This chapter consists of resource allocation and how it is
important for the success of the organization. It
also include the “Conflict” its types and how to reduce it.
strategic planning, a resource-allocation
decision is a plan
for using available
human resources especially
in the near term, to achieve goals for the future. It is the process of
resources among the various
or business units.
The plan has two parts: Firstly, there is the basic allocation
decision and secondly there are contingency
mechanisms. The basic allocation decision is the choice of which
items to fund
in the plan, and what level
of funding it should receive, and which to leave unfunded: the
resources are allocated to some items, not
There are two contingency mechanisms. There is a priority
ranking of items excluded from the plan,
showing which items to fund if more resources should become
available; and there is a priority ranking of
some items included in the plan, showing which items should be
sacrificed if total funding must be
Resource allocation is a major management activity that allows
for strategy execution. In organizations that
do not use a strategic-management approach to 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 organizations have at least four types of resources that can
be used to achieve desired objectives:
financial resources, physical resources, human resources, and
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 overprotection 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
Managers normally have many more tasks than they can do.
Managers must allocate time and resources
among these tasks. Pressure builds up. Expenses are too high.
The CEO wants a good financial report for
the third quarter. Strategy formulation and implementation
activities often get deferred. Today's problems
soak up available energies and resources. Scrambled accounts and
budgets fail to reveal the shift in
allocation away from strategic needs to currently squeaking
The real value of any resource allocation program lies in the
resulting accomplishment of an organization's
objectives. Effective resource allocation does not guarantee
successful strategy implementation because
programs, personnel, controls, and commitment must breathe life
into the resources provided. Strategic
management itself is sometimes referred to as a "resource
Conflict is a state of opposition, disagreement or
incompatibility between two or more people or groups
of people, which is sometimes characterized by physical
Military conflict between
political terms, "conflict" refers to an
ongoing state of hostility between two groups of people.
Conflict as taught for graduate and professional work in
commonly has the definition:
"when two or more parties, with perceived incompatible goals,
seek to undermine each other's goalseeking
One should not confuse the distinction between the presence and
absence of conflict with the difference
In competitive situations, the two or more parties each have
mutually inconsistent goals, so that when either party tries to
reach their goal it will undermine the
attempts of the other to reach theirs. Therefore, competitive
situations will by their nature cause conflict.
However, conflict can also occur in cooperative situations, in
which two or more parties have consistent
goals, because the manner in which one party tries to reach
their goal can still undermine the other.
Types and Modes of Conflict
A conceptual conflict can escalate into a verbal exchange and/or
result in fighting.
Conflict can exist at a variety of levels of analysis:
• intrapersonal conflict
(though this usually just gets delegated out to
• interpersonal conflict
• organizational conflict
• community conflict
• intra-state conflict
(for example: civil wars,
• international conflict
Conflicts in these levels may appear "nested" in conflicts
residing at larger levels of analysis. For example,
conflict within a work team may play out the dynamics of a
broader conflict in the organization as a whole
Theorists have claimed that parties can conceptualise responses
to conflict according to a two-dimensional
scheme; concern for one's own outcomes and concern for the
outcomes of the other party. This scheme
leads to the following hypotheses:
• High concern for both
one's own and the other party's outcomes leads to attempts to find mutually
• High concern for one's
own outcomes only leads to attempts to "win" the conflict.
• High concern for the
other party's outcomes only leads to allowing the other to "win" the conflict.
• No concern for either
side's outcomes leads to attempts to avoid the conflict.
society, practitioners usually suggest
that attempts to find mutually beneficial solutions lead to
the most satisfactory outcomes, but this may not hold true for
many Asian societies.
Several theorists detect successive
in the development of conflicts.
Often a group finds itself in conflict over
It is critical that it properly
identify the type of conflict it is experiencing if it hopes to
manage the conflict through to resolution. For
example, a group will often treat an
as a fact.
The more difficult type of conflict is when values are the
It is more likely that a conflict over
facts, or assumptions, will be resolved than one over values. It
is extremely difficult to "prove" that a value
is "right" or "correct".
In some instances, a group will benefit from the use of a
to help identify
the specific type of conflict.
have developed many practices to solve social and
political conflicts without
resorting to violence or coercion.
There is no one optimal organizational design or structure for a
given strategy or type of organization.
What is appropriate for one organization may not be appropriate
for a similar firm, although successful
firms in a given industry do tend to organize themselves in a
similar way. For example, consumer goods
companies tend to emulate the divisional structure-by-product
form of organization. Small firms tend to
be functionally structured (centralized). Medium-size firms tend
to be divisionally structured
(decentralized). Large firms tend to use an SBU (strategic
business unit) or matrix structure. As
organizations grow, their structures generally change from
simple to complex as a result of concatenation,
or the linking together of several basic strategies.
Numerous external and internal forces affect an organization; no
firm could change its structure in
response to every one of these forces, because to do so would
lead to chaos. However, when a firm
changes its strategy, the existing organizational structure may
become ineffective. Symptoms of an
ineffective organizational structure include too many levels of
management, too many meetings attended
by too many people, too much attention being directed toward
solving interdepartmental conflicts, too
large a span of control, and too many unachieved objectives.
Changes in structure can facilitate strategyimplementation
efforts, but changes in structure should not be expected to make
a bad strategy good, to
make bad managers good, or to make bad products sell.
Structure undeniably can and does influence strategy. Strategies
formulated must be workable, so if a
certain new strategy required massive structural changes it
would not be an attractive choice. In this way,
structure can shape the choice of strategies. But a more
important concern is determining what types of
structural changes are needed to implement new strategies and
how these changes can best be
accomplished. We examine this issue by focusing on seven basic
types of organizational structure:
functional, divisional by geographic area, divisional by
product, divisional by customer, divisional by
process, strategic business unit (SBU), and matrix