Business Case Study 4. 1 000 000 Tones Wheat

published in: Case studies

01 Dec
2009

In 1981 a Foundation decided to fight starvation in a poor African country on the east coast of the continent!  During the previous 3 years, on average 150 000 people per year died from starvation!  Due to the high level of corruption in that African country the Foundation decided to endow several ships of wheat weighted over 1 000 000 tones instead of money.

A very large-hearted, well-intentioned act of the Foundation, aimed at the welfare of these poor people. Let's see what happens further.

Wheat arrives, it is distributed relatively equitably among the entire population.  In this year 10 000 business case, business consultant, trojan horse, troyan horsepeople died because they surfeited on wheat products.  Isolated cases of starvation were registered only in almost inaccessible places in high mountains and deep jungle.  The Foundation, the government of the African country and the media around the world were extremely pleased with the operation and reported it as very successful.
   
   
pic. Trojan horse
Nobody paid attention to some local economists - business consultants - that predicted huge problems.

The following year approximately 400 000 people died of starvation ...!  Why?

The donated wheat completely ruined the
farmers - no one was buying their products.  For the next year, the few survivors planted cotton as its price went up.  In 1982 the poor country had neither domestic production of wheat, nor financial resources to purchase some.

What looked as the perfect gift caused unprecedented problems to the African country.  The Foundation hired the same business consultants whom it did not pay any attention an year ago.  But it cost 4 years and amount exceeding the value of the donated wheat to fully recover the caused economical problems.

 

Business lesson: It is mandatory to analyze today, tomorrow and the future implications of any significant our action.  We must require different views from external experts (consultants) with experience.

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