Wednesday, March 23, 2011

Risking / derisking Business Model by Globalising

Recent Japan earth quake gives us all a lesson. The companies which have their businesses spread across the globe have inherently derisked their business against natural disasters. Also it tells us the importance of Insuring and Re-insuring by the Insurance companies.

Many US comapnies have exposure from 10% to 75% in their Japan ventures and hense stand to loose by their strategy of concentrating to much on a geography. Area's like Japan and Gujarat in India are famous to be Earthquake prone but are also very akin to business ventures. This shows what PR can do, it can make a person invest in a inherently risky area, but suitable to business growth and entrepreneurism.

So planning a business think of it, not more than 20% of the business in One country esp. if it is disaster prone. Similarly with the markets, better to have more diverse customers to de risk the revenues and marketing function of the Company. Always think of de risking your company. If only the US businessmen thought they would have avoided the great second depression in Global economy.

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