These costs are less obvious than direct costs, but can be an important factor in organizational competitiveness ("Project managers," 2003). As an example, long lead times for hard-to-find, specialty resources can result in additional hidden costs. These include the costs of warehousing extra resources, to compensate for these long lead times. If production runs short of these resources, and they are not readily available, this can result in stopped production. The lost productivity results in increased overhead costs as a percentage of production. This can then lead to reduced competitiveness, resulting in reduced revenues, and an inability to continue to take advantage of economies of scale, for not only that particular resource, but also all other resource inputs for that product or service.
The consequences of obtaining resources for an organization are both external and internal. Externally, the primary consequence is that that resource is no longer in the environment for other organizations to acquire. This can further positively impact the organization's competitiveness that was able to obtain the resource, if the other organizations vying for the resource are competitors.
This consequence also affects other organizations outside of the competitive sphere of the one organization that acquired the resource. Even if another organization isn't a competitor regarding the final product or service, they too will be negatively affected by the removal of the resource from the environment. This consequence resulting in higher demand and scarcer availability will directly impact the cost of the resource to the rest of the organizations who need the resource as an input, no matter what their output, in the end, is.
A final external consequence of obtaining a resource is the impact this acquisition can have on the political relationship between two countries, if the resource is located outside of the home country of the organization. An economically advantageous relationship between entities in different countries can help foster a political relationship between the two countries. Profit is a common language around the globe. If resources from a country become scarce, or are withheld for other reasons, this can result in resentment between the two nations and strain political relationships that had formally been on solid ground.
Internally, the primary consequence of obtaining a resource is the financial resources used to make the acquisition are no longer able to be used for other acquisitions. Each time an organization obtains a resource, it is a conscious choice of the organization to allocate those financial resources to that resource, as opposed to something else. The organization, in this way, sets priorities. This establishment of priorities, from early on, sets a precedence for future operations. For example, if an organization makes research and development a priority, and therefore makes the acquisition of resources to facilitate research and development a priority, from the very beginning of the organization, it is likely to continue to be a priority for the organization as it advances through its stages of development.
Furthermore, it is the setting of these priorities that often determines the success of the organization, within its competitive environment. The financial resources of an organization are finite. Selecting their most effective use in the acquisition of resources can make or break the organization's competitiveness. Devoting financial resources to unneeded or ineffective resources can result in lost competitiveness. This can result in the organization paying the ultimate consequence of organizational demise, if the organization is unable to quickly correct their errors.
How Resource Attainment Varies with the Type of Organization, Environment and the Organization's Stage of Development:
Resource attainment varies greatly depending on the type of organization, the environment they operate within and the organization's stage of development. One of the most difficult tasks a business faces is determining how to best organize their people. Business types often are determined by the sheer size of the number of employees performing the necessary tasks within the organization ("Organizational structure," 2008). An organization may exist as a sole proprietorship, with one person in complete control of the organizational processes. This includes resource attainment. With a single person controlling this process, the decision-making of where the resources should be obtained and which should receive priority is far more simple than any other organization type.
As the organization becomes increasingly successful and grows, there is typically more work to perform and, thus, more people who are needed to perform the increasing number of tasks. Utilizing division of work, the individual workers can specialize in a specific job. Due to the fact that there...
This systematic work arrangement results in a more complex organizational structure ("Organizational structure," 2008). These increasingly complex network of responsibilities, functions, relationships, communication lines, and authorities further add to the complexity of resource attainment.
A traditional organizational type, with clear bureaucratic lines that can be demonstrated on a pyramidal organizational chart, does have the advantage of a formalized authority structure, when it comes to obtaining resources. However, lower levels of the organizational chart will be vying for their desired resources, placing the weight of the decision near the top of the chart. For the more modern and more organic organization type, where groups within the organization are organized to interact with one another, the process of attaining resources can be even more difficult. The lines of authority are not as clearly drawn, and therefore the decision-making process may be more tedious. Departments that do not receive the resources they feel they need and deserve may harbor resentment against the other departments. This can lead to the siloing of information and result in a reduced level of cooperation, within the organization. This increased competition for resources can further negatively impact morale, and result in reduced productivity across the organization as a whole. Even within different industries, one can see the difference in how resources are attained.
Slack (1997) applies organizational theory to further an understanding of sport organizations. In this, Slack discusses competition over resources for this specific type of organization. He notes,
When two or more subunits within a sport organization compete for a share of limited resources, they come into conflict with each other. Because sport organizations only have so much money, space or equipment, there is conflict over who is going to get what. Also, since these resources often help subunits accomplish their goals more easily and quickly, managers often use such strategies as inflating budgets or political maneuvers to increase their share.
Conflict over resources can occur horizontally in a sport organization, for example, when the sport studies department within a university has to compete with other departments for increased funding. It can also occur vertically, particularly between owner/managers and workers. The NHL's 2004 to 2005
canceled season (…) is a good example of conflict over resources, in this case, financial resources (p. 223).
This is very similar to the internal competition experienced by many larger corporations, especially those with unions and their competition for organizational resources to be devoted to union members, at the expense of other needs of the organization.
The environment the organization operates within also affects how resources are attained for the organization. If the supplier power is strong in an organization's environment, the organization has very little bargaining power. This occurs when the resource is a specialty resource, with one or a very few number of suppliers offering the resource. This is also true if there is no good alternative resource for the organization to turn to. If there are several suppliers offering a similar resource or there are several alternatives available, then the organization holds more power over the suppliers and thus have a better chance negotiating better terms for acquiring the resource.
This external environment also takes into account the level of competitiveness within the industry. If the industry is very competitive, and/or there is a significant threat of new entrants into the industry, then attaining resources as effectively and efficiently as possible can be critical to the organization's success. However, if there is very little competition within the industry, for a particular output product or service, then the organization's competitiveness will not be as affected by the obtaining of the resources. For this reason, organizations in a less competitive environment may be more likely to obtain the resources with less care, as far as cost is concerned. However, those organizations in a hyper-competitive environment will be far more likely to be price conscious.
Lastly, the organization's stage of development often affects how they attain resources. At inception, there is typically little need for obtaining resources; however, as the organization moves into the start-up phase, resources become an issue. The organization must determine which resources it truly needs to be successful, and which can wait for the organization to mature. Investing in the wrong resources early on can spell early failure for the fledgling organization.
For launch of the organization to be successful, the input resources must be obtained…
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