-
Effectiveness Of Profit Planning In Nigerian Organisations
CHAPTER ONE -- [Total Page(s) 3]
Page 2 of 3
-
-
-
1.2 STATEMENT OF THE PROBLEM
Hilton (1991:201) observed that both the
market forces of demand and supply and the cost of production have a
Significant bearing on determining prices. Equally he explained that
there are other variables that influence pricing decisions according to
him, this includes: Manufacturer’s pricing objective, economic
situation, level of competition, and availability of close substitute.
a.
For pricing to be effective, firms must incorporate all these factors
in selecting the most advantageous price for its product. At times,
firms are not in the habit of considering these factors and this has led
to the shutting down of many factories, downsizing of workforce and in
most cases, winding up of firm’s (Hilton, 1991:201).
b. Profit plan
are made in form of budget and they help firms to forecast the level of
profit, cost and revenue, they intend to generate in order to gain
competitive advantage. Unfortunately many firms still do not prepare
these plans, thus, this has led firms undertaking unplanned ventures
resulting in escalation and inability of firms to foresee shortage in
resources or finance or personnel needed in the future operation of the
firm. Where no plans exist, there will be no basis for firm to compare
or evaluate their performance.
c. Based on the foregoing, the problem of this study is in three (3) folds.
1
The failure of some firms to incorporate factors such as economic
situation, level of competition, availability of close substitute, among
others in their pricing decisions, may have resulted to the minding up
of several small scale manufacturing firm (SSMF) in Nigeria.
2. It
has been shown in accounting literatures that profit planning is a
potential tool for achieving profit objectives and efficiency. Which
small scale manufacturing firms seems to ignore the use of profit
planning (or budget) in their operations. This has led to far reaching
problem such as huge unforeseen operating cost as well as shortages in
good financial and human resources.
3. Most importantly, the problem
that stringated this study is the knowledge gap, that is, it looks as if
small scale manufacturing firms are not aware that pricing policy and
profit planning impact positively on profit performance.
1.3 OBJECTIVES OF THE STUDY:
This research is aimed at achieving the following objectives.
(i) To determine if pricing decision (s) can make an impact on a firm’s profit and efficiency.
(ii) To investigate if profit planning (or budgeting) can result in cost reduction and increased profit performance.
1.4 RESEARCH QUESTIONS
1. Does pricing decision(s) make an impact on a firm’s profit and efficiency?
2. Does profit planning (or budgeting) help in cost reduction and increased profit performance?
CHAPTER ONE -- [Total Page(s) 3]
Page 2 of 3
-
