Seeing my name combined with the word “economics” appealed to the CEO in me as well as the CPA. It’s only when I read into the article, “Abenomics Turns Japan Upside Down,” that I learned the true, worldwide impact of Japan’s leaders flooding the economy with yen to end the country’s 20-year deflationary plunge.
Prices in Japan started rising__from luxury goods at Chanel and Tiffany to the hamburgers at McDonald’s, which went from 100 yen last month to 120 yen now. Consumers are rushing to buy before prices get too out of reach.
“After more than two decades of sluggish growth, and seemingly never-ending deflation, the central bank, the bank of Japan, has set a target of achieving 2 percent inflation within two years,” writes Brian Robins for the Sydney Morning Herald. “Its change of policy follows the election of new Prime Minister Shinzo Abe [pronounced AH-bey], who has made it clear he wants the central bank to become more aggressive in pulling the economy out of its despondency.”
Robins says the global financial crisis, which has hurt investment in the United States and Europe, encouraged funding in Japan (where the yen is strong) and Australia. Abe’s plan includes monetary, fiscal, and reform programs to force mild inflation, and it is seeing some success. Now, the yen is moving downward to about 100 to the dollar.
“The country’s manufacturers were quick to breathe a sigh of relief. A lower dollar gives them some breathing space in export markets. They have uniformly upgraded profit forecasts and, perhaps more important for the domestic economy, flagged higher bonuses for their employees.”
As Japan tries to fight its way out of deflation, other countries in the world may soon find themselves in it. According to the May 25 edition of the Economist, Japan’s new economic policy might force deflation on the rest of the world. “The lower yen will allow Japanese exporters to undercut their competitors.”
Making it your business
The macroeconomic trends outlined here might be hard to relate to your everyday job. However, they might be more relevant than you think. Take, for example, forecasting, which is defined in the APICS Operations Management Body of Knowledge (OMBOK) Frameworkas follows: “forecasting is attempting to predict or project future statistics—typically, demand or sales. It requires that all factors surrounding the decision-making process are recorded. Factors that affect forecasting include sales demand patterns, economic conditions, competitor actions, market research, product mixes, and pricing and promotional activities.”
At its simplest, business is about trading goods or services for money. If the value of money is changing drastically__because of inflation or deflation__forecasting becomes trickier. Add to that the fact that when inflation threatens, consumers and companies hurry to buy needed products before the prices go too high. Inventories might not exist to support these buying trends, and different challenges arise.
The complexity of today’s worldwide business environment requires skilled supply chain and operations management professionals. Through its certifications, education, conferences, and more, APICS supports professionals in a variety of industries and empowers leaders who can navigate these tricky situations. Visit apics.org today to see how APICS can help you lead your company in its business endeavors.