AN EXAMINATION OF THE EFFECT OF BUSINESS BUDGETING ON ORGANIZATIONAL PERFORMANCE: A CASE STUDY ON NICO LIFE

A business budget lays the foundation for everything the business will do over a coming year, such as how much sales will bring into the business or how much the business should put aside for investment. Organizational performance refers to how well an organization is doing and how much of its daily tasks and set objectives it successfully completes. The main objective of this research is to determine how different budgeting methodologies (such as incremental budgeting and zero-based budgeting) effect organizational performance. The specific objectives include to compare the effects of different budgeting methodologies (such as incremental budgeting and zero-based budgeting) on the achievement of strategic goals and long-term organizational objectives; to analyze how different budgeting methodologies affect employee performance and motivation through resource availability and departmental funding; to investigate the relationship between budgeting methodologies and organizational adaptability to market changes and economic fluctuations; to evaluate the challenges organizations face in implementing different budgeting methodologies.
The theory used included Budgetary Control Theory, Agency Theory and Contingency Theory. The following research has made use of exploratory research design to arrive at conclusions as to the effect business budgeting has on organizational performance. The research method was quantitative, relying on primary data gathered from the current study. The sample was representative and data analysis was quantitative, making use of surveys on a selected business in Malawi. The research process was structured. The research method was further supplemented by qualitative research method. This has included written interviews to cover the areas of organizational performance of the particular organization.
The findings include budgeting methodology affects performance. Budgeting methodologies influence achievement of long-term goals. Budgeting improves morale and accountability. Flexible budgeting enables responsiveness to economic changes. Practical challenges (skills, time, and resistance) affect implementation. Recommendations include to enhance employee involvement in budgeting processes and increase flexibility in budget implementation.