[Japan Earthquake & Tsunami Crisis]

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Acknowledgement

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Table of Contents

ACKNOWLEDGEMENTII

DECLARATIONIII

INTRODUCTION1

JAPAN'S ECONOMIC OVERVIEW1

EFFECT ON THE JAPANESE STOCK MARKET2

EFFECTS ON GLOBAL MARKET3

BUSINESS IMPACT3

EFFECTS ON DIFFERENT INDUSTRIES4

Supplier Industries4

Telecommunication Industry5

Automobile Industry5

Oil and Gas Industry5

Luxury Goods Sector6

REFERENCES7

Japan Earthquake & Tsunami Crisis

Introduction

The devastating tsunami in the Indian Ocean of December 26, 2004, alerted the world to one of the most terrifying natural phenomena on Earth. The word “tsunami” is derived from the Japanese word meaning “harbor wave.” Tsunamis are generated by offshore earthquakes, submarine slides, and, occasionally, sub aerial landslides that enter water bodies. Although most tsunamis are phenomena associated with the open ocean, some tsunamis can be generated within lakes and/or creek due to rockslide failures. (Benson, and Clay, 2003)

Since the 9.0 magnitude earthquake and resultant tsunami hit Japan on March 11, 2011, the total recovery costs are still unknown. The economic impact of this disaster has the potential to affect not only businesses within Japan's borders, but those located in countries around the world (Hiroko and Bettina, 2011).

Japan's Economic Overview

Japan was the 2nd largest economy in the World, knocked to 3rd by China last year. Japan contributed 8% of the world's GDP in 2009, 2nd to China's 9%. The 10th most populated country in the world, with a staggering 128 million residents (2009) and 30 million in Tokyo, listed as the world's largest metropolitan area, Japan is a heavy player on industrial, economic and technology fronts. (IHS Global Insight, Japan, 2011)

In the first two days following the earthquake on 11 March, the Japanese stock market fell by a total of 16%. It has since trended higher, regaining 13.4% of its value by the close of business. The market's recovery has been helped by news that some of the industrial production, including car production, that had been heavily impacted by the earthquake would resume. (IHS Global Insight, Japan, 2011)

The increased radiation and reduced energy supply has been very disruptive to the Japanese business sector. Many large manufacturers had to shut down plants across the country, including most of Japan's leading global corporations such as Honda, Toyota, Nissan, Mitsubishi, Sony, Toshiba and Panasonic. However, most of these firms are planning to resume production. Also, some of the lost output in the prefectures (Miyagi, Fukushima, and Iwate) that were immediately hurt by the disaster can be replaced by switching production to less affected parts of the economy. The low capacity utilization rates that are assigned across most of the economy will make this easier. (Kyohei and Yuichiro, 2011)

In the short-term there are four main channels through which measured GDP in Japan is ...