THE TRADITIONAL INCREMENTAL APPROACH TO BUDGETING ORGANIZATIONS IS CONCERNED WITH PREDICTING CHANGES FROM THE PREVIOUS YEAR'S EXPENDITURE LEVEL. ZBB MANAGEMENT IS A LOGICAL PROCESS WHICH COMBINES THE FOLLOWING COMPONENTS: IDENTIFYING OBJECTIVES; EVALUATING ALTERNATIVE MEANS OF ACCOMPLISHING THESE OBJECTIVES; EVALUATING ALTERNATIVE FUNDING LEVELS; ASSESSING WORKLOADS AND PERFORMANCE MEASURES; AND ESTABLISHING PRIORITIES BASED ON THE PREVIOUS ANALYSES. IT IMPLIES THE REEVALUATION OF ALL ACTIVITIES TO DECIDE WHETHER THEY SHOULD BE REDUCED, INCREASED, MAINTAINED AT THE SAME LEVEL, OR ELIMINATED. STEPS IN ZBB INCLUDE THE FOLLOWING: (1) IDENTIFYING DECISION UNITS; (2) ANALYZING EACH DECISION UNIT IN A 'DECISION PACKAGE'; (3) EVALUATING AND RANKING ALL DECISION PACKAGES TO DEVELOP THE BUDGET REQUEST; AND (4) PREPARING THE DETAILED OPERATING BUDGETS TO REFLECT THOSE DECISION PACKAGES APPROVED BY EXECUTIVE MANAGEMENT. POSSIBLE PROBLEMS WITH ZBB INCLUDE RELUCTANCE OF MANAGERS TO EVALUATE THEIR PROCESSES AND PROGRAMS, DIFFICULTY IN IDENTIFYING APPROPRIATE DECISION UNITS, AND INADEQUATE AVAILABILITY OF DATA TO ANALYZE, RANK, AND EVALUATE DISSIMILAR PROGRAMS. ZBB CAN BE MANIPULATED BY MANAGERS WHO MIGHT AVOID IDENTIFYING REASONABLE ALTERNATIVES TO PROGRAMS OR RANK HIGH PRIORITY PROGRAMS LOW IN ORDER TO OBTAIN ADDITIONAL FUNDS. (DAG)