Reducing the impact of financial crisis Essay

The Use Of Marketing And MIS On Reducing The Impact Of Financial Crisis

Introduction

During the 2nd half of the last twelvemonth 2008, the most sectors of the markets was affected such as stocks, Banks, Oil, Real Estate, Industries etc. The fiscal crisis has affected the universe in general, affects such as persons losing their occupations, Bankss and organisation traveling bankruptcy, people being homeless, and the clang of the stock market where major losingss have occurred. Furthermore, this crisis has affected the Middle East even in sectors which are non straight involved in the planetary market topographic point, such as in Bahrain many contractors have witnessed a decrease in their catching concerns due to the awkwardness in the activity of Bahrain ‘s Market. Furthermore, this decrease has been through the loss of assurance from purchasers to purchase existent estate and hence as a consequence contractors have non been hired to make these occupations, which they depend on to a great extent as a beginning of their income.

Furthermore, the Middle East states rely on natural resources such as oil along with existent estate, investing, lodging, touristry and foreign aid instead than utilizing production activities. Since the Middle Eastern states have wealth they have non been affected every bit much as other states in the universe, since this expensive resource can assist them fund undertakings and develop their economic systems. These states may hold adequate wealth gained from the natural resources at the clip of economic system boomed up merely before the crisis happened, which used to detain the deep consequence of the crisis and to back up the possible development. In malice of the gained may non enough used to develop a strong industrial base and substructure.

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The Middle Eastern Region does non hold the cognition and capacity to absorb income an investing on a diversified footing this could take to economic instability if the planetary fiscal crisis increases more.

Furthermore, the Crisis has caused rising prices in the universe which is the general addition in the monetary value of goods and services ; as a consequence the person ‘s, client ‘s and purchaser ‘s buying power will worsen, which will take to impact on the concerns activities and every bit good as the economic system in the Middle East part. Another Factor which is impacting the Middle East states from the fiscal crisis is that most of the Middle East states have their currencies linked and pegged to the U.S Dollar, since the US Dollar has depreciated in value this will do those states to be affected from the fiscal crisis.

Most states in the Middle East have non been really affected by the fiscal crisis due to their limited trust on planetary fiscal establishments, what is meant by this is these states in the Middle East have non depended on puting in U.S stock markets really much as other states outside of the Middle East Region did.

In contrast, some states policies have limited their effectivity organize the fiscal crisis, for illustration Iran ‘s economic system has non been straight affected by the crisis since Iran are non in partnership with the US of America ‘s economic system and policies they do non merchandise oil to America and therefore do non trust on the US as a beginning of income. Furthermore, Iran trades it oil to other states such as China which is one of its biggest spouses. Furthermore, Iran trades has been affected by the fiscal crisis in some grade since it trades with Europe, which is affected by the fiscal crisis, However it does supply its crude oil to China, which has an first-class economic system and could merchandise with Iran for many old ages to come. Another illustration is Syria, which is non portion of the oil manufacturer, but their trading is with Russia alternatively of United States which is the beginning of the crisis in the universe.

In extra, as per CNBC Arabia the economic intelligence channel ( www.cnbcarabia.com ) , the undermentioned extra concern illustrations which they are traveling to back up to cut down the effectivity of the fiscal crisis.

State of Qater is the 1 of the largest gas modesty in the universe, now a twenty-four hours is subscribing a future economic trade with Porch and FoxWagon, this trade as back uping the both parties economically, while Qater will derive a worldwide market portion and will develop their concern substructure. Orascom Development Holding Company ( www.orascomhd.com ) is an Egyptian group of companies with multiple concern activities is considered as one of the largest Arabian companies has established on 1961 is be aftering to buy stock, and bonds of Swiss Bank. However, it seems that the political system, natural resorts, population, civilization, selling and some other are the chief ground of the effectivity of the universe ‘s fiscal crisis.

History

For the long-run, the worldwide market ( Global Market ) trends is unstably, this lead to increase of unemployment, poorness, illness, cut down in the state instruction and industry engineering, while it is believed that these grounds lead to weak of fiscal economic system. The planetary fiscal market was historically affected chiefly by ( Roger Leroy Miller, 15th Edition, “Economics Today” , page 161 ) the Word War I ( 1914 – 1918 ) , Great Deprecation ( 1930 – 1940 ) , World War II ( 1939 – 1945 ) , Korean War ( June 1950 July 1953 ) , Vietnam War ( 1959 – 30 April 1975 ) , and for the Middle East Region such as Iranian Gulf War that when the struggle Begin in August 1990, when Iraqi forces invaded and occupied Kuwait. The struggle culminated in contending in January and February 1991 between Iraq and an international alliance of forces led by the United States. By the terminal of the war, the alliance had driven the Iraqis from Kuwait. The cause of the war was, the Iraqi-Kuwaiti boundary line had been the focal point of tenseness in the yesteryear. Kuwait was nominally portion of the Ottoman Empire from the eighteenth century until 1899 when it asked for, and received, British protection in return for liberty in local personal businesss. In 1961 Britain granted Kuwait independency, and Iraq revived an old claim that Kuwait had been governed as portion of an Ottoman state in southern Iraq and was hence truly Iraq ‘s. Iraq ‘s claim had small historical footing, nevertheless, and after intense planetary force per unit area Iraq recognized Kuwait in 1963. However, there were occasional clangs along the Iraqi-Kuwaiti boundary line, and dealingss between the two states were sometimes tense.

The dealingss between the two states improved during the Iran-Iraq War ( 1980-1988 ) , when Kuwait assisted Iraq with loans and diplomatic backup. After the war ended in 1988, the Iraqi authorities launched a dearly-won plan of Reconstruction. By 1990 Iraq had fallen $ 80 billion in debt and demanded that Kuwait forgive its portion of the debt and aid with other payments. At the same clip, Iraq claimed that Kuwait was pumping oil from a field that straddled the Iraqi-Kuwaiti boundary line and was non sharing the gross. Iraq besides accused Kuwait of bring forthing more oil than allowed under quotas set by the Organization of Petroleum Exporting Countries ( OPEC ) , thereby dejecting the monetary value of oil, Iraq ‘s chief export. ( hypertext transfer protocol: //encarta.msn.com/encyclopedia_761551555/persian_gulf_war.html, accessed on August 20, 2009 ) , all of those wars were a great ground for the long-run fiscal issues, which are governed by the political systems and issues.

Background

The Global Financial crisis has affected most economic systems in the universe ; the chief ground behind this crisis is the sub-prime mortgages which were from the United Sates of the America. Looking at the events that led to the Global Financial Crisis, the Fed ‘s Report ( 2008 ) identifies that the recognition crunch ( which could be defined as tightening of loans in the recognition market ) was chiefly due to the losingss on sub-prime mortgages that Bankss faced get downing at the first half of 2007. BBC News ( 2007 ) identifies that the construction of mortgage loans availability to the market transformed in the old old ages, borrowers who borrowed from fiscal mediators saw their loans sold onto the bond markets as a signifier of a mortgage-backed-security, helping the Bankss that originally gave out the loan to free-up their balance-sheets to publish more mortgages and loans, the consequence was higher demand for houses, as families could obtain mortgages at really low involvement spreads ab initio. Families and Bankss were driven by a bad febrility. Fed Report ( 2008 ) paperss that Households assumed that the tendency of high house monetary values would go on to the hereafter and they could refinance their houses, Bankss on the other manus realized the bad recognition history of borrowers but did n’t mind, due to the ever-increasing value of the collateral ( houses ) . BBC News ( 2007 ) studies, nevertheless when involvement rates readjusted to a higher degree two old ages after the loans were initiated loans became more expensive to refund and many borrowers defaulted, ensuing in an addition of non-performing mortgage loans and a go oning decrease in lodging demands as house monetary values and involvement rates were excessively high, harmonizing to the Fed Report ( 2008 ) the decrease in demand resulted into a autumn in house monetary values as extra supply was built during the bad period and house monetary values.

Furthermore, as per the ( Geting Off Lightly? The impact of the International Financial crisis on the Middle East and North Africa by Julian Brach and Markus Loewe ) Middle East states have been affected to a lesser grade than other states in the universe. The Middle East states have been affected by economic and reassign effects instead than being financially affected. Furthermore some Middle East states are exporters and manufacturers of Oil & A ; Gas as chief natural resources and have big sums of oil compared to their little population illustrations: Kingdom of Saudi Arabia, Qatar, Kuwait, and Oman. These states have been affected by the crisis in signifiers of economic minutess and investings made abroad. However, since they have big modesty of oil & A ; gas the natural resource in comparing to their little populations, therefore they produce big sums of oil with low costs and derive a batch of net income. These states economic systems can finance their states authorities despite of decrease in the value monetary value of the oil trade good. Furthermore these states have gained immense sum of wealth in their old oil booming old ages which could decrease the affect of such a fiscal crisis.

Some other Middle East states which are oil manufacturers and exporters with big populations such as ex: Yemen, Iran, Iraq, UAE Dubai and Bahrain. These states have been affected more towards the crisis compared to the other states. Dubai and Bahrain are both affected in footings of wealth and finance. These states are largely affected by the fiscal crisis since they are unable to maintain their custodies of public disbursement at the current oil monetary value degree without utilizing their fiscal militias of taking on excess debts. This is an issue since increasing purchase ( debt ) the states are exposing to more hazards in the market.

States that are purchasers ( importers ) in the Middle East such as Jordan, Lebanon and Palestine districts are all witnessing losingss in touristry every bit good as foreign investing. However, these states have benefited from the diminution of oil monetary values which could help them in geting more oil resources at cheaper monetary values. For illustration Jordan spent more than a 3rd of its GDP on oil imports, these states are able to salvage 5 – 10 per centum of their GDP because they can import oil at a much lower monetary value now than in 2007. This could be considered as one of the benefits of the fiscal crisis for these importing Middle Eastern Countries.

Furthermore, as per the above mentioned beginning, many states have been affected by the fiscal crisis in the Real Estate sector. Properties monetary values have been affected in Dubai monetary values have fallen by 50 % and edifice undertakings deserving $ 582 billion have been put on clasp. Furthermore, exiles have been forced to halt working as a consequence and forced to go forth the state. In February 2009, 17 % of expatriate workers left the state as a consequence the existent estate monetary values fell every bit good as building activity worsening.

The exporters and manufacturers of oil and natural gas have been affected, because of the diminution in the universe monetary values of oil and gas trade goods. These exporting states have suffered a 25 % bead in their GDP due to the losingss in their export grosss. Most GCC states have sufficient fiscal resources and fiscal militias to get by with this loss of income for a limited period of clip. Monetary values of oil have reduced in the summer of 2008 and it was around US $ 50 per barrel. Harmonizing to the IMF appraisals Oman, Iran and Iraq need an oil monetary value of US $ 77, US $ 90 and US $ 110, in order to finance their authoritiess budgets form their export income. Mention to ( Geting Off Lightly? The impact of the International Financial crisis on the Middle East and North Africa by Julian Brach and Markus Loewe ) .

Methodology

Questionnaires were distributed to several and different states including Bahrain, Kuwait, UAE, and India. A figure of concern and proficient employees were personally interviewed, and a focal point of group was held which included several groups from authorities operation, fiscal sector that includes Bankss and insurance establishments and commercial sector globally including United State of America and United Kingdom. The information analysis reading was carried out on the footing of the information provided as per the enclosed study of questionnaire analysis and consequence.

The Questionnaire addressed several issues, in the signifier of both unfastened inquiries and closed inquiries. Participants were encouraged to talk freely of the thought and supply input about at that place attitude sing their possible development of fiscal sweetening system via increasing enhance selling and information systems and other specific countries like barriers to develop and their possible function in such an online system.

The Interviews were conducted through several authorities employees, citizens and population in the Kingdom of Bahrain sing fiscal crisis. For illustration, several extremely placed ministry functionaries and managers, directors and caput of sections, other degree staff, citizens and population, and private sector, the consequence seems that the fiscal crisis cab be cut down by the proper selling and via the right use of Management Information Systems that will cut down the impact of the crisis via increasing the trading and concern activities in the society. So many agreed that the addition of fiscal impact due to the Political Government System and behavior, and state ‘s civilization and instruction. The impact of the crisis can be reduced via promoting the concern activities within the part, encourage to remember the local investors to put within the part or state alternatively of puting outside the Middle East, and get exile investing. . The interview covers the undermentioned countries:

Selling and Advertisement Activities

What is the feedback of the selling and advertizement in the states? Simply what do you believe of these concern to the local part.

Entrepreneurship Skills

Do you hold the entrepreneurship accomplishments and involvement to put in the part?

Management Information System Resources

Do you believe that the MIS aid to cut down the impact of fiscal crisis?

Encourage and get of investing

How can possible to promote local investors to come back and invest in the state? How can get or convey new investing either local or deport?

Investing Security:

Do you hold assurance in puting the Middle East?

Do you hold assurance in doing payments online?

Do you hold assurance in unwraping your concern information?

E.g. By supplying net deserving statements, Properties and other Assetss, Payment dealing information, and or by supplying revenue enhancement and or one-year audit studies.

Speed of Booking

Do you believe that the e-booking will better the enrollment, booking and assignments, which will increase the concern activity and cut down the impact of crisis?

Support and Needs

What information, aid, support and demand should be provided to the investors to put in the part?

E.g. : such as analysis studies of population, investing, undertakings, existent estate, revenue enhancement jurisprudence, political systems, merchandising ordinance, employment functions and Torahs.

Benefits and Advantages

What benefits and advantages do you believe that will be if such a above information provided? Does the above will cut down the impact on the unemployment and fiscal crisis?

Challenges forces

What challenges could originate and could impact citizens, population and investors?

It was indispensable to happen out the feedback, positions and thoughts of holding MIS and Marketing systems in order to better the impact of fiscal crisis and extinguish and or detain to go on once more. The interviews, in add-on to research and better the specific grounds of the fiscal crisis.

Proposed Solution

To cut down the impact of the fiscal crisis, the following are believed to be impalement:

  • The sweetening in the political and democratic system
  • Educating and developing the states on multiple countries
  • Distribute the wealth of the authorities income that includes the natural resources to the state
  • Increase the dependence on the local educated people, investors, shareholders
  • Aid and promote the entrepreneurship people, by supplying the needed information, support and accomplishments
  • Acquire exile investing
  • Support the industrial market
  • Promote callback and return the local investing to the state, which lead to a concern chances and cut down the unemployment, so increase the people wealth
  • Adapt and heighten a proper selling and advertizement
  • Impalement and usage of Management Information System
  • Enhance the political and legal environment

Consequence And benefits of holding an e-Government system

The followers are some of the major benefits that have been observe by the survey.

  • Increase the local concern chances
  • Increase the single wealth
  • Delay or cut down the impact of the fiscal crisis
  • Increase the cultural apprehension
  • Easy entree to information
  • Better the Quality of Decision Making

Decision

The Financial Crisis is a planetary phenomenon that impact on the most states, local and planetary concerns, it may caused by immense market participant, while its impact most concern and single. Several ways has been discussed to cut down or detain its impact including the authorities support to the states by administering the natural wealth and income to the state, bettering the political systems and supplying the needed information. It seems that of the major decrease of the fiscal crisis is marketing and direction information systems, while it can supply the needed analysis study and tendencies of the market and rush up the concern trading.

Many Middle Eastern states have reacted after the eruption of the planetary fiscal crisis. States that have reacted are Jordan, Qatar, Kuwait and UAE have concentrated on province warrants or warrant financess in order to procure private bank sedimentations and to forestall the prostration of National Banking Institutions. ( Geting Off Lightly? The impact of the International Financial crisis on the Middle East and North Africa by Julian Brach and Markus Loewe ) What is mean by this paragraph is policymakers can forestall themselves from future crisis or losingss through an insurance company. These province financess act as a signifier of insurance for insurance, and are funded by insurance companies that sell insurance in a given province. ( www.Investopedia.com ) .

Most In-between Eastern states will be able to get by with the effects of the planetary fiscal crisis without enduring any amendss, although they are expected to turn at lower rates than earlier. The oil manufacturers can anticipate in the hereafter the demand for oil and natural gas to increase and as a consequence monetary value shall increase more than the market monetary values. International stock markets are besides expected to retrieve and get down operations. These Middle Eastern states should larn a lesson from the fiscal crisis and therefore cut unneeded costs from authorities outgo. An illustration of this from the writers of this paper can be Qatar. In Qatar the authorities finance the public-service corporation measure on behalf of the Qatari citizens, nevertheless this could ensue in extra use of electricity and if citizens were to pay from their ain pockets they would utilize electricity without inordinate use. Therefore the authorities of Qatar could salvage electricity costs which the writers see as unneeded and could switch it to the citizens in order to salvage costs.

One Important issue that exporting oil states should make is non rely merely on the exportation of oil resources as a individual beginning of income, they should trust on other factors particularly invention and progressing in engineering which could profit a states economic system. ( Geting Off Lightly? The impact of the International Financial crisis on the Middle East and North Africa by Julian Brach and Markus Loewe ) .

Furthermore, many Middle Eastern states have non been really affected by the planetary fiscal crisis since the Middle Easter states have non depend on World International Markets they have non been really affected as a consequence. Middle Eastern states need to reconstitute their authorities ‘s programs and long term schemes and adjust themselves. Restructuring is really dearly-won nevertheless it is indispensable to make so in order to beef up their places and competiveness in the planetary fiscal markets.

Mentions And Resources

1 ) CNBC Arabia intelligence channel ( www.cnbcarabia.com )

2 ) Orascom Development Holding Company ( www.orascomhd.com )

3 ) Roger Leroy Miller, 15th Edition, “Economics Today” , page 161

4 ) hypertext transfer protocol: //encarta.msn.com/encyclopedia_761551555/persian_gulf_war.html

5 ) Fed Report ( 2008 ) “Recent Economic and Financial Developments” The Federal Reserve Board, Monetary Report to Congress

6 ) BBC News ( 2007 ) “The US-Subprime Crisis in Graphics” hypertext transfer protocol: //news.bbc.co.uk/1/hi/business/7073131.stm

7 ) Geting Off Lightly? The impact of the International Financial crisis on the Middle East and North Africa by Julian Brach and Markus Loewe

8 ) hypertext transfer protocol: //www.investopedia.com/terms/s/stateguarantyfund.asp

9 ) Cecchiti Stephen ( 2008 ) “The Fed ‘s exigency involvement cut: There ‘s a new sheriff in town” hypertext transfer protocol: //www.voxeu.org/index.php? q=node/888