Blog Post #2: The Strong Impacts of Exogenous Shocks to Businesses
“Flooded Honda cars in their factory in Thailand” (Taken from Flickr and by: JeD Chan)
One of the first-hand business experiences or knowledge I had that had impacted me was during the Thailand flood, that had caused massive floods in industrial areas, which also included the location where my family’s business was. This was a very devastating time, as many factories ranging from tech to garmented companies lost a lot of money when its factory was flooded in Thailand (2011). The Thai flood has influenced me as it made me realise the domino-effect, where the exogenous shock had lead many big and small firms (ex: Sony, Seagate, Honda, Toyota, etc) face a loss and also caused the Thai economy to worsen; as companies seek other areas to start new factories, while Thailand recovers from this devastating natural disaster.
Even though, some firms that have established a factory in Thailand may not be flooded, it also faced a loss/financial impact as the flood impacted many of their supply chains. Therefore, the firms could operate as they did not have enough resources to produce the products.
Hence, I feel that this exogenous disaster can tie into the SWOT tool under ‘threat’ and the PEST Analysis under ‘Environment’, as firms face the uncertainty in recovery time from the flood, and also because ‘time is money’, where the firm is facing a high opportunity cost and “higher loss” when it is not operating/shut-down.
Article used: http://www.bbc.com/news/business-15285149 (” Thailand floods disrupt production and supply chains”)