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Resource scarcity refers to the availability of resources critical to a company or that are in high demand by other companies. Resource scarcity is usually the result of a shortage of supply, but it can also result from demand driving up prices. In conditions of resource scarcity, a company may not be able to acquire the resources it needs to operate or grow.

For example, lithium ion batteries are now used extensively in electronic devices, tools, and electric cars. But lithium supplies are in a severe shortage and new sources are slow to arise.

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Tesla, the US electric car manufacturer, will require about one-third of the available lithium to supply its new battery factory. Its ambitious growth plans could be jeopardized if new sources are not developed. Instability, complexity, and resource scarcity all lead to uncertainty. Uncertainty refers to how predictable environmental conditions are.

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In an uncertain environment it is very difficult for managers to predict where and how change will occur. Instead, managers must make decisions based on assumptions rather than clear facts. Southwest Airlines bet that fuel prices would go up and hedged against oil price increases. Other airlines bet that prices would be stable or decline.

Nothing stays the same. This simple fact underlies strategic management, which seeks to adapt to and benefit from change. Conditions of instability, complexity, resource scarcity, and uncertainty make it impossible for managers to anticipate change and make rational decisions.

Instead, they must operate with incomplete data and base decisions on assumptions and best guesses. This makes good managers, who use their experience and training to guess right more often, even more important to organizations.

Dynamic Triggers: Repetition and Small Changes using TATAT | K-Devices

Skip to main content. Module 4: Environments and Strategic Management. Search for:. How Environment Affects Strategy Learning Outcomes Explain the key aspects of the environment that can affect strategy e. Strategy integrates the organization with its external environment. Licenses and Attributions. Learn More - opens in a new window or tab International shipping and import charges paid to Pitney Bowes Inc.

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    Iterative Optimization: Small Changes, Big Results

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