Effect of Worldwide Recession

Negative Effects of Recession on American Business

American auto manufacturers have been particularly affected by the recession; Chrysler, in particular, suffered severely as a result of the downturn in Asia. Exports to Japan (in particular) and Asia and general suffered as Asian distributors cancelled orders for Chrysler products. This resulted in excess demand and a slowdown in production at American manufacturing plants. At its Toledo Jeep plant, for example, Chrysler cancelled all overtime in early 1998.

When the recession started in Asia, auto manufacturers in those countries (such as Toyota and Nissan) increased their exports to Canada, Europe and Latin America where the recession was not yet being felt. This move was undertaken in order to gain market share in these regions and increase profits. This brought additional pressure and competition to American auto manufacturers in these areas, and put a damper on sales for American manufacturers as a

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s in Latin America and the Far East which might have contracted from what they were several years ago, but which still hold considerable potential for small and mediumsized companies. For many of these types of organizations, sales have actually increased to those regions hit hardest by the recession. In addition, companies which might have focused on a particular region which might be affected by the recession are now able to focus their marketing efforts on other markets. This can be a significant advantage to companies which are able to enter markets they might otherwise have overlooked. In addition to providing short-term benefits through increased sales, companies are also able to forge strategic alliances which may well have long-term beneficial effects. When the countries currently being affected by the recession recover, these companies will have a broader customer base which will make them more formidable competitors in the future. Future Unemployment in the United States Many companies are finding that they are caught between the benefits of the recession (lower prices for components) and the problems associated with the recession (lower prices for competing products, and increased participation in American mark
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