Relationship between War and Business Performance

            Understanding the relationship between war and business performance is necessary for effective business planning.  In the current era the world operates in wars; in fact, it is at the brink of the third world war. A number of countries are experiencing either internal or external wars; among such countries are: Israel, Democratic Republic of Congo, Ecuador, Syria, Ukraine, Russia, Haiti, Sudan, Palestine and Mexico among others.  These wars prove an existing relationship between war and business performance in terms of planet, people and profit- the triple bottom line.

            The question that arises is what is the nature of the relationship? Studies reveal that businesses in different sectors are affected differently by war. There is both a positive and negative relationship. Positive relationship means that war leads to higher performance of the business in terms of the triple bottom line.  Negative relationship means that businesses’ performance plummets. Specifically businesses engaged in agriculture,   manufacture of household items, hospitality, entertainment, transport, insurance, banking, fishing, and apparel among others are negatively affected while those in manufacture, distribution and selling of fire arms register a positive relationship.  As such, war presents both risks and opportunities.

Negative Relationship between War and Business

             Business owners perceive war as a threat to their businesses. As such, businesses tend to close, emigrate to safer areas, or scale down their operations.  War lead to loss of property, loss of investments, and drop in revenue.  However, there are other businesses that are more vulnerable to war than others. Part of the reasons for the resilience of business operations during war is adoption of technology in business operations and transactions.  Others remain resilient because of their effectiveness in profit and loss control. Part of the tactics in profit and loss control includes tax negotiation, contract negotiations, price controls among others.

 As Business Connections East Africa, our aim is to increase the resilience of businesses in settings of war by encouraging them to adopt technology and helping them access the needed technology.