Has Zero-Based Budgeting Gone out of Fashion - Dissertation Example

Although the use of zero-based budgeting can be very costly and time-consuming, the primary benefit derived from the use of zero-based budgeting is that the use of this method can provide the organizational leaders with a systematic method of evaluating the non-production activities of an organization. Aside from allowing the organizational leaders to come up with detailed information presented in each of the proposed budget plans, the use of zero-based budgeting is effective in terms of reducing bureaucratic ambiguity, inefficiencies, or duplication in budgeting. Likewise, the use of this method promotes communication among the budget decision-makers.
The use of the zero-based budgeting method in the UK industries has lost its fame for the reasons that the use of this method is time-consuming, triggers the development of resistance-to-change, and is very costly. Even though zero-based budgeting is no longer applicable when managing the short-term budget in companies throughout the United Kingdom, the method of zero-based budgeting can still be used when making more important long-term business investments.
Zero-based budgeting has been one of the most researched and talked about budgeting systems since the late 1970s. Aiming to cut bloat in government spending, the rationale behind the implementation of the zero-based budgeting is to require all government departments and agencies to be able to justify all of their spendings regularly (Quinn, 2011; Blodgett, 1978).
As a solution to “budget creep”, the application of zero-based budgeting even came to a point that it has gained popularity when the U.S. president Jimmy Carter implemented zero-based budgeting into the federal budgeting process (Smith, 2007, p. 145; Rasmussen, 2003, p. 133; Blodgett, 1978; Schick, 1978). Aiming to allocate limited available resources more efficiently, other multinational companies like Xerox, Allied Van Lines, and Westing-House Electric also applied the use of zero-based budgeting in managing their business (Blodgett, 1978).