Resource Allocation& Budgeting

.What is Resource Allocation Resource Allocation deals with procurement. informational and physical resources to strategic tasks for the achievement of organizational objectives. human. commitment & distribution of financial.

Steps dealing with Resource allocation  Resources should be allocated at a place where these have maximum contributions  Resources should be put according to the needs of various organizational units .

Factors affecting Resource Allocation  Objectives of the organization  Preference of dominant strategies  Internal Politics  External influences .

that is zero base. net present value  Performance Budgeting -It involves non financial measurement of performance which can be related to financial measurement in explaining changes & deviations from planned performance  Zero based Budgeting.It requires each manager to justify his entire budget in detail from scratch. payback period. .Basis for Resource Allocation  Capital Budgeting -Investment in long term assets. Various techniques used here are average rate of return. internal rate of return.

Resources are distributed to through a process of segregation down to operating levels ( Entrepreneurial mode)  Bottom up approach.Strategic BudgetingThree approaches are used while budgeting  Top down approach.Resources are segregated after a process of segregation from operating level ( participative mode)  Iterative form.It involves a mix of two approaches & is known a strategic budgeting between different levels of management .

Stages of Budget of preparation  Position papers. middle level and lower level. It includes     Position paper on environment Position paper on organizational constraints & resources Position papers on past performance Position paper on future direction of activities  Preparation of Budget.Budget is prepared through the interaction of top level. .Provides the background on which strategic budget is prepared.

Levels of management Budgeting process Top management Corporate policy guidelines Desired long& Short run goals Approval& Resource sanction availability Executive management Position papers Minimizing gaps Strategic budget Proposals Operating management Target/ Operational plans Implementation .

Limitations of resource allocation  Scarcity of resources  Restrictions on generating resources  Overstatement of needs  Tendency to imitate competitors .

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