Japanese earthquake – business aftershocks

As Japan struggles to get to grips with the scale of the human tragedy and the long term damage to its infrastructure, you may be thinking through some of the more immediate impacts on business.

My A2 Business students came up with an excellent range of points before watching this related BBC video clip.

- Breaks in the supply chain. After all, Japan is famed for the development of lean production concepts like Just-in-time (JIT) stock control systems. The disruption will have a huge impact on delivery schedules which will ripple right through supply chains.
- Workforce. Not limited to the impact of people struggling to get in to work, but the impact of the loss of key decision makers and support staff. Of course, Japan benefits from its wealth, development and sophistication in this respect. The idea of contingency planning is deeply ingrained, but there will still be significant disruption.
- Disruptions to electricity supply. Easy to see how the impact of such disruptions will be wide ranging, stretching from manufacturing to retail, banking to day-to-day communication and internet access. (The BBC’s Robert Peston was also arguing that the setback to the nuclear industry is much the biggest impact of the quake, from a UK/European perspective).
- Customers and retailers, who have suffered on a variety of scales. Just securing access to cash and basic goods will be a struggle in the days ahead.
- Uncertainty. Credit crunch, global recession, spikes in oil and food prices, Middle East unrest .... it’s a long list of variables that have made strategic planning, budgeting and forecasting so difficult over the last 2-3 years. This creates a climate that stifles business investment.
- Stock market wobbles. No wonder then that world markets have dived over the last few days, as speculators flee what they see as an excessively risky environment. This makes it more difficult for firms to raise cash for future expansion.

I don’t want to be either too gloomy or glib with this posting! Good luck to Japan (and other struggling spots) in the weeks, months and years ahead.