STRATEGY

IMPLEMENTATION

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Learning objectives
• Describe the nature of, and barriers to, strategy implementation
• Discuss the interrelationship between formulation and implementation of strategies
• Explain the three themes that constitute model of strategy implementation
• Review the role of project management in strategy implementation
• Review the role of regulatory mechanisms in procedural implementation
• Recognise the importance of aligning resource allocation to strategy

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Four phases in Strategic
Management

Establishment of
strategic Formulation of Implementation of Strategic
intent strategies strategies evaluation

Strategic control

3
Nature of Strategy Implementation

• Strategy implementation is a dynamic, iterative and complex process, which is

comprised of a series of decisions and activities by managers and employees –
affected by a number of interrelated internal and external factors – to turn strategic
plans into reality in order to achieve strategic objectives.
• Strategies have to be activated through implementation

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Characteristics of Strategy Implementation
• Action orientation

• Comprehensive in scope

• Integrated process

• Wide-ranging involvement

• Demanding varied skills

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Barriers to Strategy Implementation
• Strategies often fail not because they were not formulated well but for the reason that they were not implemented effectively.
• Hrebiniak’s listed the following major obstacles below:

An inability to manage change

Poor or vague strategy

Poor or inadequate information sharing

Unclear responsibility & accountability

Working against the organizational power structure

Not having guidelines or a model to guide implementation efforts

L.G. Hrebiniak, “Obstacles to strategy implementation,” Organizational Dynamics 35, no. 1, (2006): 12–31.

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Failed Companies/products in India
• Kingfisher: The premium and world-class airline group founded by Vijay
Mallya was based in Bangalore and boasted of 400 flights per day once.
But it mired in some controversies and had to bear the brunt of customer
complaints such as lack of delegation, misbehaviour, unnecessary
burning of fuel and lack of attention from the owner who was busy
handling another business. It had to shut down completely hence.
• Nano: Tata Nano which brewed quite the storm in tea-cups failed as the
company announced it was going to be the cheapest car of the nation
which will be run by battery, not fuel. But it later got mired in political
controversies and the marketing went wrong too. No prizes for guessing,
this car from the house of Tata failed too.

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 Failed Companies/products in the
World
• NOKIA: The Finnish company Nokia reached its finishing point in 2014 when it was sold
to Microsoft. Although, the use of its name in technologies and branding still continues,
but the Nokia we knew is now no more. Having been the industry leader for a long time
almost all across the globe, Nokia’s sudden nose-dip into failure was a mystery for many.
• Nokia Corporation started with products like paper items, bicycle tires, rubber boots and
various other electronic items before getting into mobile phones. For 14 years straight
Nokia was the largest global mobile phone maker.
• The reason for the failure can accurately be summed in two A’s – Apple and Android.
Apple and Android crushed Nokia. Relying only on Symbian operating systems, Nokia
failed to adapt early to the software shift in the market and concentrated only on
producing better hardware.
• Business strategies seem fairly simple until you start practicing the business.

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 Failed Companies/products in the
World
• KODAK: The American company Kodak was the pioneer in camera
technology.
• The first ever digital camera was designed in 1975 by Steve Sasson.
Where did Steve work? Yes, Kodak! When Steve introduced his
revolutionary technology to his bosses at the company, their response was
“that’s cute – but don’t tell anyone about it”.
• The management saw this invention as a threat to that business. Result –
no marketing of this brand new invention
• Competitors like Sony, Fujifilm, Nikon got hold of the technology and
capitalized heavily on the opportunity. Kodak remained in denial and was
adamant to not go ahead with this filmless digital technology.

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Overcoming Barriers to Strategy
Implementation
• The means to overcome the barriers to strategy implementation usually revolve
around the following two main suggestions:

• Clear model of the strategy implementation process

• Effective management of change in complex situations

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Interrelationship of Formulation and
Implementation
• There are two types of such linkages that exist between formulation and
implementation of strategies:

• Forward Linkages

• Backward Linkages

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Two-Way Linkage Between Formulation and
Implementation of Strategy

STRATEGY STRATEGY
FORMULATION IMPLEMENTATION
(ANALYSIS / THOUGHT) (ACTION / DOING)

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Contrasting Strategy Formulation and
Implementation
• While strategy formulation is primarily an entrepreneurial activity, based on
strategic decision-making that require analysis and thinking, the implementation
of strategy is an administrative task based on strategic and operational
decision-making that may require action and doing.
• Strategists have to manoeuvre around the emerging circumstances dropping some
of the parts of the intended strategy that is the unrealised strategy and adding some
other elements that are the emergent strategy. Ultimately what is implemented is
the realised strategy.

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Mintzberg’s Conception of the Types of Strategy

Formulated Implementedstrat
strategy egy

Intended Deliberate strategy Realised

strategy strategy

Unrealized Emergent
strategy strategy

Source: Based on H. Mintzberg, “Pattern in strategy formation,” Management Science 24, no. 9 (May 1978):
945.

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A Model of Strategy Implementation
• The model of strategy implementation depicts the below mentioned three major themes:
• Activating strategies
• Managing change
• Achieving effectiveness
• A strategy creates its own requirements of the various activities of the implementation process.
• As the strategy is modified or replaced with a new one, each of the activity of implementation need
to undergo a change and implementation is also and rightly said as change management.

A. Kazmi, “A proposed framework for strategy implementation in the Indian context,” Management Decision 46, no. 10 (2008): 1564-1581.

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A Model of Strategy Implementation
ACTIVATING MANAGING ACHIEVING
STRATEGIES CHANGE EFFECTIVENESS

PROJECT
IMPLEMENTATION
STRUCTURAL FUNCTIONAL
IMPLEMENTATION IMPLEMENTATION
LEADERSHIP
STRATEGIC PROCEDURAL IMPLEMENTATION EVALUATIO
PLAN IMPLEMENTATION BEHAVIOURAL N&
IMPLEMENTATION CONTROL
OPERATIONAL
IMPLEMENTATION
RESOURCE
ALLOCATION

FEEDBACK

https://www.youtube.com/watch?v=CKcSzH1
SvCk
Source: Adapted from A. Kazmi, “A proposed framework for strategy implementation in the Indian context,”
Management Decision 46, no. 10 (2008): 1564-1581.

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1. The Theme of Activating Strategies
Activation strategies in the form of a pyramid with strategies at the top.
• Strategies lead to several plans
• Each plan leads to several programmes
• Each programme results in numerous projects
• Projects are supported by budgets
• Policies
• Procedures
• Rules and regulations
• Administrative mechanisms

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The Pyramid of Strategy Activation

STRATEGY

PLANS

PROGRAMMES

PROJECTS

BUDGETS

POLICIES, PROCEDURES, RULES AND REGULATIONS

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2. The Theme of Managing Change
• Strategic management has to deal with dynamic situations within and outside
organisations.

• Strategy implementation almost always necessitates change and performs the

significant task of keeping the organisation internally fit to be responsive to
external environment. Managing change, therefore, is an essential requirement
for the success of strategy implementation.

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Issues in Management of Change
• The three issues in management of change as a theme of strategy implementation are:

• Degree of change: radical/incremental

• Timing of change
i. Reactive Change
ii. Anticipatory change.
• Activity areas of change: In strategy implementation, the three activity areas of change are:
• Structure
• Leadership
• Behaviour

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 3. The Theme of Achieving Effectiveness
• Organisational effectiveness is the degree to which an organisation is able to achieve its objectives and
the eventual end that we seek to attain through implementation of strategies.
• There are four models of organisational effectiveness: the goal model, resource-based model, internal
process model, and the conflicting values model.
• The methods of achieving and the means to improve organisational effectiveness cover a wide array of
managerial activities. These include, financial management, marketing management, operations
management, human resource management, and information management.

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Project Implementation
• Projects are not an appendage to strategy implementation but need to be a significant part of the overall strategy
supported by the right approach, processes, and tools and techniques.

• Project: It is a temporary group activity designed to produce a unique product, service or result.

• Project management : is the application of knowledge, skills and techniques to execute projects effectively and
efficiently; enabling them to tie the results to the organizational business goals.

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Project Implementation
• Project management is generally thought of as comprising of five sequential
processes:
• Initiating
• Planning
• Executing
• Monitoring and controlling
• Closing

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Project Management and Strategy
Implementation
• Project management is the key enabler of strategy implementation within the organisations.
• The succeeding step of strategic evaluation and control would support the controlling stage of the
project process by providing a set of control measures.
• The linking of the project management process with strategy implementation helps in creating a
project-oriented organisation and it might pose a complex organisational challenge before managers as
this requires a high level of coordination.
• But once achieved, the significance of project management changes; project management integrates
with the strategy implementation framework.

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Strategy Implementation through Project
Management
STRATEGIC MANAGEMENT PROCESS

STRATEGY IMPLEMENTATION STRATEGY EVALUATION AND

CONTROL

PROJECT CONTROL MEASURES

OBJECTIVES AND METRICS

INITIATING PLANNING EXECUTING MONITORING AND CLOSING

CONTROLLING

PROJECT MANAGEMENT PROCESS

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Procedural Implementation
• Regulation is a sort of contract between the business and society. Governments and regulators are
among the important stakeholders of firms and it lends legitimacy to business positively.
• Deregulation is intended to loosen the controls - within which any industry or business operates - and
let the market forces determine supply and demand for products and services.
• There are controversies galore on questions such as whether or not regulation needs to be there, if
regulation is needed then how much of it is necessary; is self-regulation better than imposed
regulation, and so on.
• Organisations have costs of compliance with regulation and usually higher costs of non-compliance
too.
• For companies in many nations, regulatory policy increasingly shapes the structure and conduct of
industries and sets in motion major shifts in economic value.

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 Regulatory Mechanisms in India
• Organisations planning to implement strategies must be aware of the procedural framework within
which the plans, programmes, and projects have to be approved by the government at the central,
state and local levels.
• The procedural framework consists of legislative enactments and administrative orders besides
policy guidelines issued by different levels of the government from time to time.
• The regulatory mechanisms for trade, commerce, and industry in India span a wide legal
framework consisting of the Constitution of India, the Directives Principles, Central laws, State
laws, general laws, sector-specific laws, and industry-specific laws, and the rules and procedures
prescribed by the implementing authorities at various levels of the government.

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Regulatory Mechanisms in India
• The major elements of the government’s regulatory framework are as below:
• Formation of a company
• Procedures for industrial assistance
• Facilitation for fair competition
• Procedures for foreign collaboration
• Procedures for foreign trade
• Protection of intellectual property
• Requirements of labour legislation
• Requirements for consumer protection
• Requirements for investor protection
• Requirements for corporate sustainability
• Requirements for availing incentives and facilities

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Formation of Company
• The formation of the company is governed by the provisions of the Companies Act, 1956. The
Companies Act, 2013 has been notified and many of the provisions of the Act have been
implemented while the provisions of Companies Act, 1956 are still in force.
• The Companies Act, 1956 consists of promotion, registration, and floatation of companies.
• Corporate strategies such as integration and diversification may lead an organisation to form a
separate company to expand or enter a new business.
• There are some strategic management tasks to be done like, setting of vision and mission need to
be established at this stage to guide the writing of articles and memorandum of association.
• Corporate governance mechanisms need to be set for the effective working of the board.

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Procedures for Industrial Assistance
• The system of planning (or planned development) rests on three policy documents consisting of
Industrial Policy Resolution, 1956, Industries (Development and Regulation) Act, 1951,
and statements of 1978, 1980, 1982, and 1991. The Industries (Development and Regulation)
Act, 1951 provided for a licensing system for the development and regulation of scheduled
industries - those industries listed in the Schedule of the Act.
• A license is a written permission from the Government to an industrial undertaking to
manufacture specified articles included in the Schedule.
• The licensing procedure requires the applicant to approach the Secretariat for Industrial
Assistance (SIA), which is a common secretariat for receiving and processing all types of
applications related to medium- and large-sized industrial projects including those for FDI.

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Facilitation for Fair Competition
• In India, competition in industry is regulated through the provisions of the Competition Act,
2002, as amended by the Competition (Amendment) Act, 2007.
• The activities of the Commission are overseen by the Competition Commission of India (CCI)
that works to eliminate practices having adverse effect on competition, promotes and sustains
competition, protects the interests of consumers and ensures freedom of trade in the markets.
• As can be seem the requirements under the Competition Act are likely to have substantial impact
on some of the strategic issues within organisations such as implementation of competitive and
business strategies, functional strategies especially in the area of marketing or mergers and
acquisitions.

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 Procedures for Foreign Collaboration
• Many strategic alternatives call for foreign collaboration and investment as per policy on an automatic
basis with some exceptions such as those where industrial licensing is required or where the provisions
of SEBI are applicable.
• The Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, Reserve
Bank of India, and Foreign Investment Promotion Board (FIPB) are the major regulatory agencies in
India.
• Foreign investments are of two types: FDI and FII or portfolio investment
• FDI can take place through wholly-owned subsidiaries, joint venture, or acquisition.
• FII(Foreign Institutional Investment): Portfolio investment takes place through investment by the foreign
institutional investors and investments in instruments such as global depository receipts (GDRs) and foreign
currency convertible bonds (FCCBs).

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Procedures for Foreign Trade
• Strategy implementation in areas such as diversification and internationalisation requires the consideration
of foreign trade requirements in related to import and export.
• Imports are vital for capital goods and raw materials provision for new and existing projects. Exports are often
the first step as an entry mode to internationalisation of an organisation
• The Central government has the powers to prohibit, restrict, regulate, exempt or promote foreign trade. The
Department of Commerce in the Ministry of Commerce is responsible for the country's external trade and all
matters connected with commercial trade relations with other countries.
• The policy implementation and the legal framework for imports and exports in India are largely based on the
Foreign Trade Development and Regulation Act (FTDRA), 1992 and the Foreign Trade (Regulation) Rules,
1993. The Directorate General of Foreign Trade under the ministry is assigned the role of facilitator and
promoter of export and imports. Foreign trade policy is announced for five years corresponding to the national
five-year planning period.

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 Protection of Intellectual Property
• Patents, trademarks, designs and geographical indications (country of origin of product) are assuming greater significance
in Indian industry owing to international environmental changes. The major impact on these issues is of the World Trade
Organisation (WTO) requirements related to the Trade Related Aspects of Intellectual Property Rights (TRIPs) as well as
protection of intellectual property created by Indian organisations.

• The regulatory mechanism of patenting are dealt by the Ministry of Commerce and Industry through the office of the
Controller General of Patents, Designs & Trade Marks that supervises the working of Patents Act, 1970, Designs Act, 2000
and Trade Marks Act, 1999.

• The Copyright (Amendment) Act, 2012 and Copyright Rules, 2013 govern the protection and enforcement of copyrights in
India. The office of the Registrar of copyrights under the Ministry of Human Resource Development deals with all matters
related to copyrights.
• The increasing competitiveness in the business environment has meant that it is necessary to know the rights and privileges and
the legal procedures for protecting products and ideas and familiarity with the related law has, therefore, become essential for
strategy implementation.

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Requirements of Labour Legislation
• Labour reforms are necessary for global competitiveness and attracting foreign investment but governments
have been deliberate in their actions since labour is a sensitive political issue.
• Under the Indian Constitution, labour is a common subject for Central and State governments.
• Labour legislation consists of over 150 central and state laws related to different aspects. The major
aspects are: industrial relations, industrial safety and health, child and women labour, social security,
labour welfare, employment and training and wages.
• The procedural implementation regarding labour legislation has bearing on the implementation of strategies
in the areas of objective setting, strategic choice, social responsibility, formulation and implementation of
human resource management policies, and the operational strategies.

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Requirements for Consumer Protection
• The growth of consumerism, consumer awareness coupled with growing competition makes it imperative
that companies conform to procedures laid down in the law regarding consumer protection.
• The apex level institution for overseeing consumer affairs is the Department of Consumer Affairs under
Ministry of Consumer Affairs, Food and Public Distribution. Consumer protection is ensured through a
plethora of legislation the major one being Consumer Protection Act, 1986
• Consumers are the subject of the organisation’s vision and mission, objectives are set to satisfy customers,
and the business definition is in terms of customer needs and customer groups. Environmental and
organisational appraisals give due regard to the customers. Corporate and business strategies are
formulated keeping in view the customers.
• The issue of consumer protection is also highlighted in the procedural implementation at the level of
business and operational strategies and in implementation of functional policies related to operations,
quality, and marketing.

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Requirements for Investor Protection
• The Securities and Exchange Board of India (SEBI) Act 1992 led to the creation of a statutory
body SEBI in 1992. According to the SEBI Act, the objectives of SEBI are to protect the
interests of investors in securities and to promote, develop and regulate the securities market.
• The SEBI issues guidelines from time to time to oversee matters under its control. These
guidelines are of relevance to companies accessing the capital market for funds for projects
emanating as offshoots of their corporate and business strategies.
• For the purpose of strategy implementation, this Act is relevant so far as the provision of
financial resources is concerned. Apart from this, this Act also affects mergers and
amalgamations as they regulate the capital reorganisation plans for mergers.

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 Requirements for Corporate Sustainability
• Corporate sustainability is a vast area including governance, social responsibility, stakeholder
management and adherence to values and ethics.
• The Apex-level body for matters related to environment in India is the Ministry of Environment and Forests
that deals with the implementation of the laws and policies and programmes relating to conservation of the
country’s natural resources. The major responsibility to deal with environmental issues lies with the State
Pollution Control Boards.
• The issues of stakeholder management, corporate governance, corporate social responsibility and values and
ethics have several requirements to be adhered and fulfilled by organisations.
• Many non-profit organisations adopt the issue of environmental protection as their mission.

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Requirements for Availing Incentives and
Facilities
• In providing incentives, etc. the government does not play a regulatory but a promotional role.
• The policies and schemes for incentives and facilities are introduced, revised, and updated regularly to
respond to changing needs and emphases.
• Some of the major policies & schemes are: loans at concessional rate of interest, subsidies in
various forms, establishment of special economic zones, tax holidays/concessions, single-window
clearances for industrial projects etc.
• Strategic decision-making has to take these factors into account in objective-setting, strategic choice,
and strategy implementation. Project implementation for putting a strategy into action requires a
consideration of various incentives, subsidies, and facilities.
• It is beneficial for entrepreneurs to be aware of these so that due advantage can be taken.

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Procedural Implementation in Action
• Strategists may adopt a submissive, confrontational, or collaborative stance in trying to conform to the
regulations
• Companies going in for expansion strategies, particularly diversification, usually look for industry experts,
consultants, and retired civil servants who can advise them on all the aspects of establishment of project and
guide them through the maze of governmental regulations.
• Informally, organisations may seek to coordinate and influence governmental action through political
donations and informal lobbying. Lobbying is illegal in India yet persists informally.
• In organisations that adopt internationalisation strategies, they should be ready to face unfamiliar regulatory
environment in the countries they choose to operate it. Legal systems, government policies and procedures,
and institutional mechanisms differ across countries.

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 Strategic Budgeting
• Strategic budgeting is an iterative process involving a multi-level, organisation-wide effort and, therefore, needs to
carry the approval of all concerned. The difference between strategic and top-down budgeting lies in the way the
budgeting exercise is carried out in an iterative manner between different managerial levels and the assumptions
made before the formulation of budgets.
• Broadly, there could be three approaches to resource allocation through budgeting:
• Top-down approach
• Bottom-up approach
• Mix of these two approaches (involves an iterative form of strategic decision-making between different levels
of management termed as strategic budgeting.)

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Making of a Strategic Budget

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Resource Allocation: Men, Money, Material
• Resource allocation deals with the procurement, commitment, and distribution of financial, human,
informational, and physical resources to strategic tasks for the achievement of organisational objectives.

• Organisational resources in tandem with organisational behaviour constitute the foundation for the creation of
strengths and weaknesses, synergistic advantages, core competencies, and organisational capability ultimately
leading to the competitive advantage that an organisation has.
• Resources allocation is both a one-time and a continuous process.
• When a new project is implemented, it would require allocation of resources. An on-going concern would also
require continual infusion of resources. Strategy implementation should deal with both these types of resources
allocation.
• Resource allocation especially for financial and physical resources could be done through budgeting.

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Aligning Resource Allocation to Strategy
• A major task of top managers is resource allocation and strategy guides managers in making
decisions by laying down clear priority among competing plans, programmes, and projects.
• Resources get allocated to tasks that are really not necessary from strategic point of view.
• Tasks that are strategically important may be starved of resources.
• Since resources are scarce and organisational tasks that demand resources are often too many,
managers end up with making difficult trade-offs in the process of resource allocation.
• Focusing on objectives and making trade-offs is often observed in the case of non-profit
organisations that have to face the challenge of working under conditions of severe resource
scarcity.

M.A. Carpenter and Wm. G. Sanders, Strategic Management: A dynamic perspective (New Jersey: Pearson Education, 2007):.323-324.

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Factors Affecting Resource Allocation
• The factors that affect resource allocation are:
• Objectives of the organisation

• Preference of dominant strategists

• Internal politics

• External influences

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Difficulties in Resource Allocation
• There are four major difficulties in resource allocation

• Scarcity of resources
• Restrictions on generating resources
• Overstatement of needs
• Tendency to imitate competitors

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Questions?

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