How Resources Can Become Liabilities

According to David, resources can turn into liabilities when an organization mismanages the funds allocated to transform the resources into revenues. However, other scholars have opined that even in the event of embezzlement, the value of resources like the land is unlikely to change, thus negating the argument that funds embezzlement can turn resources into liabilities. In support of the second opinion, Peng contends that the value of the most uncommon resources rarely alters in the event that an organization mismanages operating funds. This means that a resource like land cannot become a liability to companies, unlike proposed earlier.

Nevertheless, resources like labor can easily become a liability, especially in the face of an organization’s financial hardship. Such an opinion is verifiable as well as the previous one concerning land.

For instance, PHD Media, after going through a period of financial struggling in 2009, had no option but to cut down its workforce. The move derived from the fact that the company could no longer afford to pay its employees, which was a concise example of an incidence where resources could turn into liabilities. Although the Swansway Garages Company went through a similar ordeal, the results were different.

After finding itself struggling financially, the company sold off about 9 acres of land previously set aside for constructing new garages. This contradicts the opinion that resources can turn into liabilities because this case shows that land as a resource helps companies get out of debt. As such, whether a resource turns into liability or not depends on its nature.