The news about the spread of COVID-19 is changing fast and companies are trying to make decisions about everything, depending on the industry. There are a lot of uncertainties about the spread of the virus and companies need to develop appropriate Change Management strategies to respond to it.
The spread of the virus has affected a lot of companies; major lock downs in some countries like Italy among others. The tourism industry being the most affected as most countries have closed their boarders putting restrictions on travelling, hotels now recording the lowest occupancy rates in these times, postponements of all recreational events until further notice, etc. These for instance has put a toll on the 1% levies charged to consumers that support Ghana’s tourism industry. Imagine this happened before Ghana’s Year of Return!
Companies across the globe must be predictive and proactive in their decision making to preserve business continuity and build enterprise resilience. Corporate leaders should be thinking of measures they can take not only to react to severe business shocks but also to reshape their businesses and plan for recovery.
WHAT STRATEGIES SHOULD BUSINESS LEADERS CONSIDER?
Per the reports released by the World Health Organization (WHO), the COVID-19 is spread through close contact or contact with the bodily fluids of an infected person. This has significantly raised the work risk of employees. Especially for companies reliant on the active human resource like banks, Schools and hotels. Companies must actively seek to redress such risk in order to secure employee safety, customer safety and their profit, for as Bernie Sanders once put it the health and safety of the worker should always remain the bedrock for the continuity and persistent success of the organization.
According to Brigette Hyacinth, Great leadership isn’t about control. It’s about empowering people. Firms that may be new to remote working can conduct a test run to let employees work from home. Resources should be available to ensure access to internet. Skype calls can be scheduled as well as Microsoft teams’ meetings. It’s all about giving quick feedbacks on tasks assigned and updating various job schedules. Employees will really feel appreciated because their employer has created a safe working space to work. To minimize employees’ abusing this dispensation, deliverables can be given. For companies who cannot let their employees work remotely (bank tellers, attendants at a fuel pumps, etc.) must ensure that there are extremely safe precautionary measures on site such that, employees’ well-being are catered for. Planned transformational change begins with creating the desire for change (which has already happened due to COVID-19) and redesigning processes so that they work better.
Most companies must employ enough digital tools to reach customers. For most tourism companies, virtual tours can be organized through apps where individuals and families can have tours without necessarily travelling. Other industries can put more resources into online advertising and marketing to make their goods easily accessible as well as convenient payment systems. Home deliveries are also sure ways of making sales since most customers would want to be isolated in these times.
The spread of COVID-19 has caused massive supply shocks because a lot of companies worldwide have closed or shortened production entirely. The limited supply deficit which has led to an increase in prices can be attributed to this. To that end, countries that rely heavily on exports are forced to consider other alternatives. In 2017, the top international trading partners for Ghana were China, the United States, India, Belgium-Luxembourg and the United Kingdom (Observatory of Economic complexity, 2017). Subsequently, with all these major trade partners assigning sanctions on trade because of the COVID-19, companies must assess their supply chain effectively in order to secure other alternatives, especially for companies that heavily depend on suppliers who are in areas significantly impacted by COVID-19.
If raw materials that are imported can be locally produced at fair prices, hurray! Apart from China, there are other countries that offer alternative supplies. For example, countries like India, Egypt, and Bangladesh are strong global contenders of China, especially in the area of telecommunication. Likewise, Saudi Arabia being a small country has the sixth largest natural gas reserves, therefore companies in the oil and gas industry can look at that. Raw materials like cotton can be sourced from Australia, India and Brazil.
Companies can also consider selling products tactfully to get enough funds to buy supplies during these times. Those who sell on wholesale can resort to selling on retail to create temporary capacities to meet customer obligations.
In addition to that, companies that might see COVID-19 as an opportunity can consider whether they can use their strengths to take advantage of this. For example, Kasapreko Company Ltd, an indigenous manufacturer and producer of alcoholic and non-alcoholic drinks in Ghana, announced on 23rd March 2019 that it has the capacity to produce enough hand sanitizers at lower prices compared to other prices on the market. Such a company has positioned itself well.
International Accounting Standards (IAS) 10-Events After Reporting guides accountants on transactions that are adjusting events and those that are not adjusting events. Companies that report as at 31 December may treat COVID-19 as a disclosure. However, there may be some exceptions to this. For instance, if an entity has recorded a receivable as at 31st December 2019, and due to financial losses caused by corona virus, the debtors are unable to pay back after the year end, the entity may have to adjust the receivable figure.
Furthermore, the entities that report between January and March 2020 may experience some bumps in their finances. If the impact is material and previous budget assumptions and business plans are no longer relevant, companies should consider revising these to remain agile.
Companies need to review their operating costs and consider cutting down some non-essentials. Receivable days should be reduced whiles increasing payable days. However, companies must ensure that this does not affect their reputation. Doing these among other things will create a near-term source of finance during these times.
One way that companies can achieve competitive advantage in these times is appropriate change management measures.
LET’S BE GUIDED!