Search For Corporate Effects of Terrorism
(With Valbona Zeneli and Gary Knight)
The scientific approach is largely driven by hypotheses which are analyzed as to their likelihood of being acceptable, true and robust. We present thoughts on the odds and consequences of relationships between international marketing and terrorism. We suggest arms length and reliable insights which improve our contextual understanding and decision making. Here are several hypotheses which we postulate are associated with terrorism and corporate action.
First are increases in Marketing Costs, accompanied by disruptions of supply chains. Interruptions in global supply chains tend to cause shortages or delays of critical inputs, which affect corporate strategies and performance, shrink shareholder value, and reduce the consumption of goods and services. Perhaps the entire “just in time” production processes of a firm and its supply chain may need to be reconfigured. Increased security measures heighten the complexity of motion which increases costs. Contextual volatility raises the cost of coordination, as suppliers and distributors devote more resources to environmental scanning, information processing, and negotiating with their suppliers for synchronized responses to rapid changes within all affected organizations.
For marketing planning, design, and organization we believe that an increase in the threat or occurrence of terrorism, makes management select its risk as a salient factor in the firm’s international marketing planning, supply chain management and organization of global distribution channels. To develop business strategies which minimize the firm’s exposure, managers tend to avoid direct investment and to require higher returns on investment. Exports can rise but with higher cost assessments for the development of new infrastructure in terrorism-prone areas. Terrorism also appears to depress buyer psychology and consumption.
International Experience plays a major role in the firm’s marketing planning, and the design and organization of the firm’s global distribution channels. The acquisition, interpretation and distribution of knowledge are critical for optimizing performance of global supply chains, and achieving superior resilience and market share. Reducing the firm’s risk due to unfamiliarity with a market, also called the “liability of foreignness”, pays off by decreasing market operational uncertainties, and shrinking surprises. It pays off to be on site, a motto which argues for multi-dexterity in international strategy. Substantial experience in numerous foreign markets is greater than the sum of its parts, and becomes a strategic asset when a firm must confront terrorism in its global operations.
Organizational Resources of the firm affect its competitive advantage. They can strengthen assets such as in-house knowledge, skilled personnel, superior strategies, and financial reserves. The ability of firms to succeed in light of international business adversity is largely a function of the resources available to explore alternatives.
Resource-restricted firms face greater challenges to create a solid business foundation by researching foreign markets and potential partners. Conversely, well-resourced firms have a greater capacity to undertake international ventures that will perform well. Therefore, we expect that firms with comparatively abundant resources will be better positioned to undertake sophisticated international marketing preparations. They can incorporate the environmentatl contingencies of terrorism into their planning, their development of supply chains, and their distribution channels, all key components of international success.