Some countries in the united states and fir4st world countries are located at areas that may be prone to such economics of scale are aimed at achieving the greatest returns possible given a low cost of all factors inputs and this helps in increasing of the markets value of a company in the industry. Catastrophic have extremely emergency economic implications to business firms because they normally destroy property, which includes machinery, building, plant and equipment and also goods in stock.
The effect of three is that such property helps in the production processes, which produce outputs, to be sold in the market. These saws gain profit, which is then shared between the company stakeholders. These include shareholders, Debenture holders and long/short term cinders to the company. With the destruction caused by catastrophes the flow of benefits form the company to all parties in question is disturbed. Some catastrophes are politically motivated like and September 11 is the government duty and responsibility to secure the resident and business non-resident community in the country.
These are contributors to the revenue collected by the government in terms of taxation. If business is affected by catastrophes, there work is enough sales, profit and tax to the government. In the case of natural catastrophes government involvement is also very necessary. Aid should be given to fund reconstruction and recovery efforts by the business community. Companies have a right to be protected and * in case of a catastrophe because of the amounts that they combine to the government through taxation.
The next catastrophe relates to the extend of preparedness to ensure that incase of a natural or artificial terrorist attack or disaster measures are in place to ensure that regardless of the exposure to catastrophes, a company will still continues to enjoy its economics to scale because there disasters negatively affect the operations of the company. Governments assistance is therefore very necessary in both preventive precautionary measures and after catastrophe remedy in reconstruction and recovery efforts.
Lee and Perrow 39,8 1040 1056
The next terrorist or disaster attack may be natural thus includes earthquakes or even floods which may be very destructive or through ethnology. This can be in the form of nature or a computerized terrorist attack. The focus should be on how prepared everybody is including the government; measures should ensure that such could be defected in advance and corrective action taken. People dont have power over natural forces and their investment can be normally affected. Government scientists should detect such and alert the business community in time in order to take necessary measures, which might include relocation nomatter the lost because a stitch in time saves nine.
The government should also ensure that terrorist attacks on grounds are avoided because these are cases of another government nation individuals not happy about the governments stand or past reaction / action on some global issues and the business community ends up suffering thanks the ruling system. As was the case for September 11.
Those around times to work hard their buildings property plants and machinery brought down and hence their operations came to a standstill. This leaned to loss of revenue, profit, terming per share went down, loans were taken to help in recovery and Goodwill of the company was destroyed. Relationship between the company and suppliers employees, clients, and company guarantors were all not as before and the public image of such companies was messed up.
The questions here is how to avoid such so that the acquired economic of scale can be utilized due to continuity of operations. Perpetuity of business centuries also determines its extend of economies of scale both internal and external.
The next catastrophe may destroy the perpetuity concept of business companies. Business assumes that they should control to operate for the enforceable future and thus is preparing that may be due to the next disaster. Even this is tampered with, inefficiencies and massiveness occur and therefore output is achieved at high cost especially if a firm is located at a place than is extremely exposed to calamities.
The government should give growth or even funds to the companies to ensure that reserve accounts are not utilized and the balance sheet sir destabilized. Disasters at the moment are the main source of worry to business around the United States metropolitan because they cannot be of my economic value due to the costs incurred. After September 11, it was not easy for all entities to relocate and with the continued war on Iraq and the United states impact on the war another error attack may be due to anytime.
Bushs stand on the war of a concern to the republicans who form the business community. Revenge by the Iraq may be expected and this will mainly be at big cities where such attackers aim to have a maximum destruction.
To the republicans, the presidents stand may be initiating another attack and businesses around these regions will be greatly affected. Once businesses are affected this growth and development is affected and production may not be at low cost due to the funds utilized to desk with terrorist affects. The market value to affected companied go down due to low volumes of sales, which determine profits and earnings per share. Investors may not want to invest in such areas because their return on investments may be low and may decide to invest in other parts of the world.
This leads to low funds and finance for company, which is needed to make more investments and or start new project.
Clarke and short (1993), 21-23
High-risk facilities like all New Jersey where major oil gas, pipeline companies and railways are located business people around that area are always worried about the past catastrophe. These are areas where terrorists may be invested and may stake in revenge. Business are said to be interested in one way because both product and service industries need one another for the effective and efficient performance railway lines are need for the transfer of factor inputs and outputs if they are destroyed, other means of transport may not be cheap and therefore this average cost of production may be high. This leads to diseconomies of scale because high revenues are matched wit high costs and low profits are gained.
The timings per share are reduced. Investors may decide to buy shares of other companys because there is no economic value due to the low comings per share. Incase the government does not come in these costs of services may go up to the disadvantage for investors. Location of sites in such high-risk areas may not be avoided and firms may suffer die to catastrophes that they may not have control over.
Pipelines and gas companies are m* needed by manufacturing companies due to the factor inputs. When destroyed, firms may have to look for other forms of energy, which may be liked in areas due to low supply, which cannot be matched with the existing demand. Goodwill that has been created is no longer in one and diseconomies of scale false the company. Unnecessary costs are incurred which violates the set budgetary expenditure, health, economies of scale.
In determining the business location, many factors are considered and therefore a site may be admirable due to other factors regardless to the vulnerability of the region to catastrophes. More disasters may be considered to be interminable so a company may decide to ignore the next catastrophe. However, caution is that such firms together with the government should know what to do incase of a disaster because this may reverse the economics of scale. Other factors that a company considered in choosing its site may be enabling growth and development of a company which censures low factor input costs. Perrow (1984), 16,19.
Catastrophes are normally abrupt and will be economically viable given that they may not be directly related benefit. Average product cost goes up after including all costs that have been incurred in dealing with the catastrophe. The prices of commodities will remain constant and exercise losses occur. Return on investment, return on sales, and acid test varies all become unfavorable to the shareholders together with the management. The employee may also lack motivation and thus may lead to magnificent leading to low quality or area wastages and idle time, which is very costly to the company.
Lack of government involvement in a discouragement to investors because at times the finances may be available to the companies affected and the calls for governments intervention. Business vulnerable to catastrophes should always be considered in the government budget for every year under disaster management funds. This is what the government owes the taxpayers the next catastrophes should have very minimal impact on those affected and this will be government duty. Business community in such areas should keep a eye on the government to ensure that they are prepared and what happened after September 11 doesnt occur.
Economic costs and time, which is valuable, should all be considered when carrying up with a catastrophe preparedness scheme? Time lost during reconstruction and recovery may never be recounted to employees are destabilized; suppliers and companys clients are disturbed and may lack for other clients and supply point. This is and advantage at the expense of the affected companies.
Perrow (2005) 34,2; 99 -107
Delays caused by these catastrophes may also affect the company to the unforeseeable future. The government regulatory bodies, which include the homeland security office, should consider all these and take measures as required. Catastrophes may require research for development purposes. The cost for research will increase the average cost per unit and reduces profit margins.
This in itself is a diseconomy of scale, which could has been enjoyed by the company if operations were not disrupted. The objective of all firms is to maximize revenue profit subject to factors inputs. These research expenses may not be of use to the company immediately and will greatly affect the customers of the company and hence the objectivity of the financial statements which will greatly be affected. It is therefore necessary for the government to fund research out of these catastrophes so that the average cost of outputs is not increased.
Perrow (2007) 6 10
Catastrophes may lead to hanger in techniques used in production. Relocation may also affect the enthusiasm of the employees and may not have the motivation to improve the quality of producers. Marketing the company will also be necessary after the next catastrophe in order to improve the affected companied image. After the next catastrophe, suppliers and consumers may also want to help away from the vulnerable region and this has a greater economic implication.
After September 11, focus shifted form achieving short-term and long-term goals to the issue of safety form catastrophiles. It is the governments duty to ensure that its residents and foreigners in the country are secure. Government goodwill will be showing concern for this and should be ready to take measures that impress the country allies because its such people who financially deal with the economic antis in the country. Attention on safety is not very economically bitable even in areas prone to catastrophiles. This leads to an ignorance of other duties that the companys management owes the stakeholders of the company inducing increasing market value to the company in the industry.
Pidgeon 5,1, 1-14
Vulnerable companies may ignore the idea of professional growth and development of its staff. Labour is very important for a company to achieve its long tern and short-term objectives. The human capital is therefore affected by catastrophiles as well the case for September 11. People result to mobility and theory therefore transfer their ability to other regions that are not vulnerable.
Employees ability improved by working for a particular organization is provided to other firms in other regions. The government should endure the working population that their interest are being considered by the government investment in the next catastrophe preparedness and they should therefore not seek employment else where. Labour mollify of a diseconomy of scale because more capital will be employed in recruiting and training new staff. This is a direct cost of production leading to high average cost of production.
Ripma 5,1, 15 -23.
The environment is also affected by both natural and physical catastrophiles.
Jacob , Brain 13,2,34 43
In conclusion, all business people an citizens of a particular country need a clean environment free form pollution caused by catastrophes. The economic implication of environment should be considered in the next catastrophe. The governments deregularization of homeland security efforts has left many high-risk entrepreneurs to be greatly affected by catastrophiles either natural or artificial. The government should increase funds for the next catastrophe preparedness in order to avoid the effects of all levels of the economic at domestic level because these are market and industry players.
La Porte, Todd and Rochlin , 214, 221 227.
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