Archive for the ‘Week 14’ Category

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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?