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What are the Two common organizational constraints ?

Numerous organizational constraints may affect a firm’s strategy options. In almost all instances, these hindrances are short-term because they can be overcome by existing business opportunities. Two common organizational constraints involve monetary capital and intellectual capital. Decisions to minimize or eliminate each of these constraints can be analyzed using capital budgeting analysis.

Strategy implementation generally requires a monetary investment, and all organizations are constrained by the level and cost of available capital. Although companies almost always can acquire additional capital through borrowings or equity sales, management should decide whether (1) the capital could be obtained at a reasonable cost and (2) a reallocation of existing capital would be more effective and efficient.

Another potentially significant constraint on strategy is the level of the firm’s intellectual capital (IC). Many definitions exist for IC, but all have a common thread of intangibility. Intellectual capital reflects the “invisible” assets that provide distinct intrinsic organizational value but which are not shown on balance sheets.
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