A Study On Resource Allocation- Sm i4o4q

A STUDY ON RESOURCE ALLOCATION

INTRODUCTION:

Resource allocation is a central management activity that allows for strategy execution. A resource allocation is plan for using available resources, especially human resources in the near term, to achieve goals for the future. It is the process of allocating resources among the various projects or business units.

Resource allocation is the assignment of available resources to various uses. In the context of an entire economy, resources can be allocated by various means, such as markets or central

planning.

In project

management,

resource

allocation

or resource management is the scheduling of activities and the resources required by those activities while taking into consideration both the resource availability and the project time.

Resource allocation is a major management activity that allows for strategy execution. Organization do not use strategic management approach for decision

making, resource allocation is often based on political or personal factors. Strategic management enables resources to be allocated according to priorities established by annual objectives. Nothing could be more detrimental to strategic management and to organizational success than for resources to be allocated in ways not consistent with priorities indicated by approved annual objectives.

All organization has at least four types of resources that can be used to achieve desired objectives:    

Financial resources Physical resources Human resources & Technological Resources

Allocating resources to particular divisions and departments does not mean that strategies will be successfully implemented. A number of factors commonly prohibit effective resource allocation, including an over protection of resources, too great an emphasis on short run financial criteria, organizational politics, vague strategy targets, a reluctance to take risks, and a lack of sufficient knowledge.

The real value of any resource allocation program lies in the resulting accomplishment of an organizations objectives. Effective resources allocation does not guarantee successful strategy implementation because programs, personnel,

controls, and commitment must breathe life in to resources provided. Strategic management itself sometimes referred to as a “resource allocation process”.

DEIFNITION OF RESOURCE ALLOCATION: Resource allocation is a process and strategy involving a company deciding where scarce resources should be used in the production of goods or services. A resource can be considered any factor of production, which is something used to produce goods or services. Resources include such things as labour, real estate, machinery, tools and equipment, technology, and natural resources, as well as financial resources, such as money.

METHODS OF RESOURCE ALLOCATION:

 In an economist's world, resources are optimally allocated when they are used to produce goods and services that match consumers' needs and wants at the lowest possible cost of production.  Efficiency of production means fewer resources are expended in producing goods and services, which allows resources to be used for other economic activities, such as further production, savings, and investment.  This basically boils down to creating what customers want as cheaply and efficiently as possible.

 A list of eight different price mechanisms critical to an understanding of politico-economic and socio-economic allocation. Although it is difficult to give a clear characterization of the importance of different methods of distribution in a modern society, the following approaches are considered to be the major means of allocation of resources:

(1) The economic market with a price system;

(2) Voting procedures;

(3) Bidding;

(4) Bargaining;

(5) Allocation by higher authority, fiat, or dictatorship;

(6) Allocation by force, fraud, and deceit;

(7) Allocation by custom, including gifts and inheritance; and

(8) Allocation by chance.

Though simple, the list suggests different approaches used in many politicoeconomic systems, including less-developed countries and societies without democratic institutions.



RESOURCE ALLOCATION PROCESS & STRATEGIES:

 STRATEGIC PLANNING:

Resource allocation begins at strategic planning when a company formulates its vision and goals for the future. The vision and strategic goals are accomplished through achievement of objectives. For example, a consumer electronics company's goal may be to become the market leader in computer tablets. An objective towards this goal is the design and promotion of an innovative tablet.

 BUDGETING:

Once you have set your objective, you will need to allocate sufficient resources to accomplish it. In practical , this is often a matter of project budgeting. In our example, the company will allocate money for market research to determine unmet consumer needs and wants for a computer tablet, money for product design and development, funds for production, and money for promotional activities, such as advertising. Each department may take its budgeted funds and

allocate those resources for more specific purposes, such as hiring employees, commissioning marketing studies, and buying raw materials and components.

 LOGISTICAL MANAGEMENT:

Resources have to be moved to where they need to be in order to accomplish the company's objectives that will bring it closer to its strategic goal. Logistics is the process by which a company manages the flow of resources coming into the company, flowing inside the company, and flowing out of the company.

 MONITORING AND EVALUATION:

Monitoring evaluation ensures that resources are allocated in cost effective and efficient manner. This can be accomplished through careful logistical management and proper ing & auditing.

RESOURCE ALLOCATION PATTERN:

Resource Management is a very important part of Real-time and Embedded software design. This article discusses commonly used Resource Allocation Patterns. The discussion is divided into two parts:

I.

Resource Allocation Algorithms

II.

Distributed Resource Allocation

I.

RESOURCE ALLOCATION ALGORITHMS:

This section covers some of the resource allocation algorithms that are commonly encountered in Real time systems. These algorithms are:

a. Hottest First b. Coldest First c. Load Balancing d. Future Resource Booking

a. HOTTEST FIRST:

In hottest first resource allocation, the resource last released is allocated on next resource request. To implement this last in first out, LIFO type of allocation, the list of free resources is maintained as a stack. An allocation request is serviced by popping a free resource from the stack. When a resource is freed, it is pushed on the free resource list.

The disadvantage of this scheme is that there will be uneven utilization of resources. The resources at the top of the stack will be used all the time. If the resource allocation leads to wear and tear, the frequently allocated resources will experience a lot of wear and tear. This scheme would be primarily used in scenarios where allocating a resource involves considerable setup before use. With this technique, under light load only a few resources would be getting used, so other resources would be powered down or operated in low power mode.

b. COLDEST FIRST:

In coldest first resource allocation, the resource not allocated for maximum time is allocated first. To implement this first in first out, FIFO type of

allocation, the resource allocating entity keeps the free resources in a queue. A resource allocation request is serviced by removing a resource from the head of the queue. A freed resource is returned to the free list by adding it to the tail of the queue.

The main advantage of this scheme is that there is even utilization of resources. Also, freed resource does not get reused for quite a while, so inconsistencies in resource management can be easily resolved via audits.

c. LOAD BALANCING:

In situations involving multiple resource groups, load balancing is used. A resource group is controlled by a local resource controller. In this technique, the resource allocator first determines the lightly loaded resource group. Then, the resource controller of the lightly loaded resource group performs the actual resource allocation. The main objective of resource allocations is to distribute the load evenly amongst resource controllers.

d. FUTURE RESOURCE BOOKING:

Each resource allocation is for a specified time. The resource allocation is only valid till the specified time is reached. When the specified time is reached, the resource is considered to be free. Thus the resource does not need to be freed explicitly.

This technique is used in scenarios where a particular resource needs to be allocated for short duration to multiple entities in the future. When an allocation request is received, the booking status of the resource is searched to find the earliest time in future when the resource request can be serviced. Resource booking tables are updated with the start and end time of each resource allocation.

II.

DISTRIBUTED RESOURCE ALLOCATION:

Most Real time systems are distributed across multiple processors. Different techniques are used to manage resource allocation in such distributed systems. Some of these techniques are discussed below. They are:

i.

Centralized Resource Allocation

ii.

Hierarchical Resource Allocation

iii.

Bi-Directional Resource Allocation

iv.

Random Access

i.

CENTRALIZED RESOURCE ALLOCATION:

In this technique, a centralized allocator keeps track of all the available resources. All entities send messages requesting resources and the allocator respond with the allocated resources. The main advantage of this scheme is simplicity. However, the disadvantage is that as the system size increases, the centralized allocator gets heavily loaded and becomes a bottleneck.

ii.

HIERARCHICAL RESOURCE ALLOCATION:

In this technique, the resource allocation is done in multiple steps. First, the centralized allocator takes the high level resource allocation decision. Then, it

es on the allocation request to the secondary allocator which takes the detailed resource allocation decision.

The advantage of this scheme is that the centralized allocator is not burdened with the detailed resource allocation decisions. This technique could be implemented in multiple levels of hierarchical resource allocations.

iii.

BI- DIRECTIONAL RESOURCE ALLOCATION:

This scheme allows two independent allocators to allocate the same set of resources. It is used in situations like bi-directional trunk groups. The switch at each end of the trunk group allocates the trunks from one specific end. This logic avoids both ends allocating the same resource under light and medium load. However, under heavy load, there is a possibility of both ends allocating the same resource. This situation is resolved by a fixed arbitration algorithm leading to one of the switches withdrawing its claim on the resource.

iv.

RANDOM ACCESS:

Whenever a resource needs to be shared between multiple entities which cannot synchronize to each other and they do not have access to a centralized allocator, designers have to resort to random access to the resource. Here all the entities needing the resource just assume that they have the resource and use it. If two or more entities use the resource at the same time, none of them gets service and all the entities retry again after a random back off timer.

The main disadvantage of this technique is that the random access channel works well only when the overall contention for the random access channel is very small. As contention increases, hardly any resource requests are serviced.

FACTORS AFECTING RESOURCE ALLOCATION: The factors that affect resource allocation are: i. ii. iii. iv.

i.

The objectives of the organisation Preference of dominant strategists Internal politics External influences

OBJECTIVES OF THE ORGANISATION:

Objective setting is a complex process. There are number of objectives, some are official (or explicit) while others are operative (or implicit). Employees of any organisation tend to judge the importance given by strategist to tasks on the basis of amount of resources allocated to them. If the chairperson of a company, while resenting the annual report, makes a recording of persuasive in speaking or writing on the virtues of human resources but the actual resource allocation does not reflect the importance given to these resources, then the human resource development is certainly not a priority strategic task. Operative objectives tend to affect the pattern of resource allocation to the maximum extent.

ii.

PREFERNCE OF DOMINANT STRATEGISTS:

The dominant strategists most often the chief executive officer tends to affect the process of resource allocation. Their preferences are reflected in the way how resources get allocated. Perceptive strategic business units, divisional, and departmental heads know that such preferences matter and try to present their demands in line with them or attempt creating interest in the dominant strategists for their demands so that resources can be attracted easily.

iii.

INTERNAL POLITICES:

The ownership of resources is often misconstrued as possession of power. Those departmental units which are able to attract more resources are perceived as being more powerful. Executives who are in a position to affect the process of resource allocation in their favour are received to be more effective. These perceptions make resource allocation a rational political process. Internal politics within the organisation, therefore affects the process of resource allocation.

iv.

EXTERNAL INFLUENCES:

Apart from internal politics external influences also affects resource allocation. These influences arise due to government policy and stipulations, the demand of external shareholders, financial institution, community, and others. For instance, conditions imposed by legal requirements on companies may require additional investments in labour welfare and security, pollution control and safety equipment, or energy conservation. The shareholders may expect a higher dividend or bonus shares and resources may have to be diverted to them. Financial institutions may impose restrictions or require companies to invest in technology upgradation. The discharging of social responsibilities such as contribution to community services may require allocation of funds. Thus external influences affect the process of resource allocation considerably.

If we look back to the factors described previously, it is easy to recognise that in the absence of clear strategic priorities, the process of resource allocation could be distorted to a great extent. If strategies are made explicit at different levels,

objectives are clearly laid down, and strategic priorities are defined unambiguously then balanced of allocation of resources is more likely.

DIFFICULTIES IN RESOURCE ALLOCATION: Peter Drucker put forward the idea that the job of an effective manager has there components:  Analysing available opportunities to produce results and developing an understanding of their costs  Committing resources to pursue the most promising opportunities and  When some activities lead to results and others do not, deciding which should receive more resources and which should be abandoned altogether. Drucker described the third component as the most painful step. In this subsection, it deals with that painful step makes the process of resource allocation so difficult. The previous subsection described the factors that affect the process of resource allocation. These factors, combined with the fact that the resource allocation process is highly complex, create serval difficult for the strategists. The four major difficulties are: a. Scarcity of resources b. Restriction on generating resources c. Overstatement of needs and d. Tendency to imitate competitors

a. SCARCITY OF RESOURCES: The major difficulty arises due to scarcity of resources. Financial, physical, and human resources are hard to find. Firms will usually face difficulties in procuring finance. Even if finance is available, the cost of capital is a constraint. Those firms that enjoy investor confidence and high creditworthiness process a competitive advantage as it increases their resource generation capability. Physical resources would consist of assets such as land, machinery, and equipment. In developing countries 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 non availability of skills that are specially required. Highly specialised IT and compute professional, advertising personnel, and telecom, power, and insurance experts are scare in India. This places severe restrictions on firms wishing to attract and retain personnel. The availability of scarce resources is very real problem faced in resource allocation.

b. RESTICITIONS ON GENERATING RSORCES: Within the organisation there are several difficulties encountered in resource allocation. The usual budgeting for existing strategic business units,

divisions, departments places restrictions on generating resources for newer units and those with a greater potential for growth. This is often seen in the case of bureaucracies such as government departments. Here the usual way of resource allocation is fixed percentage of increase over the previous years budget allocation irrespective of the needs of the departments or the projects that they handle. The results are restriction on generating resources for allocating to new departments and the projects that might be in greater and more in urgent need of resources.

c. OVERSTATEMENT OF NEEDS: Another frequent problem, especially in a bottom up approach to resource allocation is of overstatement of the needs for resources. The budgeting and corporate planning departments may have to face their executives who do not get resources according to their expectation. Such negative reactions may hamper the process of strategic planning itself. When strategic budgeting is used for resource allocation, powerful units may be divested of resources for reallocation to potential units. ‘Budget battle’ may ensure if resource allocation affects vested interest.

d: TENDENCY TO IMITATE COMPETITORS:

It is interesting to observe that companies in an industry tend to intimate their competitors in of resource allocation. No wonder companies are industries are often so alike internally. There might have been strong reasons in the beginning to do so when the competitive strategies might have been similar. But as companies move from one strategy to the next, often the resource allocation patterns fail to respond to the strategic changes. Different companies following different strategies may have similar resource allocation process and identical resource configurations. This does not really make sense and tends to hurt the capability to develop competitive advantage especially when differentiation strategies might be followed.

TYPES OF RESOURCE ALLOACTION:

The different types of resource allocation are:

1. ALLOCATION BY MERIT:

 This can be seen as a rewards system of sorts. This view suggests that rewards should be distributed according to productivity, effort, or demonstrated ability.

o In the work place, this can be seen as salary increases, promotions, and even layoffs.

o In the college environment, this can be seen as the distribution of grades. As not everyone can receive an A for classes, the grades need to be distributed reflecting a student’s understanding of the subject.

In aspects where a necessity is involved, such as food, shelter, and water, this system breaks down. In impoverished countries, for example, few would argue for denying children food because they are not as productive as adults.

2. ALLOCATION BY SOCIAL WORTH:

 Allocation by social worth tends to take a practical view toward resources, directing them toward those who appear most likely to contribute to the common good. This view suggests that resources should move in directions

that ultimately do the greatest good for the largest number of people. Criteria for social worth can include age, seniority, rank, and expertise.

o In the work place, this can be seen as layoffs. Generally speaking, a senior worker will not be fired over a new worker.

o In the college environment, this can be seen as the distribution of money to labs. Labs for graduate students and upperclassmen tend to be better than freshman labs.

Allocation by social worth breaks down when the criteria for worth ignores basic human rights. For example, wealth is sometimes used to measure social worth, especially in countries with market economies. This attitude can cause food, energy, education, medical attention, and social influence to "flow uphill," thereby making severe imbalances in essential resources even worse.

3. ALLOCATION BY NEED:

 Allocation by need tends to view resources in of basic human rights. This view suggests that every person has the same right to some minimal level of a given resource. Obvious examples include food, shelter, and clothes.

o In the work place, this can be seen when a company diverts funds to a division in that company who's equipment is outdated.

o In the college environment, this can be seen as scholarships given to students who otherwise would not be able to attend college.

Allocation by need breaks down when this criterion is applied so strictly that it removes the incentive to produce. It's usually true that people work hardest when they believe they will enjoy the fruits of their labours. This is also the same reason why socialism doesn't work.

4. ALLOCATION BY EQUAL OR RANDOM ASSIGNMENT:

 Allocation by equal or random assignment takes the view that no rational, unbiased way can be found to distribute resources. This is the default allocation method when no other allocation method works.

o The most obvious example of this is a lottery. When there is no obvious way to distribute resources, a simple lottery can prove to be the "fairest" way.

Allocation by random assignment breaks down when each portion of a resource is simply to small to do any good. For example, dividing antibiotics into small doses during an epidemic could make each dose so small that no one benefits.

No simple rules for allocation can guarantee fairness under all circumstances. The ultimate decision depends heavily on exactly what needs to be distributed and on the specific details of each situation. The Candy case study is a perfect example of resource allocation.

ALIGNING RESOURCE ALLOCATION TO STRATEGY:

 Resource allocation deals with the procurement, commitment and distribution of resources.  A major task of top managers is resource allocation. Strategy guides manager in making decisions about resource allocation.  It lay down clear priorities among competing plans, programmes and projects.  In course of day - to – day, routine work, managers are distracted enough to be diverted away from strategic tasks.  A good strategy serves the purpose of telling the managers clearly where their priorities lie. In the absence of guidance from the strategy, manager can easily end up misallocating resources.  Misallocation of resources can take place in two ways.  First resources might get allocated to tasks that are really not necessary from the strategic point of view.  Second task that are strategically important may be starved of resources. In both these cases, resources that are often scarce get wasted. In other words, aligning resource allocation to strategy means ‘putting your money where your mouth is’.  Another challenge before managers in resource allocation is that of trade – offs.  Since resources are scarce and organisational tasks that demand resources are often too many, manger end up making difficult trade off in the process of resource allocation.

 The process of trade - off requires hard to be made. For example, there may be a situation where scarcity of resources means that money available for investment may be limited. That limited amount of money needs to be allocated to competing projects, each of which demands the attention of managers. In deciding which projects to fund and which projects to postpone or abandon, managers would naturally need to have a clear priority.  Another example could be of scarce human resources. There may be a high demand for well qualified, component IT professionals to put to work on several projects. But the number of such professionals available with the organisation may be limited. In such a situation there should be a clear priority set so that available IT professionals could be put to work on strategically important projects.  The basic challenge before the strategist is how to allocate scarce resources

to

competitive

strategic

tasks

that

lead

to

the

accomplishment of organisational objectives and the realisation of strategic intent.  It would be easier for strategists to allocate resources if the strategic priorities are clear.

WHAT IS RESOURCE OVER - ALLOCATION?

Over-allocation of a resource is when a resource has been assigned more work than can be completed during normal work hours. Resource allocation often leads to overtime and overspending on financial resources.

WHY RESOURCE ALLOCATION IS IMPORTANT?

Over - allocation is most likely to occur when there are multiple projects in a company or when software is used to allocate tasks to resources. Over - allocation occurs is when project managers have been encouraged to meet unreasonable expectations. Project managers then push their resource allocation beyond obtainable limits in order to meet constrained schedules and budgets. Over allocation puts unreasonable pressure on resources and can be costly not only in overtime monies but in resource burnout.

TECHNIQUES FOR AVOIDING RESOURCES OVERLOAD:

The most obvious way resource overload can be avoided is by setting up a project schedule that is realistic. Avoid pushing employees through an unreasonable or aggressive project schedule as a first defence. Schedule the project in a realistic way as part of effective project plans.

Here are five other ways to avoid resource allocation overload in your projects:

1.

RESOURCE LEVELING: In this method, the project manager can either level resources by hand (complicated, but perhaps more sound) or use a software program such as Microsoft projects to level resources for you. This method requires the project manager to be truly on top of his or her game, and to recognize areas for concern before they become problematic.

2. PRIORITIZE PROJECTS:

By prioritizing projects, when a resource allocation overload is apparent or a task conflict exists, it can be resolved without piling pressure on the individual or team (or requiring the individual or team to put in a couple twelve-hour days).In this way, when you find your resources have been overloaded, decisions as to which tasks they should focus on are easier to make. 3. LINKING TASKS: Linking tasks is more of a logistical solution. If the resource has been assigned to research the markets for project A and project B, these tasks could be linked. In this manner, when it appears that a resource has been over-allocated, really the tasks are similar enough to count for two projects. By linking these tasks from the different projects, the problem can be resolved.

4. LEAVING BREATHING ROOM: When scheduling the project, it is vital to leave breathing room between tasks however, it is important to not under-allocate resources as this could lead to a loss of budget monies meaning resource allocations problems will

affect your project's health. A fine balance must be achieved between breathing room and not moving forward quickly enough.

5. AVOID THE “PUTTING OUT FIRES” APPROACH TO PROJECT MANAGEMENT: If your team is consistently putting out fires, it makes it difficult to focus on the project. Moreover, by putting out fires, the team becomes knee-deep in ash, while project tasks pile up. This is where project management techniques such as scrum come in handy.

How you plan your resource allocation is key in keeping your project on track and on budget with the outcomes you expect. If you have problems with resource allocation or your teams are complaining of burnout or being overworked, consider reviewing your resource management skills to keep your projects healthy.

CONCLUSION:

 The chief executive officer has a major role to play in managing the process of resource allocation.  Strategic management is based on a participative mode and the communication of the strategic plan to all executives creates a congenial environment where resource allocation decisions may be taken amicably. BIBLOGRAPHY: 1. http://www.slideshare.net/kbgluciaja/resource-allocation-16175159? related=1 2. http://www.slideshare.net/bogdangavan/resource-allocation? related=2 3. http://www.rand.org/pubs/papers/P4161.html 4. http://www.scs.illinois.edu/~eseebauer/ethics/Advanced/Allocation.ht ml 5. http://www.strategy-implementation.24xls.com/en211 6. https://www.eventhelix.com/RealtimeMantra/Patterns/ResourceAlloc ationPatterns.htm#.Vg7LuPmqqkp 7. http://www.brighthubpm.com/resource-management/11638-resourceallocation-do-you-overwork-your-resources/ 8. http://study.com/academy/lesson/resource-allocation-in-managementmethods-process-strategy.html 9. https://books.google.co.in/books? id=J8YGhhK5keUC&pg=PA334&lpg=PA334&dq=resource+allocati on+process+in+strategic+management&source=bl&ots=UoBapdVEF p&sig=uAC_qP9bnJGcL9pv0sD2p5VrsWI&hl=en&sa=X&ved=0CE

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