Is zero–based budgeting a more appropriate method of allocating resources for organizations with new strategies requiring new organizational activities? Explain your answer in a paragraph.

In zero-based budgeting, the budgets are prepared by allocating maximum resources to those activities, which benefit the organization. The activities which are revenue generating and critical to the survival of the business, get the top most priority, Incremental budgeting is done without giving any priority to vital activities of the business and last year’s budget is simply adjusted considering the inflation factor. In this method budgets are prepared right from start for each period, it forces the management to come up with innovative ideas to lower their costs so that they can justify the allocation of resources.