Why is Coca-Cola using zero-based budgeting?

Coke bottle

Image source: Wendy Tietz

In recent years, The Coca-Cola Company (KO) is facing decreased global demand for its soft drinks due to customer health concerns about the sugary drinks. It has responded to decreased demand with a variety of ways, including cost cutting measures. In October 2014, Coke announced a $3 billion cost-cutting effort that would impact the entire global organization. (Trivia: Coke sells Coca-Cola in every country in the world except for Cuba and North Korea.)

In January 2015, Mike Esterl of the Wall Street Journal reported that Coke is using zero-based budgeting throughout its organization (Wall Street Journal, “Coca-Cola to cut 1,600 – 1,800 jobs globally,” January 8, 2015). In addition, Coke is standardizing operations across its business units. It expects to complete the cost-cutting by 2019.


  1. What is zero-based budgeting?
  2. Why might Coca-Cola want to use zero-based budgeting?
  3. Do you expect that managers at Coca-Cola would embrace zero-based budgeting? Why or why not?
  4. Why would standardizing operations across business units help with cost-cutting?

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.

  • Student handout (pdf) (word) (contains entire blog posting + discussion questions)
  • PowerPoint file (brief article overview + discussion questions)

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.

About Dr. Wendy Tietz, CPA, CMA, CSCA, CGMA

Dr. Wendy Tietz is a professor of accounting at Kent State University in Kent, Ohio, USA. She is also a textbook author with Pearson Education.

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