The resources may be existing with a company or many be acquired through capital allocation.
The resources may be existing
with a company or many be acquired through capital allocation. Resources
include physical, financial and human resources essential for implementing
are broadly of four categories.
supplies and services
Decisions involved in allocation
of resources have vital significance in strategy implementation. In single
product firms it may involve assessment of the resource needs of different
functional departments. In the multi divisional organization it implies
assessing the resource needs of different SBUs (discussed in lesson 4 of Unit
I) or product divisions
Redeployment or reallocation of
resources becomes necessary when changes take place. The redeployment of
resources is quite critical when there are major changes and shifts in
strategic posture of company. Redeployment of resources may arise due to
strategies of a company to grow in certain areas and withdraw from the other.
Methods of Resource
Based on Percentages
Usually, companies have been
following system of allocation of resources by percentages.
The following arguments reject
It may not serve much purpose
these days. They may be of help only in making some comparisons.
The allocation of resources
should not be based on their availability or scarcity as it may prove to be
The resource allocation should be
made with regard to strategies of a company for its future competitive position
and growth. The decisions of resource allocation are also closely connected
with the objectives of a company.
Based on Modern Methods
Other methods include -Portfolio models, product life-cycle charts, balance sheets, profit and loss
statements income statements. When retrenchment
or turnaround strategies are implemented zero-based budgeting is used. During
mergers, acquisitions and expansion, capital budgeting techniques are
Resource allocation is not purely
a rational technique but is based on several behavioral and political
considerations. The other analytical conceptual models used for strategic
choice are growth share matrix, ‘stop light’, and Directional Policy Matrix
used in multi divisional firms.
A more comprehensive approach to
management decisions on resource allocation is provided by the budgeting system
carefully geared to the chosen strategy.
Tags : Strategic Management - Strategy Implementation
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