Resource is represented by the level of something at any given time (no time dimension), in contrast to the stream, which expresses the change of something per time unit. Resource can be considered as the amount of water in the lake at any given time, a stream is the amount of water that flows through the lake in the specified time interval. In company, resources are presented in balance sheet of the company, at a particular point in time, e.g. 31 December. A resource can also be defined as the amount of one particular component of assets at some point in time.
In economics, the concept of resources or effort (e.g., machinery, raw materials, work) means all tangible and intangible components of production process Concept of resource can be used in the context of company-owned assets or assets in the entire economy.
The resource is one of the basic concepts with which science of economy operates. One of the major economic problems is the existence of a conflict between the unlimited human needs for goods and services and the limited resources necessary for their manufacture. Widely analyzed problem in economics is to explain the process of allocating scarce resources between the competing applications and between competing groups owning them. Normative economics refers to efficient resource allocation in the Pareto sense. It means an such distribution of goods between the different actors in the economy that it is possible to improve the situation of some without worsening the other.
Types of corporate resources
- Human resources - skills, knowledge, capacity and disposition of all persons employed in the enterprise.
- Cash Resources - financial capital of an organization used to fund both current and long-term activities.
- Tangible resources - includes raw materials, parts, production offices and all kinds of equipment.
- Information resources - include all kinds of useful information and data needed for the effective decision making.
There is also a distinction between:
- Renewable resources - natural resources (e.g. arable land), which regularly provide income and through the rational management can indefinitely provide income.
- Non-Renewable Resources - natural resources, whose supply is basically constant, and whose recovery is not fast enough to have any economic significance.
Term interchangeably used in economics is: factor of production. This concept divides the resources in the entire economy into three main categories:
- Capital - resource of physical capital e.g. all goods that contribute to the production of more goods and services,
- Ground - is a factor of production provided by nature,
- Work (labor resource) - e.g. all individuals working or seeking employment.
Examples of Resource
- Capital: Capital can refer to the financial assets of a company, such as cash, investments, or property that they hold. It can also refer to the economic resources a company has at its disposal, such as its labor force, infrastructure, and any intellectual property they possess.
- Natural Resources: Natural resources include land, water, air, minerals, plants, and animals. They are the raw materials used to produce goods and services, and are often used as inputs in production processes.
- Human Resources: Human resources are the skills, knowledge, abilities, and potential of people. It is the people in an organization that contribute to its success and make it run.
- Technology: Technology can refer to any type of equipment, system, or process used in a business. This includes computers, software, and other tools used to automate processes and improve efficiency.
Advantages of Resource
One of the main advantages of resources is that they provide a snapshot of the current financial or operational state of a company at a given point in time. This allows for quick and easy comparison of the company's performance against prior periods or other companies. Some of the other advantages include:
- The ability to accurately measure the amount of resources available at any given time. This can be used to plan for future growth and development as well as to ensure that the company has enough resources to cover current and future liabilities.
- Resources provide a more accurate representation of the financial health of a company than other forms of financial statements such as income statements, statements of cash flows, and balance sheets. This is because it takes into account all the assets and liabilities of the company at a given point in time.
- Resources also provide a better understanding of the company's economic activity. This can be used to identify areas for improvement and to better inform decisions about how to allocate resources.
- Resources can also be used to benchmark performance against other companies or industries. This allows for better decision making and more informed decisions about how to improve the company's performance.
Limitations of Resource
- The primary limitation of resource is that it does not take into account the time dimension, and is therefore unable to provide an accurate representation of changing conditions.
- Resource does not take into account the dynamic nature of the market, and is unable to capture the fluctuations of supply and demand.
- Resource does not factor in external influences, such as economic or political factors, that may affect the availability of a resource.
- Resource is limited in its ability to represent the long-term sustainability of a resource, as it does not factor in environmental or ecological factors that may affect the future availability of a resource.
- Resource is unable to provide an accurate representation of the total cost associated with the acquisition of a resource, as it does not consider the external costs associated with production and consumption of the resource.
Resource can be approached in several different ways:
- Economic resources are those resources that are necessary for an organization to produce goods and services. These resources include capital, labor, and technology.
- Human resources are the people who work for a company and contribute to its success. They consist of employees, management, and other stakeholders.
- Natural resources are resources that are found naturally in the environment and are used to create goods and services. Examples of natural resources include land, water, and minerals.
- Financial resources are money and other assets that an organization has to meet its financial obligations. These can include cash, investments, and credit.
In conclusion, resources are the inputs an organization needs to produce goods and services. They can be economic, human, natural, or financial in nature. Understanding these resources and how to use them effectively is an important part of successful business management.
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