THE ALTERNATIVE TO OVERHEAD ALLOCATION Essay
In the contemporary business environment, the autonomy of offices is very important and such company as BFBS LLC should maintain the autonomy of its office. At the same time, its overhead allocation approach is not efficient and prevents the company from the effective use and assessment of its financial resources. In this regard, the company should find the alternative to overhead allocation. Otherwise, the company may face a risk of the consistent deterioration of its marketing performance and the ongoing deterioration of its financial position, whereas the accounting system becomes non-transparent and rigid.
On analyzing the current situation in the BFBS LLC, it is important to place emphasis on the fact that, today, the company has a number of offices which operate autonomously but which suffer from the lack of flexibility and effective, transparent accounting. In fact, it is obvious that the overhead allocation is not efficient and it does not work in the company. At any rate, the overhead allocation makes the company and its units rigid and its accounting system ineffective.
In such a situation, it is possible to suggest an alternative to the overhead allocation – dynamic asset allocation. In fact, the dynamic asset allocation brings in the flexibility the company has been deprived of yet. At the same time, taking into consideration the fact that units of the company have extensive autonomy, the introduction of the dynamic asset allocation becomes particularly effective because each unit of the company can respond fast and adequately to any changes in the current business environment. In such a way, the company can reach the high level of flexibility and improve its organizational performance consistently. Moreover, the dynamic asset allocation can facilitate the functioning of units of the company because they will be able to exercise their autonomy more effectively. What is meant here is the fact that the dynamic asset allocation provides units of the company with the possibility to develop flexible policies and accounting respectively to their current needs and situation in the current business environment. They receive autonomy not only in terms of their current policies but also in terms of finance, which naturally facilitates their development because they can use financial resources more effectively than it is at the moment when financial resources are redistributed from the headquarter of the company in North America.
Obviously, the large autonomy of units of the company and the dynamic asset allocation can grant the company with essential changes and improvements, which can bring positive outcomes and solve current problems the company is facing at the moment. On the other hand, the implementation of the dynamic asset allocation needs consistent changes in the accounting of the company and its management because managers should change their regular work and to be able to work more autonomously.
Nevertheless, in case of the implementation of the aforementioned changes, the company is likely to face considerable improvements in its marketing performance
