Question

The major or central problem facing managers in their decision making process is the scarcity of resources. Discuss this statement with examples.

Answer 1

Human beings have boundless desires but limited resources. Lack of resources is forcing us to make a choice. Hence making rational choices becomes essential. Cost of opportunity exists for every choice we make. The decision to make those choices depends on our way of thinking. Our decisions are affected by resources such as time and energy. There is a trade-off between our present option of consumption and future ones. If a poor person gets to spend some money, he feels he will spend the money on his next meal. Nevertheless, for the other person who doesn't face the same situation as the bad, the situation varies. That person could save his future. The scarcity thus hit hard to the ones who are already in the scarce situaltion

Lack of time or scarce resources, either of these two creates anxiety which ends in a poor decision. Time shortage leads to procrastination, in which people prefer to do things that bring more pressure on them at the top of the priority while keeping on to doing things that could get worse due to delay. Money scarcity affects the decision to spend the money on immediate needs while avoiding the other critical items the come with a risk of potential costs. The victim under the illusion of scarcity (or call it a scarcity trap otherwise wise) is so focused on fulfilling the immediate needs that she often forgets the other critical needs to be cared for.

A manager must recognize that, while not negating the fact that it is hard not to make mistakes, there is a need for opportunities to combat intentional negligence. Biases aren't easy to get away with. The decisions beauty should be to reduce the effects of the mistakes caused by the scarcity trap while the other important goal being to prevent scarcity.