Problems in Resource Allocation

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Resource Allocation

Another issue, which must receive the attention of the strategists in resource allocation is the problem involved in its process whatever the basis of resource allocation is adopted. The
problems emerge because:
· resources are limited,
· there are competing organizational units with each trying to have major share of the cake, and
· organization’s past commitment.
These factors taken together-make resource allocation a rational political process which we have seen at the level of choice of strategy . In such a case, there is a possibility -that resource utilization becomes sub-optimal. Specifically, following problems in resource allocation in an organization may emerge:
1. Every unit in the organization tries to get maximum possible resources because allocation of more resources to a unit is considered, as more power vis-a-vis other units.
Further, every unit wants to have flexibility in its operation and tries to hide its inefficiency. To some extent, this may be done by grabbing more resources. Power-play by various organizational units may be due to lack of clear objective priority ordering. This problem may be overcome by clearly defining the expected contributions of a unit and the resources required for those contributions.
2. Organization’s past commitment of resources works as hindrance in resource allocation if the problem is not addressed to properly. Though some techniques like zerobase budgeting or strategic budgeting tries to overcome this problem by transferring the resources from the units where these are under-utilized to the units where these may be better utilized, the process is not simple. The managers of those units from where the resources are taken may show lot of resistance, as they feel neglected. To overcome this problem, the strategists’ role of persuasion and motivation to accept the reality of the situation is the most important.
3. Sometimes, the organization itself may become resistant to change even if it is a loser. It has been found that in many cases, the organization puts its best managers to manage a declining product because it has been a pride of the organization in the past but presently it may not-be of any strategic importance. Similarly, the organizational units that can boast the past glories may obtain major share of available resources, even though other’ business areas may offer more potential. This problem may be solved to a great extent -by inculcating the habit of change in the light of new emerging business-situations.