The key to success of any project or rather business venture is efficient resource management. Efficient resource management involves many aspects but the major one is resource allocation. It is important to note that economic resources are always limited and for this reason, it is very crucial to design mechanisms on how best to use of these limited resources. Resource allocation refers to the way resources are to be utilized in any given organization to obtain maximum or rather optimum output. Baumol & Blinder, (2008) asserts that, according to the classical economists, scarce resources can be efficiently allocated to alternative users through a competitive mechanism.
Depending on how resource allocation is done, it can have either a positive or negative impact on the outcome any business activities. If resources are well allocated in any business venture there are high chances that positive results are to be realized. For example, there will be no wastage of resources due to the fact that the right amount of resources will be dedicated to the right people or department within the organization, (Daft & Marcic, 2008). In this particular case for instance, employing a good number of personnel in the restraint will help save costs on employees and at the same time ensuring that there is smooth running of events within the restraint. Additionally, efficient allocation of resources will help save time, reduces chances of incurring losses, increased output, and lastly chances of attaining optimum profits are increased. On the hand, inefficient allocation of resources will lead to resource wastage and failure to meet the objectives of the business.
In conclusion, there are a number of ways in which resource allocation can be carried. The major and most efficient way is through a competitive mechanism. In this case, resources are allocated to departments within the organization according to their importance in the business. As Baumol & Blinde (2008) argue, the most important departments are given priority first before any other department. In this way, resources will be well managed to achieve optimum output.
Baumol, W. J & Blinder, A. S. (2008). Microeconomics: Principles and Policy. New Jersey: Cengage Learning.
Daft, L. R & Marcic, D. (2008). Understanding Management. New Jersey: Cengage Learning.