Importance Of ZBB: Planning And Budgeting Process

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Pyhrr (1977) defines ZBB as a planning and budgeting process that requires each manager to justify his entire budget request in detail from scratch and give justification that where should they want to spend money. When resources are limited, ZBB is best technique to attain maximum benefit efficiently and effectively (Henry & Joseph, 1977). ZBB helps organization to set their priorities more accurately and understand its importance. ZBB involves following steps:
• Identification of decision units.
• Analysis of each decision unit through development of decision packages.
• Allocation of Resources
Identification of decision units is the first part in preparing ZBB (Hammond & Knott, 1980). Taylor (1977) t describes that these units includes cost, …show more content…

Agencies were selected for implementing ZBB and analysis was done those agencies were about 1% of state budget. In the next few years, ZBB was expended in states budget. Agencies were allowed to prepare their budgets. However, in Mexico political consideration projects ranking and lack of support are all those problems experienced in Mexico. (LaFauer .J, 1974). In 1975, ZBB was implemented in Wilmington which shows more positive outcomes than any other state agencies were selected which were previously using line item technique. By applying ZBB their cost of preparing budget was increased to 100% and more time is consumed ranking problem persists but instead of these problems it has positive impacts (singleton et.al, 1975). Scheiring M. J (1976) described that ZBB was applied in New Jersey causes 1.83% increase in budget expenditures while in 1977 it causes 3.22% decrease from the 1976,s budget (1976). About 100 major firms are using ZBB (Henry & Joseph, 1977). In 1978 business review of Ohio describes that ZBB was used in middle east and in common market countries. Titan Construction Company, National Bank of Greece, Hellenic industrial Development bank are name of some companies in Greece that are using ZBB. In Israel, postal bank, Migdal Insurance Company and Maktashim chemical company are using ZBB. Similarly in Japan Daimaru Department store, Taiho Kogyo construction company and Morinaga Dairy company are applying ZBB. Moreover, Hospitality Inns, a hotel chain has applied ZBB and Finance department of Chessie system, Bendix heavy equipment,Plant maintenance and purchase department of Western Reserve University have applied ZBB in their system. (Cowen,

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