Economic theory proposes that scarcity of resources and unlimited wants is a fundamental problem in all economies. Choose any firm in an emerging economy and discuss how the firm is turning limitation of resources into opportunities through sustainability and the greening of the economy.
Every economy has the problem of scarcity of resources because emerging economy may have the enormous requirement of resources. However, there is a fundamental economic problem of scarcity of resources on the one hand and unlimited wants on the other hand. When any firm has to face such kind of problem, then another problem which is a very important economic concept called ...view middle of the document...
For all this processes, available technology is used which is also limited by our knowledge. On the other hand, wants are unlimited so when wants of an individual exceed the limited resources then the individual has to make choices.
The Concept of Opportunity Cost and the Relationship with the scarcity and choice
When that individual makes choice, he has to select an alternative and has to forgone the other options he could have selected instead of the option he has already selected. So the costs of those other options which have not been selected are called opportunity costs. It is not necessary that the opportunity cost has to be expressed in terms of money but it is expressed in terms of whatever sacrificed. There always exists a relationship between the opportunity cost, scarcity and choice because there are limited resources and unlimited wants so it is forced to choose and when there is a choice, it always leads to incur a cost which is opportunity cost.
For Example: An individual has $ 50000 in his bank account on which he is getting a valuable 5% interest. But he wants to open a new business by investing his % 50000. He is expecting to get a 7% return on the investment made into the new business. So now he has two options but he has only a source of $ 50000. If the individual decides to open the new business then he has to forgone 5% interest on the bank saving. So the value of 5% interest is the opportunity cost for the individual of selecting the first alternative.
Applied Concept of Opportunity Cost: Production Possibility
Production possibility is an economic concept which shows the organisation its possibility to produce goods and services with the usage of the available resources they are having. This economic concept can be explained graphically using a curve which is called production possibility curve that represents economy’s production possibility.
The Concept of Sustainability and the greening of the Economy
Sustainability is the ability of the economy to use the limited resources in such a manner so that it can be turned into the opportunities and further leads to the sound growth of the economy. The organisations which are able to implement their business plan keeping in mind the said concept are said to be the sustainable champions. There are some challenges in front of the organisations which they have to face to attain sustainability. These are Pollution, Depletion and Poverty.
The Report of the World Economic Forum
In May 2010 the World Economic Forum’s Center initiated the “Sustainability through Innovation Project” in collaboration with the Boston Consulting Group. These two organisations analysed the 1000 companies around the globe and based on this analysis, they have selected 16 fast growing organisations.