World Health Organisation declared COVID-19 a pandemic on March 11, 2020.

The coronavirus outbreak threatens to become one of the tragedies faced by humanity, and a major economic disruption in our history. As confirmed cases of COVID-19 spread globally, it has the potential to cause deaths, volatile markets, undermine economies, overwhelm health systems, deplete the value of assets and to trigger social change. Functioning as a circuit breaker and a game changer, coronavirus seems to test the structural weaknesses of global world. It is not only moving and expanding quickly, but also introducing new realities and new normal. We have witnessed so far that coronavirus hit the global economy, global shares and stock markets, employment level, travel industry and consumer confidence at record level. Coronavirus has also driven oil prices down at record level for the past two decades. Uncertainty about the future of global trade and investment tensions remains high and could spread further. UNCTAD said the economic uncertainty COVID-19 pandemic has sparked would likely cost the global economy USD 1 trillion in 2020. OECD, World Bank and IMF have all agreed about considerable shrinking in world economy. ILO projected up to 25 million workers would lose their job in 2020 and said the COVID-19 pandemic is having a catastrophic reduction on working hours and earnings equivalent to a-three month of 195 million full time jobs. This implies many of the workers will face income losses and deeper poverty. According to the Nouriel Roubini ‘coronavirus pandemic has delivered the fastest deepest economic shock in history.’ Mohamed El Erian said ‘the world economy will go into recession in 2020. Of course, things never stay the same but this time, we all are faced with unusual range of risks, uncertainties and dilemmas on not only business, but health, economy and social behaviour. Due to the pandemic we are in very grave period for some old habits and traditions. We feel birth pain for the new, but we do not know exactly what the new is. Future is uncertain. The pandemic also triggers new events, ideas, realities, rules and procedures that effects a significant shift in our current manner of doing and thinking new normal.

COVID-19 implications: priority for all is 'survive'

In the global pandemic nature of economy, sensitive governments have launched unprecedented public-health and economic responses for safeguarding our health, lives, earnings and assets all over the world. We all see that rigorous at scale-on time quarantines, reduced mobility and social distancing measures can drive a significant reduction in the number of new COVID-19 cases. Success in fighting against the pandemic comes at the cost of sharp fall in consumer and business spending, slowing economic activity and producing recession and financial stress no matter whether physical distancing and travel restrictions are voluntary or enforced.

While triggering supply and demand crises, the COVID-19 pandemic has also hit the business world, production-consumption-supply channels and current value chains, international trade, cash flows, employment and profitability in an unprecedented scale and speed. World Trade Organisation is expected world merchandise trade to fall up to 32% in 2020 as the COVID 19 pandemic disrupts normal economic activity and life around the world. Disease phases around the world differ from region to region and from country to country. China makes up a third of manufacturing globally, and is the world's largest exporter of goods, also importer of raw materials. Hence, companies, automotive and electronic industries that have come to rely heavily on China have been hit hard. The rates of capacity usage sharply reduced in manufacturing globally. In addition to this, service industry, education, financial services, construction, travel, aviation, tourism and leisure and their supply networks have been badly affected. On the contrary, ICT, e-commerce, medical equipment and supplies, health care, consumer goods and their supply networks have been affected positively.

COVID-19 drives business world to overcome external shocks, uncertainties and negative impacts of the pandemic. However, no one know how and when the pandemic will end. We all know that uncertainty may bring worst or best option for the business in future. At the early stages, the recession in the pandemic economy hits fragile SMEs and others associated with structural weaknesses, lack of working capital and credibility. Unfortunately, more bankruptcy is inevitable in near future. However, not wasting time for unfruitful grouches and actions, following an accurate and flexible roadmap supported by the market data and developments, fit for the company needs are crucial for fighting against destructive effect of the COVID-19 pandemic and for the near future. Optimisation of business network, ‘management’, liquidity and communication is crucial policy to challenge uncertainties and risks to maintain business operations.

As far as specific to do lists are concerned, companies and managers must internalise ‘new realties’ and ‘new normal’ introduced the game changer so that they need to challenge immediately COVID-19 implications for their own businesses. The most common management policies against negative impacts of global economic crisis would be:

1) Performing a comprehensive risk analysis associated to production-consumption-supply chain, demand and supply shocks, business models and value chain. Seeking and qualifying alternative channels, best effort to protect human capital and workforce.

2) Stabilisation of supply shocks and volatility and supply chain. Supply recovery via optimisation of supplier engagement, order management, logistic management, inventory management, production management and capacity usage as well as optimisation of sourcing.

3) Stabilisation of demand shocks and volatility via optimisation of demand management and demand recovery, distribution channels, dealers and other business partners, pricing policy, optimisation of customer engagement and communication, new technology and digitalisation.

4) Increasing productivity via economic, efficient and effective operations, cutting costs and expenses which are not crucial to operations, optimisation of work processes, optimisation of inventories and capacity usage, reviewing and re-designing contracts and commitments, saving on general management expenses, production, marketing and R&D costs, ceasing new investments.

5) Optimisation of financial health, liquidity, cash and working capital management. Increasing working capital from internal and external funds via corporate finance, limiting dividend policy, re-structuring payables and receivables, credits and cash balance.

6) Maximising governmental grants, incentives such as employment support packages, tax holidays, delays and tax credits, reduced energy costs etc.

7) Interruption of operations as a whole or departmental base till returning business to normal scale. Redundancy if only inevitable.

8) Economic, social and regulatory environment in where companies operating are also changing dramatically. Hence, the companies, shareholders and the managers need to be adapted new rules of the game, new competitive forces and risks.

China maybe to be seeing the light at the end of the tunnel of fighting the COVID-19 pandemic, and ready to increase production to export. However, this time western part of the world struggling severely, and not ready to demand/import. It also takes time and effort to qualify alternative suppliers in areas of manufacturing quality, capacity, delivery, cost and their ability to respond to demand changes.

We see that time is the best judge, and we live our preferences at the end of the day.

 

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