ACQUISITIONS AND USE OF RESOURCES

Resources in business are like blood that runs through the human system, such that without blood, the human system fails. In the same light, resources are the blood that runs through businesses system, once resources are cut, business cease to flow. According to Stoner and Hattwick (1998), “Resources are the fuel for businesses just as gasoline is the fuel for automobiles. Once businesses have the wrong resources mix, it will operate abnormally just like a car that runs on a bad fuel is having insufficient fuel to run properly.

This, therefore, calls for business managers to balance the need for each of the resources, acquire them, and allocate them properly among the units of the business. This responsibility throws a challenge to business managers to see the importance of this aspect of business as a lead way to building a successful business. Resources are the basic ingredients that make a successful business. Resources in business include people (human), physical, material, financial assets, and the information, which the firm managers need for better products or services. Once the manager of a business fails to have the right mix or there is absence of resources, there is bound to be a clog in the wheel of success for the business. This is why manager have to spend the better part of their time providing an appropriate mix of resource, nurture them and use them for the success of their firms.

OBJECTIVES

At the end of this unit, you should be able to:

• explain the nature of resources, its acquisition and use 
• discuss in entail the opportunity cost and trade-offs of resource · explain accurately the flow of resources 
• explain how the right mix of resources can be attained 
• explain the right mix and allocation of resources. 

 Nature of Resource Acquisition and Use

Resources acquisition and use is one of the most challenging areas to managers of businesses (whether one-man or limited liabilities). As manager of a business, you need to work with your subordinates as a team to have a balanced mix. Once you act in isolation, you will create deficit in one unit and surplus in another. Therefore, there is the need for consultation because acquisition of new plant and equipment will not only involve the financial resources, but also may require extra training of employees in order to use the equipment efficiently and effectively. We can also discuss the acquisition and use of resources by two sets of relationships: synergy and opportunity cost.

Let first of all define what we mean by synergy. Synergy refers combination of (actions) of two resources such that their total effect would be greater than if they had acted independently. Therefore, it is incumbent on managers to take decision such that when they sum up the actions of their decisions, it would be greater than when taken individually. For instance, if you decide to add financial resources to your business, such that when you are able to buy new technology-related equipment, both your business and human capital will increase. It means that the equipment so bought will bring improvement in the performance of your workers, their efficiency, and increase in output.

A change in resources should ripple through the business, such that any change in your resources decision that does not bring change should be abundant. The change should affect your physical resources, and enhance the productively of the human resources. This should apply to all your decisions in business, that a change in one aspect of the business should affect other sectors directly or indirectly.

 Let us take the National Open University of Nigeria as example, if the university decides to train her course developers, it means that they will produce standard course guide for the students who will study and have a good knowledge of their studied discipline. In that way, more students will be encouraged to enrol into the university’s programme. This example illustrates the interrelated nature of resources.

Increase in one resource may increase the capacity of another resource. This, therefore, encourages managers to look up for ways to build synergy and make better decisions within their businesses.

The second relationship is the opportunity costs and trade-offs. As seen in synergy, acquisition of one resource makes another resource more productive, yet the acquisition of resource requires trade-offs. This is a useful concept, which means giving off the benefit that would have been derived from the resource to use the other one. For instance, you decided to use your resource to buy more computers for your business centre rather than to buy a car. Therefore, the opportunity cost of the computers is the car you could not buy.

The concept of opportunity cost is very important for business managers to understand trade-offs, when considering acquiring and use of new resources. Managers need to weigh up opportunities and see which contributes the greater to the success or growth of the business.

SELF-ASSESSMENT EXERCISE 1

• Mention and discuss the importance of opportunity cost and trade-off in business. 

Flow of Resources

Business activities create room for movement in and out of the business as a way of acquiring and using resources. For instance, when a business buys raw material from suppliers these raw material moves into the business for operation, in turn money leaves the business in form of payment to the supplier. So also when new staffs are employed into an organisation, the staff size increase but something has left the organisation, money in form of salaries for the new staffs.

This movement seems to be a vicious circle, as staff, material and equipment are brought into the business; they produce products, which are then sold to consumers. In this movement, goods leave the organisation and in turn, money comes into the organisation as payment for the goods. The process of resources moving into, through, and out of the firm is a dynamic and continual process but managers need to be careful that these movements add value to the organisation.

The Right Mix of Resources

At times, the amount of resources a business requires might be a problem; however, the most challenging problem is having the right resources in place at the right time. Therefore, in a business enterprise, there is the need to move some resources to other places to achieve the desired goals although some fixed or physical resources might not be easy to move or transfer to another place. Even human resources sometimes exhibit this immobility. For instance, you have your business poles apart, one in Jos, and another in Abuja. Now when the Abuja unit of the business is prospering and you need to shift some staff from Jos branch to Abuja. This might exhibit some difficulties- either that the staff would have accommodation problems or reluctant to leave their families and so on. Thus, in this case, the firm has more than enough human resources, but they are in the wrong place. It could be with other resources.

When managers are struggling to predict production, marketing, and distribution need, should make sure that resources available and in a proper mix to avoid surplus in one area and deficit in the other.

SELF-ASSESSMENT EXERCISE 2

• Explain how an organisation or its manager can overcome the problem of resources mix. 

Resources Allocation

Adequate allocation of resources is paramount in any business, and most trying is among the deserving units of the business. At times, the resources allocation becomes more difficult than obtaining it. Thus, a business manager must have to tread a fine line, by helping one department without hurting another. In one-man business, the problem of resource allocation could still show its ugly head, when attention is being given to one sector of the business than the other.

 CONCLUSION

Although it is difficult to have a perfect resources mix, yet it is the only way businesses need to be handled to make profit or experience growth. Therefore, managers of businesses should see the best resource mix as the only way to success. A careful consideration of resources acquisition, the right mix, and proper allocation would fetch managers of businesses at least more than 60 per cent on their way to success.