There are several difficulties in resource allocation. The following are some of the identified problems.
in Resource Allocation
There are several difficulties in resource
allocation. The following are some of the identified problems.
Financial, physical, and human
resources are hard to find. Firms will usually face difficulties in procuring
finance. Even if fiancé is available, the cost of capital is a constraint.
Those firms that enjoy investor confidence and high credit worthiness possess a
competitive advantage as it increases their resource-generation capability.
Physical resources would consist of assets, such as, lard machinery, and
equipment. In a developing country like India, many capital goods have to be
imported. The government may no longer impose many conditions but it does place
a burden on the firm’s finances and this places a restriction on firms wishing to procure physical resources. Human
resources are seemingly in abundance in India but the problem arises due to the
non-availability of skills that are specially required. Information technology
and computer professionals, advertising personnel, and telecom, power and
insurance experts are scarce in India. This places severe restrictions on firms
wishing to attract and retain personnel. In sum, the availability resources is
a very real problem.
on generating resources
In the usual budgeting process
these are several restrictions for generating resources due to the SBU concept
especially for new divisions and departments.
Over statement of needs is
another frequent problem in a bottom-up approach to resource allocation. The
budgeting and corporate planning departments may have to face the ire of those
executives who do not get resources according to their expectations. Such
negative reactions may hamper the process of strategic planning itself.
Tags : Strategic Management - Strategy Implementation
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