What is the scarcest resource in the universe? Make a Guess Before Reading more…!
Business is about creating value from scarcities and getting benefit in return.
No matter what is the nature of your business, you provide or try to provide value to your customers in the form of products or services. Customers, in return, pay you for that value.
Whatever you produce, needs a certain set of resources that you have to accumulate to make its production possible. While knowing this fact that nothing is free and nothing is abundant enough, you have to manage the issues regarding the availability of input resources and opting appropriate alternatives or choices.
The most fundamental question in economics is, “what is scarcity?” The whole science regarding this subject discusses all possible ways to deal with it which refer to the limited nature of businesses’ resources in contrast to their goals, i.e., production level, sales, profits, etc.
Business decisions and their outcomes are highly affected by the scarcity of resources. Economics is all about dealing with it, to achieve personal or organizational goals.
Successful people at an individual level or as the owners of large firms, or managers, make effective decisions under the compelling influence of scarce resources. Here, being successful means, the transformation of efforts and an invested sum of inputs, result in desired outcomes!
How do they do so, is a million dollar question…!
It will be illogical to categorize resources firms’ inputs into scarce and ‘not scarce’ without considering its rarity in that specific region.
Because resources have geographical implications and their scarcity varies from region to region. For a silicon manufacturing plant situated near Cholistan desert, there is no shortage of sand (as silicon is extracted from sand particles). But, in Nepal where there are no deserts or beaches, sand is considered quite valuable and is an essential ingredient of making concrete for construction companies, thus making it a scarce and valuable resource.
Here is an exciting example of how the availability and the access to resources embed into the strategic planning of business, putting scarcity issue at the very top!
Smart manufacturing firms manage to install plants where the related resources or inputs are comparably more available, cheaper and accessible. Nestle International has 447 factories worldwide. Nestle Kabirwala factory is the most prominent factory of Nestle, regarding daily milk collection level (20,000,000 liters/day). It’s situated in a small Pakistani town which is almost in the center of proximity to the milk-producing region of South Punjab and upper Sindh. You know milk is a resource input that has a very low lifespan thus its timely accumulation assists plant engineers for pasteurization process.
If you are a budding entrepreneur, watch out what you are planning to offer to your customers.
Are the resources available and accessible to make such value offering possible?
Are posed threats by scarcity factors enabling you to afford such business plan concerning cost-benefit dimension?
Issues like these are helpful for strategic management.
You probably have already studied about factors of production in your college days. Which are:
Land, labor, and capital
What is the most scarce element?
In fact, this traditional definition of factors of production, lacks a major strategic asset, time!
Time is a strategic asset as it is quite crucial for you to have it for achieving your business goals. If you have less of it, you may feel its pinch at every level of your business management.
Tight deadlines for customers’ orders, slower production rate, and bit sluggish coordination among various departments, may compel you to crave for more time-buffer, as the lack of “time resource” can put your business into jeopardy even if you have enough of other required resources. The stress and frustration may cause even more panic from the top to the first line managers in an organization. Give time, to manage time, to cope with its scarcity appropriately, not confusing yourself as the Louis E. Boone’s humorist elaboration of his decision about time management:
“I am definitely going to take a course on time management... just as soon as I can work it into my schedule.”
In fact, the time is the scarcest resource; efficiency and productivity are bound to it in our individual, business, and national lives. Mismanagement regarding time may make every resource entity, a waste!