Why is Campbell Soup Company using zero-based budgeting?

Consumers are increasingly distrusting “Big Food,” and Campbell Soup Company (CPB) is working to counter the effects of that trend by offering more healthy or natural alternatives.  For example, Campbell’s recently introduced a new line of organic soups, Campbell’s® Organics, and acquired both Bolthouse Farms juices and Plum Organics baby food.

In addition to expanding its healthier and more natural product lines, Campbell’s has also announced it will be implementing zero-based budgeting.  It expects to save $200 million off its expected annual costs of close to $7 billion.

Questions

1. What is “zero-based budgeting”?
2. How does Campbell’s expect that it will save $200 million by using zero-based budgeting?
3. What are some potential drawbacks to Campbell’s from its use of zero-based budgeting?

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)

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