This article is written by Ayushi Mahajan, from Centre for Legal Studies, Gitarattan International Business School (Guru Gobind Singh Indraprastha University). This article talks about the situation of the year after the coronavirus is over.
Table of Contents
Introduction
None of us had ever assumed that a disease outbreak will initiate a pause in our day to day activities. Even in the 21st century, with a vast range of advanced medical facilities, it is all transparent how did a health crisis translate to an economic crisis.
The initial outbreak of the coronavirus in China disrupted the global supply chains. A record 3.28 million people have filed for the unemployment benefits in the week ending March 21 as coronavirus induced layoffs surge in and around the US. Even when the short – term effects end, the long term business and economic impacts will surround for many years. In December 2019, a pneumonia outbreak was reported in Wuhan, China.
On 31st December, 2019, the outbreak was traced to the novel strain of coronavirus which was given a temporary name 2019-nCoV by The World Health Organization and later named as SARS-CoV-2 by The International Committee on Taxonomy of Viruses. The COVID-19 pandemic outbreak has forced the shut down of many businesses, leading to an unprecedented disruption of commencement in most industry sectors. Brands and retailers face many short term challenges, such as those related to workforce, supply chain, health and safety, consumer demand, sales and marketing.
However, successfully navigating these challenges will not guarantee a promising future or any future at all. This is maybe because, once we get through this pandemic, we will emerge in a very new and different world compared to the one which was there before the COVID-19 outbreak.
Overview of the whole situation
Many businesses, especially the one which are in the field of hospitality and tourism, almost come to an end. All organizational functions are intended to prioritize and optimize spending or postpone tasks that may not bring value in the current environment. Companies, especially startups, have now implemented an indefinite hiring freeze. Simultaneously, businesses involving online communications, online entertainment, and online shopping are seeing unprecedented growth.
Adversely affected sectors of economy
Auto sector
The automobile sector and auto parts sector of the businesses will continue to face challenges on the account of lack of demand, falling income levels and global recession.
Shipping and non-food retail
Non-food potential threatens retailers’ supply chains and global shipping businesses will find the next 12 month very challenging.
Building and construction work
The building and construction work will face a pause in the upcoming time. Businesses are generally leveraged and hence will face some dual challenges of high-interest payments and the lack of sales.
Apparel and textiles
The Textiles industries will get a hit adversely due to disruption in labour supply, unavailability, raw material, working capital constraints and restricted demand due to limited movement of people and purchasing ability.
Economy sectors with a possible uptick
Digital and internet economy
In the near future, it is highly possible that online-based products and services companies will find new takers.
- Online shopping will increase.
- Ed-tech and much online education along with firms involved with online skill development will increase and will continue to increase till the virus is over.
- There will be a sudden increase in demand for content, digital content will be in demand more than ever.
Speciality chemicals
Firms dealing with Chemicals will see a huge jump due to increased demand for disinfectants, sanitizers, cleaners, drugs and special medicines.
Pharmacy
Pharmaceutical firms and sanitizer companies are set to see growth in the near future.
Retail and FMCG
This sector is quite dicey. It will grow as well as there are chances that this sector will be paused.
Present scenario around the world
While the COVID-19 may not have the scale of the pandemics of the past, the economic and business damage has and will continue to affect more than the disease itself. Many lives are lost and millions will and many are affected. Countries will introspect, businesses will realign but we may have to wait for the rain clouds to depart!
Technology and future work
Until today, technology was considered to be the support function for many businesses, with it being used as a means to achieve an end. This is set to change as technology will now become the major frontline requirement for most of the organizations. Trends will accelerate. Automation will now gain momentum as spend on sophisticated IT infrastructure will outpace human resources. The sort of gig economy will emerge in the markets as well as the more developed markets. Job creation will become limited with more efforts being put in contractual basis jobs rather than full-time jobs. Work from home will be the new normal for businesses. Firms in some of the sectors realize that employees working from home are equally productive as compared to when they were working in the office. This will also help in saving the infrastructure costs.
Back to basics
Businesses will be rethinking their strategies of focusing on sales and profitability growth. Organizations which are claiming hefty valuations on the basis of sales growth will no longer find buyers. The focus on profit and profit growth will be the new normal.
Data is the new oil
In the future after a pandemic, data will become even more valuable, and with that data misuse through AI will also become rampant. We are seeing that the private sectors and government roll out contract tracing tools which have poor implementation and they posed a threat to consumer’s data security and privacy. Data and IT security will now become very important for businesses. Traditional businesses including heavy industries will find it difficult to survive without access to consumer data in the near future.
Businesses should not become evil
Cities have already started thinking about sustainable development models. Non-environment friendly businesses will be locked down in the terms of business valuations and will focus on environmental, social governance will be a new way forward. Now, new more compact chains will emerge, as non-essential intermediaries are given a back-seat. This will also drive employee and labour productivity and increase efficiency.
Future predictions made by scientists and groups
The negative impacts are short term
The fact is undeniable that COVID-19 has negatively impacted the growth of businesses all over the world and according to many surveys, the results solidify that 93% of the respondents noting overwhelmingly that coronavirus will negatively impact their business.
However, the end of the surveys concludes that many groups of scientists and businesses believe that the negative impact of the coronavirus will be short term, instead of long term. Specifically, only 28% of the respondents are expecting a long term negative impact of the pandemic on the business, while 65% are expecting a short term negative impact on their business.
Of course, the negative impacts are wide-ranging and simultaneously depend on the nature of the business itself, but the most specific one would be the revenues of the business.
Businesses will bounce back
Despite of the current situation around the world, the businesses have the ability to bounce back and have their operations return to normal once the governmental restrictions are lifted and they are normally able to start their businesses.
The 12% of the respondents believe that their operations will take a time pace of six months to one year to return back to their optimal levels. There is said to be the huge gap to the 88% of surveyed leaders who expect to have their businesses back to operational levels in less than 6 months.
From that 88%, 32% are expected to be operational in less than a month while another 32% expects daily operations to return to normal in 2-3 months. Lastly, 24% hopes to have their organization back to normal in 4-6 months.
Long term effects of COVID-19
It is not an understatement saying that the pandemic has significantly impacted the way the businesses and organizations used to operate across various industries. It is evident that many organization’s executives are developing fresh and new strategies to prepare for a new post coronavirus world.
At least 55% of surveys are now prepared for an increase in long term remote work of the businesses in situations of the event of other government movement restrictions. In addition to that, 51% of respondents are also focusing on business continuity planning and scenario planning to manage potential threats from waves of the coronavirus.
Preparation will be seen as a key in a post coronavirus world and businesses are already taking steps to integrate initiatives such as working from home and measures to reduce the negative impacts of the pandemic.
Impact of COVID-19 on lawyers and legal firms
Since practising law and barristary is one of the major functions and business of every country’s lawyers so that justice would prevail, and their country set a benchmark in providing relief to the citizens. But the crises emerged during COVID-19 posed a huge challenge to hamper human rights and the rule of law. The pandemic affected the lawyers all around the world in their daily professional activities which in turn caused a huge impact on the legal profession.
Access to justice was limited due to closure of the courts. Many Legal Professionals were not allowed to open their chambers in many Indian states for more than two months. Many of the hearings were postponed due to several days. Family members of arrested persons were deprived of the assistance of lawyers. Even after many days there came a provision of virtual hearing through video conferencing of most important matters and now it seems to be a very normal way through which courts can hear matters by following proper social distancing and avoiding gatherings.
Expected economic impact
The executive surveys show that many leaders are predicting that there will be an economic crisis as the aftermath of this pandemic. From closing down productions and operational activities, to a drop in consumer confidence, COVID-19 continues to affect and impact businesses and the way they operate.
77% of the respondents believe that there will be an economic downturn out of this pandemic and due to governmental restrictions and the continued threat of health to consumers, especially in major urban areas.
Countries such as India, China, and Italy are expected to take the greatest personal financial impact after the coronavirus is over as people continue to observe the social distancing measures and observe travel bans.
Actions taken to prevent unfavourable situation
Fortunately, the government of different countries seems to have been proactive in the terms of the measures adopted to regulate the adversity of the crisis on the businesses. The government is enhancing liquidity in the hands of the consumers, focusing on the social schemes, providing food to the vulnerable sectors of the society, enabling timely harvesting of the crops by the farmers in different sectors, ensuring the food grain procurement programs of government are completed on time, announcing measures to protect MSME’s and taking key decisions related to agricultural reforms. These are some of the measures taken by different countries’ governments in order to resume the businesses on track.
The Government of India posed many lockdowns and these lockdowns have altered the habits of Indian Consumers. Their lifestyle patterns have changed now and many consumers have shifted towards healthy and immunity boosters things. The immunity booster Chyawanprash has seen a growth in sales since March 2020. The data shows that its sales have surged 700% since April to June.
Conclusion
A pandemic of the nature of coronavirus has opened our eyes to how vulnerable human life can be. These are those rare times when every human being is on a quest for survival. We are now witnessing a drastic and paradigm shift in consumer and customer behaviour, businesses and business models, wherein there will be a decline of certain businesses and an upgrade of certain businesses which are directly or somehow indirectly related to the economy of a country.
References
- https://www.sciencedirect.com
- https://www.weforum.org/agenda/2020
- https://blog.smallcase.com/the-new-normal-analysis-of-covid-19
- http://economictimes.indiatimes.com
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