby also helping the economy of Ghana to grow, because when enterprises and businesses do well, the economy will definitely do well.
1.1.2 PROFILE OF THE ORGANIZATION
Merchant Bank Ghana Limited (MBG) is a limited liability company is one of the leading Banks in the country. It was incorporated in August 1971 and commenced business in March 1972 as the first merchant bank in Ghana. Merchant Bank Ghana Limited (MBG) provides a comprehensive range of banking services to its customers and clients, using its worldwide network of correspondent banks and their agencies. The range of MBG’s banking services includes:
- Domestic and International Banking Operations for Corporate Customers, Small & Medium Enterprises (SMEs) and, High Net-worth Individuals;
- Treasury Services
- Money and Capital Market Operations
- Hire Purchase and Leasing Services; and
- Foreign Remittances
The Bank has two wholly owned specialised subsidiaries namely;
- Merban Investment Holdings Limited (MIHL) – dealing in Funds/Portfolio Management, Money Market Operations, Investment Advisory Services, Trustee Services and Custodial and Nominee Services;
- Merban Stockbrokers Limited (MSL) – dealing in Brokerage Services, Underwriting of new Issues, and Investor Search & Joint Venture Arrangement; and
The MBG group also has the following additional specialist services tailored to meet its customers’ needs:
- Registrar Services – maintaining records of Shareholders and Creditors, facilitating dividend payments to Shareholders; and
- Corporate Finance & Advisory Services (CFAS)- handling Corporate restructuring, Joint Venture Arrangement, Company Valuation, Project Finance; Funds Sourcing, Issuing House Services and General Financial Advisory Services. And also dealing in Hire Purchase transactions and Leasing.
The bank has taken advantage of the opportunities offered by the introduction of Universal Banking Business in Ghana and MBG has fully developed all three areas of universal banking namely; Retail, Corporate and Investment. The branch network of Merchant Bank currently stands at twenty-two (22).
Mission
As a universal Bank in Ghana, Merchant Bank (Ghana) limited is committed to providing quality financial products and services to our customers across our chosen market and maintaining our place as a leading and preferred financial institution in Ghana.
Vision
To become the leading, the most influential and best performing financial service provider in Ghana by 2012 and one of the leading banks in West Africa by 2015
Core Values
- Performance-oriented organization
- All decisions and actions must be based on Unshakeable Facts.
- Must at all times conduct business with a sense ofCompetitive Urgency.
- We must maintain High Ethical Standardsin all our internal and external relationships.