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A company operates in export and import markets and its operational CF are affected by movements in the exch rates, which are highly volatile. As a result, the co has great difficulty est. a budgeting system that is reliable for more than 3 months.
Why would rolling budget be more suited and not ZBB?
Than you.
Rolling budgets work best for businesses in dynamic markets that deal with frequent changes, in consumer preferences and exchange rates, etc
ZBB requires all costs to be justified, it would seem inappropriate to use it for the entire budgeting process in such a dynamic organisation with a volatile environment.
Why take so much time and resources to justify costs that must be incurred in order to meet basic production needs?Ah ok! That makes sense.
So if Incremental is suitable for stable environments and rolling for dynamic markets, is there a specific setting sutiable for ZBB or would it just be suitable for certain cost planning within a budget?
Something that is different each year
It could be argued that ZBB is far more suitable for public sector than for private sector organisations. This is because, it is far easier to put activities into decision packages in organisations which undertake set definable activities.
Also a charity
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