Before coming to a conclusion about what kind of resources do we need, we have to ask ourselves three main questions. And those questions are
- What shall we produce?
- How shall we produce the goods or services?
- To whom shall we produce the goods or services?
After answering these questions we can come to a conclusion of what kind of resources do we need. You will also understand that no matter what kind of resources you need, the core problem is the scarcity of resources and the various means of retrieving them.
These are the four economic resources required for production,
- Entrepreneurial skills and tools.
These four resources are essential to production and output of services, concepts and goods. So, these four resources are combinedly known as “the means of production“. From a multi billion dollar industrial giant to a small startup with a tiny workforce needs these resources.
Resources are scarce and are limited in quantity.
Workforce, Capital and Entrepreneurial skills and tools, can be available in limited quantities.
Lands are considered as finite though there are vast amount of untapped lands on this planet.
Considering the scarcity of resources, limited availability of lands, workforce, capital and Entrepreneurial skills, it is safe to say that overtime the need and want for these resources will increase. It is also safe to say that humankind has unlimited wants/needs and limited resources to satisfy that.
There are many ways to obtain resources or products. The four main ways are
Without interacting with others, people can be self sufficient by relieving their need and want by themselves in some occasions. In this approach there is no market nor marketing. ex.- hunting for food, weaving cloth by hand, farming all by themselves.
Coercion is also known as brute force. In this scenario, the bully is threatening someone else with life, or loved ones to get their hands on the victims goods. This method is not beneficial to the victim as they are not given anything other than of not being harmed.In this approach violence is involved and no productive activity can be seen.
People in need ans want can approach the others and beg for what they need. The beggar has nothing tangible to offer but their gratefulness.
People in need and want can approach others, to offer goods or services in exchange of what they need and want.
Marketing arises from this exchange approach to obtain products or resources. Exchange is the procedure of receiving some desired service or products from someone else by giving them something in return.
Exchange take place after the fulfillment of these five conditions.
- There are at least two or more parties involved.
- Each party is having something that might be valuable to the other party.
- Each party is able to communicate and deliver the products or services that they offer.
- Each party is having the ability to accept or refuse the offer.
- Each party is under the impression that it is desirable or appropriate to deal wit the other party.
When these five conditions are existing, there is a capacity for exchange. If both parties can agree on terms and conditions of exchange, then the exchange will actually take place on the grounds of leaving both parties better off or at least not worse off than before the exchange.
In a scenario in which the both parties are left with better off than before the exchange, it is described as a “value creating process”.