External Applications of Public Administration Agencies

By definition, Zero-Based Budgeting (ZBB) is a type of expenditure planning where an organizer plans for expenses of a given accounting period from scratch. That is, the organization assumes that there are no balances brought forward at the end of the previous accounting period, and thus, it begins from zero. Moreover, the firm assumes that every new accounting period has its new types of expenses; accordingly, it evaluates all the planned activities and their estimate costs at the start of every accounting period independently of the previous budgets. Noteworthy, many organizations have employed the ZBB; thus, a look at one case would tell not only the approachs applicability but also the strengths and weaknesses associated with ZBB.

One organization that applies the ZBB is the Coca-Cola Company. It is an international firm that deals in the refreshment industry by producing a wide range of beverages such as "Coca-Cola, Fanta, Sprite, and Minute Maid," among others (The Coca-Cola Company, 2014). The company sells its products to more than 200 countries across the globe. Furthermore, it engages in sustainable practices, such as a safe and inclusive workplace, healthy living, and environmental conservation (The Coca-Cola Company, 2014). It started to implement the zero-based budgeting in 2014 (The Coca-Cola Company, 2014). Some of its anticipated concerns include the growing risk of obesity, the ever-changing consumer demands, and increased competition from such firms as Pepsi (The Coca-Cola Company, 2014). Recently, the syndicate introduced new tastes such as the coke-zero sugar to attract people with health issues such as the blood-sugar level.

To me, the ZBB is appealing because it requires the organization to engage in market research on a continuous basis; thus, any company that employs it maintains its relevance in the market. From its description, the ZBB system requires the firm to project new expenditure at the beginning of every accounting period (Hopkins, 2015). That way, the organization would have to assess the prevailing conditions in the market at the start of every financial year and project the expected expenditure for that period independently of the past spending. That means that a firm that employs ZBB cannot plan its expenditure without researching the market extensively. That way, ZBB allows a company to remain relevant in the market.

It is worth remarking that the ZBB has its own set of advantages and disadvantages. Its benefits include accuracy, efficiency, and few unnecessary spending (Hopkins, 2015). That is so because the budgeting type allows the firm to conduct its evaluation at every planning period; thus, the administrators are not likely to make any errors. Besides, some expenditure in the previous budgets could have become unnecessary; so, assuming the last budget helps to avoid repeating such outlays. On the contrary, the ZBB is disadvantageous in the sense that it is time-consuming and required highly skilled labor (Hopkins, 2015). A specialized workforce has to engage in a field study at the beginning of every financial period. Definitely, ZBB is both advantageous and disadvantageous to an organization.

Evidently, Coca-Colas application of the ZBB has enabled it to act on its consumer needs by introducing new tastes depending on the health concerns in the market. That way, it has maintained its relevance over the years by offering what the market wants. However, that advantage comes at the cost of having to hire experienced personnel who take much time surveying the field before reporting what planners need to include in their budget. Therefore, the budgeting method is both advantageous and disadvantageous, but its benefits overweigh the limitations.

References

Hopkins, M. (2015). Zero-Based Budgeting: Zero or Hero? Retrieved from https://www2.deloitte.com/content/dam/Deloitte/us/Documents/process-and-operations/us-cons-zero-based-budgeting.pdf

The Coca-Cola Company. (2014, October 21). The Coca-Cola Company announces actions to drive stronger growth. Retrieved from http://www.coca-colacompany.com/press-center/press-releases/the-coca-cola-company-announces-actions-to-drive-stronger-growth