How a Natural Disaster Can Affect International Business

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At any time on any day, we will be able to hear news on major natural disasters, the lastest at the time of this article was being written was the devastating earthquake in Haiti. No matter where the disaster struck, if it had caused significant damage, it could cause a dent to the world’s business activities. How are some examples what may happen when there is a natural disaster in a place on this planet.

A country is the major supplier of the most important raw material for a product that is manufactured in another country. A hurricane destroyed the town where the material was being produced. As a result, it cannot export the materials to the country needing them to manufacture the product. Since, they are unable to produce the product, they are unable to bring anything to the stores to sell the product or export it to other countries. Without the product, they have nothing to sell. If they produce other products as well, their revenue will definately reduced. In order to survive, the factory will have to take drastic measures including sacking some of their employees. At worst, it will have to be closed down. Countries who used to import the defunct product from them will have their revenues reduced due to the fact they have less one product to sell.

Here’s another example. An earthquake destroyed a major city. As a result, the country where the devastated city was situated was unable to import anything from other countries. The exporting countries, not being able to sell anything to that country, will definately not be able to generate any income from the usual exporting activities. This caused a reduce in revenue and in some cases, would lead to unemployment as the businesses involved in the exporting will have to take drastic measures to survive after their ability to earn was reduced.

When goods or materials cannot be imported from a country, the country that needs the material will not be able to produce the needed goods to be sold locally and be exported to other countries. If a business only sells the affected product, it will have to close down because there is nothing for it to sell. If the product is only one of the products being sold, the revenue for the business will surely decrease. If the affected product is made out of a large percentage of the overall products sold, the business may have to take some drastic actions to enable it to survive.

A nation’s capability of producing a product or service may also be affected if it became impossible to import services that are required after a disaster has stricken. For example, a country relies on another country for expertise in helping it to develop an important technology for its people. When disaster stricks the country providing the asisstance, it is unable to send out its people. As a result, the project will have to be halted. When the project being stopped, the organization in charge of the project will have to sack its employees.

The education industry can also be affected by a major natural disaster. An earthquake, for example, can prevent a large number of students from the affected country from going to another country to further their education. This will cause reduction in revenue for the country where the students originally intended to study.

A business with a branch which has been destroyed by a natural disaster in another country will also have to suffer some revenue lost because the branch no longer exists to generate income. WIth communications down as a result of a natural disaster, it has become impossible for businesses to trade with one another effectively.


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