Potential Business Opportunities in Japan and Sri Lanka
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Suppose you want to start a business in an area in which a natural disaster has recently occurred.How would you decide which kind of business to start? Choose a business in an industry that has been affected, either in a negative or positive way, by the natural disaster. Will demand, supply, or both shift as a result of the event? What happens to equilibrium prices and output in this market? Would you expect these effects to be short-term, or will they impact the long-term performance of the business?
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Solution Summary
This solution describes business opportunities in countries where natural disasters occurred. Japan and Sri Lanka, both countries devastated by massive earthquake and tsunami, were selected. It looks into potential business, possible patterns and trends of demand and supply and price, whether such situation impacts the short-term and long-term performance of any business ventures in those countries.
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Business Opportunities in Japan
In the devastated Japan, as a reconstruction process goes on the Japanese government will spend around JPY25 trillion (US$300 billin approx.) to re-establish the communities and businesses destroyed by the quake and the tsunami.
Opportunity #1- Housing related materials
What does this imply to business? This will mean raw materials for at least 30,000 temporary homes over the next two months, and 60,000 units by August -- even before the main reconstruction effort and possibly millions of tons of wood, concrete, steel, and glass are put to use over the next 2-3 years.
Which sector will benefit? Among those already receiving advance notice of orders from
major trading houses and construction materials suppliers are foreign suppliers of energy in the form of coal, LNG/LPG, and oil; timber, especially glue-lam and plywood; and metals such as iron ore, copper, zinc, etc.
What is the caveat? But to cash in on a potential US$300bn rebuilding bonanza, only companies that are plugged in to the Japanese materials supplier network are likely to see much opportunity. Partly because the Japanese are not likely to reduce import standards or accept sizes and grades that are unfamiliar, and partly because they are dealing with a patient population of refugees who know it could be several years before things are somewhat back to normal. Therefore, with some extra time up their sleeves, the powers that be will not feel pressured to step far outside their comfort ...
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