IntroductionBudgeting is a process in which every company must be involved not only with the board of directors (Principle) who authorizes the budget, but also with the management team (Agent) who also uses it. In other words, budgeting requires communication with all levels of employees in the company in order to build the company's goal or strategy. Furthermore, budgets are an instrument of power while being a reflection of power (Ashton et al., 1995, p. 289). Budgets that are not based on well-understood activities and costs are poor performance indicators (Drury, 2005). Today, in the age of information and technology, conventional budgeting is not sufficient to withstand the rivalry of the global market. As Hope and Fraser (2000), cited in Young (2006), say, the traditional performance management model cannot reflect today's discontinuous change economy. This is why they point out that the annual budget model can be seen as having a number of inherent weaknesses and acting as an obstacle to the implementation of an annual budget. effective implementation of alternative models to use for successful strategic change. Therefore, I divide my essay into two parts. First, point out and criticize five intrinsic weaknesses of the annual budget model. Second, explain how the conventional budgeting process can be seen as an obstacle to achieving the goals of benchmarking, balanced scorecard, and activity-based models for achieving strategic change. Discuss the inherent weaknesses of the annual budget model. There are many weaknesses. of the traditional budgetary model and this has been the subject of much controversy. According to recent research by Libby and Linsay, 2010 cited by Hansen et. al., 2003 summarizes several discussions on budgets and...... in the middle of the document...... activities are prepared on a phased basis or called incremental budgeting. This means that ongoing operations and current budget allocations for existing activities serve as a starting point for preparing the next annual budget. The basis then adjusts for changes such as changes in product mix, volumes and prices that are expected to occur during the new budget period. For example, the allocation for budgeted expenses may be based on the previous budgeted allocation plus an increase to cover higher prices caused by inflation. The main disadvantage of the phased approach is that the majority of expenses, which are associated with the "base level" of activity, remain unchanged. As a result, the costs of non-unit activities become fixed and past inefficiencies and waste inherent in the current way of doing things are perpetuated (Drury, 2005).