Coronavirus test for business: for whom the bells toll2020 05 06
Author: Andžej Šuškevič
There are no companies that has he total immunity to the coronavirus crisis. When many services are provided from home, it is understandable that many of the measures that stabilize the business are linked to the use of communication and information technology.
Few weeks after the start of quarantine, we can observe how the business is transforming in Lithuania. For example, taxi companies begin not only to take out food, but also to set up their own e-shops. The social space just flicks away from the proposals to create an e-shop daily and for a dozen euros.
However, all this is only the first necessary action, which is critical to ensuring business continuity as soon as possible. In this context, it is often forgotten that the digital transformation of enterprises is not only about information technology or specific tools. This is about change in the organization and its management. The competitive advantage that technology can provide or how they can change existing business models or operations, thereby contributing to business objectives.
It is understood that the current situation calls for hasty actions to guarantee the continuity of operations and revenues, but in the long run we will have to return to normal life and assess whether the changes that have been made in a hurry, the solutions put in place are sustainable, adaptive and long-term. All the more so, experts are not sure when European countries’ GDP can return to pre-crisis levels in the first quarter of 2021 or only in the third quarter of 2023.
Tourism and luxury goods are at the greatest risk
Globally, the downturn is observed in almost all sectors:
- he largest – in the segments of commercial aviation, tourism, fashion and luxury goods;
- Average – in the automotive, real estate, insurance sectors;
- The lowest is in the pharmaceutical, health services, telecommunications services sectors.
Demand for commercial aviation, travel and tourism has now fallen by about 6 times more since the events of 9/11. In the long term, local tourism is likely to recover in the first place. Commercial aviation will take longer, and people’s habits may also be affected by changes– business travel will be likely to decrease in the future, as organizations will be more able to manage remote working.
The decline in the clothing, fashion and luxury goods business is due to both a decline in demand and a closed physical trading venue.
It should be emphasized that the gaps between different companies in the same sector are sometimes greater than the gaps between different sectors. It is therefore, of course, for each undertaking’s situation to be assessed individually.
However, if the limitation of quarantine is protracted, not only those businesses that provide goods or services of the first necessity, but also those which, by their very nature, cannot be digitized because they require proximity to the customer or physical space will suffer greatly.
The most resilient are those businesses where managers are able to manage the crisis
In assessing the resilience of a business to a coronavirus, not only the sector to which it belongs, size, capital structure or model, but also the ability of managers to manage the crisis systematically, professionally and at the same time creatively and make quick decisions. It is the managers who are part of the company that must ensure continuity of business even at such a difficult time. This means adopting changed circumstances, assessing potential risks and measures to prevent them.
For example, insurance business can be influenced by several factors: the increase in health and life insurance benefits, the declining return on long-term investments, and the limited ability of agents to make sales with their customers.
Forbes reviewers are considering that the COVID-19 will also affect revenue from compulsory insurance against drivers’ civil liability. With strict restrictions on movement and future unemployment growth, the population will look for ways to save. Abandoning a car (unrenewed insurance contracts for starters) can be one of them.
The second example is the telecommunications business, which has high technological maturity. However, there are also some specific challenges here. According to experts from Boston Consulting Group, on the one hand, there is a growing demand for consumers for stable, high-quality connectivity. Customer loyalty to the supplier is also likely to grow. On the other hand, smartphone sales are falling noticeably.
As the crisis is on the rise and the number of companies going bankrupt is growing, a decrease in business to business (B2B) segment is expected. The introduction of new communication technologies or the development of a network may also be delayed by problems in the supply of equipment and/or the focus of telecommunications companies not on development, but on ensuring the stability and accessibility of services.
Inevitable digital transformation
The coronavirus crisis that has emerged will show great evidence and is already showing the power of technology. The whole world is suddenly forced to get out of its comfort zone and practically move to work remotely within a few weeks, launch e-commerce or introduce new solutions to combat the consequences of coronavirus. Whether it’s remote work, supply scenario modeling, or customer business analytics, all of which require IT expertise and technical resources, new software or urgent changes to existing systems.
In this context, predicting the future is difficult, but one of the trends we may face is the growing divide between the ‘big and the small’.
It is likely that the large companies that have mastered new technologies well before and during the crisis will become even stronger, more influential. It is disappointing, but small and medium-sized businesses, which have so far struggled to implement IT solutions, may be further depressed after this crisis.
Unfortunately, the use of some enterprise technologies becomes not a solution or an opportunity, but an additional burden: how to ensure security, avoid falls in productivity, maintain and ensure the development of digital products and services? These and similar issues afflict many, so IT and telecommunications companies are currently faced with a strong need for advice.
The inevitable outcome of the crisis will also be that businesses will be more conducive to the benefits of technology and the opportunities they are opening up. We can certainly foresee that there will be companies which will continue to work in the e-space.
When attitudes change, the processes leading to the development of digitization are combined, we can observe through, reducing even important environmental factors such as the consequences of coronavirus.
How do cloud services help to handle a seasonal peak?2023 11 07
Learn how the public cloud helps manage and optimise trading systems during the seasonal peak.More
Rising cyber threats: a close look at global and Baltic cyber security situation2023 10 23
Dive into Baltic and global cybersecurity, uncovering causes of cyberattacks and key threats for organisations.More
Why should your financial institution consider SEPA integration via CENTROlink?2023 10 12
Learn more about the CENTROlink payment system, its key advantages, and how you can access it hassle-free.More