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Blog 14: Have Oman and Qatar escaped the Arab revolts?

April 21, 2011

Due Date: April 21, 2011

Article Sourcehttp://www.bbc.co.uk/news/world-middle-east-13147271

Article Date: April 20, 2011

Article Title: Have Oman and Qatar escaped the Arab revolts?

Summary: 

Oman has often been considered a peaceful country because its monarch has often met the demands of protesters but is now seeing more and more protests because of the large job unemployment. Sultan Qaboos has been reigning for 40 years as an absolute monarch and has been seen as pro-Westerner and has reacted quickly to the protests. Qatar is not seen as a threat because it is seen as one of the richest countries and only 250,000 of its 1.9 million population are Qatari; the rest are foreign workers.

Reflection:

Even though Oman may not be a very oil country, if their country were to revolt it would continue the spread of protests and other revolts throughout the middle east and ultimately cause oil prices to rise. This would continue to tighten the supply of oil and energy throughout the world and as supply tightens we will see many resulting problems throughout the world. Companies need to be especially aware of the middle east protests so that they can understand what impact it will have on their business here and abroad. First, if their supply chain runs through the Middle East or Africa in any way they will see increasing prices as it becomes harder and harder to negotiate and move product around those areas. In addition, the biggest price factor is oil and as it becomes more and more limited the prices will continue to spike. It is estimated to reach over $5 a gallon this summer which is almost twice of what it is now (or at least what it was a couple months ago). This is a major impact on companies to have something double in price in only a matter of months. The second thing that companies have to be aware of is how this will impact the consumer as well. As consumer spending tightens because they also have to spend twice as much as gas and then if that price hike gets passed on in other products from food to technology they are going to have to cut back as much as they can and purchase only what they need. Therefore I think that companies are going to have to make the decision if they are going to absorb the gas prices or pass them on to their consumers. I think that it will be easier for companies that fulfill a need rather than those that fulfill a want. For example, I really wanted to get a new computer because mine is falling apart but with so many price increases to consider I decided to pass on it even though I have enough money. As you can see from this example consumers may hold back on spending because they know they might need the money down the road when taxes increase or gas increases or food increases or interest increases, etc etc. This can already be seen in the parts of Japan where the earthquake did not hit as those who have money are holding onto it so that they can help support others who got hit by the earthquake or at least so they can have some padding as the economy and country struggles to put itself back together (which could take up to 15 years with the current nuclear crisis)

All in all, these countries could become major players in the whole balance of supply and demand and the impact of increasing prices.

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Blog 13

April 19, 2011

Golden Ticket

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Blog 12: Japan’s government downgrades its outlook for growth

April 14, 2011

Due Date: April 14, 2011

Article Sourcehttp://www.bbc.co.uk/news/business-13058743

Article Date: April 13, 2011

Article Title: Japan’s government downgrades its outlook for growth

Summary:

After the two disasters in Japan combined with the radiation leakage has resulted in the Japanese downgrading their assessment of the economy.  These disasters have caused rolling blackouts and energy shortages across the country causing many large companies to have reduced production. In addition, the radiation crisis at the Fukushima plant has been raised to a seven which is the highest level.

Reflection:

This news has both good and bad sides for companies all around the world. First, consumer spending from Japan will be down and will most likely impact the global economy and any companies who rely on Japan for any part of their supply chain or for their customer base. In addition, companies will have to be very aware of  consumer spending throughout Japan so that they can provide their products to the places where consumer spending is up. For example, many places throughout Japan that did not get hit by the disasters are more likely going to spend more than people who are just trying to stock up on necessities because their whole livelihood was destroyed by the earthquake and the tsunami. Finally, companies will have to be aware of the restrictions resulting from the radiation and how their exports and imports will be affected because Japan’s supply is very low while their demand is very high for almost any product.

There are many benefits for businesses other than demand from Japan being higher. First, they can take advantage of the fact that many Japanese companies being unable to produce as much because of the rolling blackouts. We can already see this as many US car makers have been able to create a profit in recent days because of the increased demand for their products as Japanese suppliers have fallen behind. Throughout all of these times companies will increasingly have to choose what strategy they will choose to last throughout the changing global economy. Will they retrench their company, stabilize it, or try and grow?

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Blog 11: Japanese imported vegetables in Singapore ‘radioactive’

March 24, 2011

Due Date: March 24, 2011

Article Sourcehttp://www.bbc.co.uk/news/business-12834153

Article Date: March 24, 2011

Article Title: Japanese imported vegetables in Singapore ‘radioactive’

Summary:

Many countries are beginning import bans on food coming out of Japan because of their low levels of radiation. Thankfully because of the low levels an adult would have to eat 3.5 kilograms in order to even reach the levels of radiation caused by an x-ray. Unfortunately, this situation is expected to extend into the long term many farmers will begin taking a hit and it will result in an increasing shortage of food around the world.

Reflection:

These bans are going to have many effects on businesses around the world. First of all, businesses are going to feel the impact of food shortages in the rising food prices and other rising prices. They will have to figure out how to “strategize”  in a way that allows them to survive through these hard times and how to maintain reasonable prices. In addition, to the shortage of  food exports from Japan we will also see an increase of food imports now that they no longer can consume some of their domestic food products. Second, businesses will have to deal with the additional shortage of exports from Japan such as different parts that are key to certain products such as cars or technology. Businesses will have to decide if they are going to try and take opportunity of these shortages or if they are going to try something else that will allow them to get through the shortages. All in all, there is going to be a need for businesses will have to step up and fill the gap in supply chains and in order to fill the many shortages that are going to result. Another aspect of this issue is that businesses will have to be very aware of the many bans on certain Japan exports so that they do not violate any of them or interfere with them in their trade routes.

On a final note, I feel that businesses are going to have to “wake up” and begin to prepare for the effects and begin to understand global dependency. They are going to have to understand that there are going to be increasing prices and decreasing exports. All in all, we are going to see increasing demand for certain products (such as uncontaminated food) and the supply is going to be more and more limited.

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Blog 10: Japan, the economy, and the world

March 22, 2011

As the world’s resources become more and more limited, as global dependency increases, and as trade deficits become larger and larger we see how one event can cause a chain reaction. I believe that this stretched means that has coupled with many events going on in the world will cause businesses to have to make a choice whether to ride it out, grow, or turnaround their company. All of these issues that I have mentioned probably stem from years back but I believe that in reality we can see how the U.S. downturn has started a global downturn which has led to this stretched global economy. For example, we now see more and more political unrest in the Middle East because the economy has been going down and down. This in turn causes food, energy, and other prices to increase because of the strain these events have and our ever increasing global dependency. Japan is another event that will cause the economies of many countries to be impacted because of the downturn in the imports from Japan and also because Japan will now be more dependent on other countries. Once again, businesses will face the choice of what their reaction will be to all of these events. I feel that a lot of companies in the US can definitely increase their production in order to take advantage of all the different companies that have fallen behind. This would hopefully benefit the global economy as a whole.

The main issue that companies will have to look out for in the company years and possibly even months is the increasing prices of energy and the limited amounts of energy whether it be electricity, oil, nuclear, etc. Companies will have to also factor in the chain reaction this spike will have on other goods that they purchase and how consumer spending will continuously be stretched by any price increases and if the company will take the hit or increase their prices to make up for it.

All in all, I think that companies will need to choose one of the three mentioned strategies and stick with it and continuously be “on their toes” in regards to price trends, political trends, and basically any trend that will potentially affect their company or the consumer in general.

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Blog 9

March 17, 2011

Golden Ticket

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Blog 8: Libya protests: oil prices rise as unrest continues

February 22, 2011

Due Date: February 22, 2011

Article Sourcehttp://www.bbc.co.uk/news/business-12533620

Article Date: February 22, 2011

Article Title: Libya Protests: Oil Prices Rise as Unrest Continues

Summary:

As the protests continue and as Gaddafi refuses to quit, oil prices continue to rise and stock markets have begun to drop. Libya is the 12th leading producer of oil, but with the many protests companies are slowly withdrawing their business. In addition, stock markets have fallen due to the unrest and the possibility of it spreading throughout the Middle East where other major oil producers are.

Reflection:

I feel that oil is one thing that is going to impact all parts of business. Just as they mentioned in the article how already stock markets have been dropping or even closing and that inflation has been going up as oil goes up. All of this means that it will cost businesses more to import or export products and will basically impact any part of the supply chain. In addition, high oil prices mean that the consumer’s budgeted spending will now have to increase for oil and decrease for other parts (most likely the spending for any product or service that does not fulfill a need).

This article also means that companies will have to continually assess the environment of Libya and how the unrest is impacting business. If companies keep monitoring their business within the Middle East and Africa they will be better prepared to respond if something happens (like this unrest). It also allows a business to understand what consumers in the country will need, if they need to withdraw from the country, and the balance of trade along the supply chain. Any country that is dealing with political instability is going to impact international business so companies must always keep their eyes and ears open so that they can deal with the impact. Finally companies may want to consider during these times what they will do if they are unable to do business with a certain country (i.e. if the country is unstable does that lead them to withdraw and move on or should they stay in the country)