Wednesday, November 7, 2012

Natural Disasters: Rocking Markets, like a Hurricane

This week’s reading focuses on the impacts that dynamic, global trends can have on a business’s overall strategy and development. Many companies devote hours of research and prediction to account and prepare for these shifts, and the pressure is rising with the increasing rate by which these global trends are changing. However, as companies improve their prediction and monitoring tactics, there will always be environmental variables that they will not be able to see coming, namely the occurrence of natural disasters.

While weather abnormalities may seem to have little connection to the business world and its development models, these unpredictable events can have damaging and long lasting effects on a variety of markets and industries. This concept is all too relevant in today’s business climate for a significant group of the population, as New York and New Jersey were trapped directly in the path of “frankenstorm” Sandy. 

Over the course of 48 hours high winds and pouring rain engulfed the Northeast region of the United States and left not only considerable structural damage, but also a distinct impression on businesses of all shape, size and location. Take for example, the luxury electric car company Fisker. As a result of the storm, the company saw significant damage to several hundred thousand dollars worth of products that were subject to the harsh weather conditions, including 16 cars that caught fire due to the deadly mix of rising water and electric car batteries (Chernova).

The shopping habits of those affected by Sandy have also been dramatically altered, as many frequent shoppers were presented with roadblocks. Physical barriers halted those who tend to shop in-store, while the habits of frequent online shoppers were limited by the lack of electrical power. While immediate online shopping markets have been altered for a short time, there is a worry that the consumer focus towards basic goods and away from unnecessary goods and services may spill over into the crucial and typically lucrative holiday season (Talley).

Alongside the massive losses in certain markets due to natural disasters, there is also room for considerable gains. According to Target research, products like flashlights, batteries, heavy coats, jackets and scarves, and goods that need immediate replacement after being damaged in the storm are at a higher consumption level than usual, as those without power have zeroed in on the absolute necessities (Talley).

If there is a lesson to be learned out of the hurricane Sandy’s wake, it’s that you can never prepare for or protected from everything. Instead of the traditional prediction process, a company’s market and resources can be dramatically altered by a single natural disaster. These unpredictable disruptions in daily life pay no attention to market trends or product fads. They cannot be stopped or swayed by compromises, so it is up to businesses to deal with the fallout and make the best of the unwieldy environment around them.

Chernova, Yulia. “Fisker Suffers Hurricane Loss”. Wall Street Journal. Web. 7 November 2012.

Talley, Karen. “Sandy Changes Retail Shopping Patterns in the Northeast”. Wall Street Journal. Web. 7 November 2012.

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