Environmental Factors; Advantages and Disadvantages
An Environmental Factor is “An identifiable element in the physical, cultural, demographic, economic, political, regulatory, or technological environment that affects the survival, operations, and growth of an organization.”
Source: Business Dictionary
Japan’s scarcity of natural resources, is theoretically overstated. The numerous natural harbours, plentiful rainfall, temperate climate, and other geographical aspects are important yet unclaimed bounties of nature. On the contrary important also are natural catastrophes such as earthquakes, floods and typhoons, and other factors that are beyond control could produce adverse impacts. As a consequence of which the economy and business could suffer.
Advantages / Opportunities;
Natural resources: Japan is known as being least blessed in terms of natural resources as it has to rely on USA and other nations for most of the core minerals like crude oil, iron ore, copper and coal. The nation holds the smallest per capita land mass among all G-7 countries.
However there are, mark able gifts of nature that have often been under appreciated or overlooked, few of which have been discussed below.
High mountains, abundant rainfall, temperate climate are the key factors that the nation enjoys and benefits from these fully. In most part, Japan is well watered with temperate climate which favors agriculture the most. Accompanied by a rugged terrain, three fourth of the Japanese territory is mountainous which generate fast-running and large-volume of water that become a significant natural source of ample water supply for residential and industrial use. This water from the mountains is also a big source of energy, about 15% of the electricity is been generated via hydroelectric sources. Another benefit of the mountains is that they play the role of natural barriers securing the country from foreign invasions.
Natural Harbors are perhaps the most underappreciated factor of the “nature’s bounty” with which the nation has been blessed. Japan has developed tremendously by utilizing her maritime resources and location. The surrounding waters, including many bays and natural harbors, provide the Japanese not only a means of internal communications but access to other countries. One of the biggest resource is the inland sea that is well protected naturally thus is of high economic importance. Major urban cities of Japan are linked to natural harbors. Consequently the nation enjoys strategic benefits as harbors are quite costly and require considerable technology and capital.
Disadvantages/ Threats;
The Japanese islands sit over a highly unstable region as the country is located in a volcanic zone where several continental plates meets, situated along the circum Pacific depth. The country experiences occasional volcanic activity and frequent low-intensity earth tremors are observed throughout the islands. Japanese geography has a good big number of volcanoes. Japan's highest mountain and the most famous volcano is Mt.Fuji. Many including Mt. Fuji have been dormant for quite a few decades still a huge number of volcanoes are still active and become a cause of massive destruction almost every year. The country has the distinction of experiencing more earthquakes than any other country on the face of earth.
Japan is considered as a hard place to live, only 15 percent of all land area is suitable to do farming reason being deficiency of flat land or plains.
As the map of Japan tells, the country comprises of a number of islands, since the land of this country is so prone to earthquakes, these jolts are accompanied by hurricanes, tidal waves typhoons and tsunamis, which become a reason of destruction of the infrastructure as well as of economic downfall.
The country lacks natural resources, in terms of fuels there is no oil or coal. Hence Mining is of very little importance. The mineral deposits are scarce, low quality, and hard to mine. To fulfill its energy needs, Japan heavily relies on imports.
There are variant climatic regions where the climate varies strongly. In the major cities the climate is temperate to sub tropic and comprises of four seasons. There is a monsoon season in early summer every year and during late summers typhoons hit different parts of the country.
This situation of frequent natural catastrophes hits the financial markets drastically. The impact is suffered not only by the Japanese financial markets but the international markets suffer too. For example, as quoted by Lin Wang in her research paper `The Impact of Japanese Natural Disasters on Stock Market` ``there are observed fluctuations of the Nikkei 225 stock index as well as the Standard & Poor’s 500 stock index after the Mar. 11 earthquake and tsunami in 2011. The price of crude oil also rises after this natural disaster and the associated nuclear crisis``.
The above mentioned risks may impact the business and economic conditions, and hence could effect significantly the decisions of an investor.
References
Lin Wang. 2011. ``The Impact of Japanese Natural Disasters on Stock Market`` Retrieved from
http://artsci.wustl.edu/~gradconf/LinWang.pdf
Japan`s Geography. 2012. Retrieved from.
http://www.koreanhistoryproject.org/Jta/Jp/JpGEO1.htm
Geographical Featues of Japan. 2010. Retrieved from.
http://classes.uleth.ca/200701/idst2008a/notes/Geographical%20features%20of%20Japan
(1).pdf
Natural Resources of Japan. 2012. Retrieved from.
http://www.harpercollege.edu/mhealy/g101ilec/Japan/jpe/res/jperesfr.htm
Hamao,Yasushi, Ronald W. Masulis, and Victor Ng. 1990. “Correlations in Price Changes and
Volatility across International Stock Markets.” The Review of Financial Studies, 3(2): 281-307.
