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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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