CHAPTER ONE

1.0 INTRODUCTION.

The rapid environmental changes that companies face today affect not only production system, equipment changes and new technology usage but also organizational performance and management philosophies, therefore this report will consist of the background to study, the statement of the problem, purpose of the study, scope, objectives and the significant the study has on business organizations as far as budgetary control and performance are concerned.

1.1 Background to the study

Budget and Budgeting are concepts traceable to the Bible days, precisely the days of Joseph in Egypt. It was reported that nothing was given out of the treasure without a written order. History has it that Joseph budgeted and stored grains which lasted the Egyptians throughout the seven years of famine.

Budgets were first introduced in the 1920s as a tool to manage costs and cash flows in large industrial organizations.

John (1996), states that it was during the 1960s that companies began to use budgets to dictate what people needed to do. In the 1970s performance improvement was based on meeting financial targets rather than effectiveness companies then faced problems in the 1980s and 1990s when they were not willing to spend money on innovations in order to stay with the rigid budgets, they were no longer concerned about how customers were being treated, only meeting sales targets became essential.