Effects of COVID-19 to the business is so massive that the impact will last till the end of 2020 for some industries and sectors. It would take even more time to heal the people and get the economies of countries to where they were.
In this, I will observe those industries which are highly affected and will discuss course of actions they can implement right away to minimise the effect.
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The highest affected of all, I believe. Aviation is a highly seasonal business whereas, their profitability is sometimes so sceptical due to the their uncertain nature. Airlines typically have high fixed costs and finance costs to be paid which requires them to be in business every single minute. They plan for their aircrafts to spend a minimum time in airports and always want to be in the sky with the maximum number of passengers.
However, with COVID-19 situation, some of the countries which are highly affected have totally shutdown their airport operations and other countries have minimised the arrival of aircrafts to their airports.
Even if an airline operates, they have to adapt to the high safety and security requirements imposed which again costs them time and money. All this has surely caused tremendous losses for airlines.
From the other side, one of the airline’s substantial cost in their financial statements, jet fuel, is down from a huge margin giving them a relief. Unfortunately, most of the airlines are currently in hedging agreements to face the sudden movements of jet fuel prices. Though the fuel prices is dropped, there is no significant benefit for most of the airlines right now. Checkout this article in investopedia to read in depth to how airline hedge fuel prices.
However, what generally happens here would be that the governments would use the tax payer money to save the airlines. Though these funds come through, it will take some more time for the people to have that peace in their minds to travel like they used to do.
What Airlines can do
- Promote domestic travel
- Cut costs on non essential projects and services
- Follow strict health and safety requirements and promote them
- Get into merge operation agreements with other airlines to survive
There were economies, some in Europe and most in Asia and Africa, that extremely depended on tourism. In these economies there were thousands of individuals and companies providing different services.
With the COVID-19 situation became a pandemic, locking down many tourist destinations and airports, these businesses were closed and operations came to an end. From the five star hotels to the home managed AirBnbs, the airlines and tourism package companies, tourism related entertainment businesses, travel guides and cab services are in the direct affected list.
Tourism is a highly seasonal business just like aviation. However, it will take some serious time for people to start travelling around the world even after the COVID-19 pandemic. I can’t see that day anywhere close at the moment I write this seeing the active virus situation in the world.
- Start operations focusing domestic market as people would tend to travel locally just after the pandemic situation is over
- If any business wants to change the way they operated, position themselves into a different segment of tourism, renovate their assets, this is the best time
- Get ready for the next wave. Keep your costs low and plan to survive for the next six months
Buying a car at a time that you don’t even know the next day you go for work or you get paid? very unlikely. Movement of people globally, have become historically lowest. Individuals and businesses would not spend their precious money to buy automobiles at this hour.
Following data is about the automotive production lost in Europe in the last month due to the lockdown of the manufacturing facilities. However, I believe, the sales of automobiles would be worst though we don’t have reliable data at the moment to compare.
However, there is a green light for automobile industry from far as people would not be comfortable using public transportation for a long time even after the pandemic situation is over. A demand for smaller, affordable and dual purpose vehicles should rise which could be exploited.
There is a considerable drop in the traditional education sector as most of the institutions are closed, whereas a significant up movement in online education industry as more people stay at home trying to access education online
According to UNESCO, 1.38 billion students stay at home due to the education institution closure.
- This is a huge opportunity for online education providers
- Education institutions can focus on providing support for their students to study from home and some institutions have gone to the extent of ‘Lecturing From Home’ which is a great initiative to face the situation
Manufacturing industry for non essentials were highly affected, mainly due to the lockdown situations in certain countries and reduced demand for industrial products globally.
Manufacturing is an industry which can not be run remotely. It involves so many people and so much human interactions which make a manufacturing facility more susceptible to become a COVID-19 virus spread house.
Safeguarding the workforce should be the highest priority in such a fast moving unpredictable outbreak.
Declining demand, production and revenues while accumulating debt would be critical for most manufacturing businesses.
Honestly there is very little apart from the general government support or bank support which any industry can have/ should have to survive in a difficult time like this.
- Try to start partial operations with the support of the government or health authorities complying to the maximum health and safety standards
- Consider investing in industrial automation processes such as autonomous material movements, robotics
- Secure the existing clients and the orders. It won’t be difficult as the whole globe is in the same pandemic situation
Construction is in a similar situation as of manufacturing. However, they follow their own safety standards which can be easily upgradable to the COVID-19 requirements.
But the issue is, this is an industry which involves so many other suppliers and service providers in a daily basis without whom the operations can not be run.
Construction businesses can start partial operations depending on which stage their work is on with minimum work force adhering to the required safety standards if the governments allow.
7. Financial Services
There are two places where all the above businesses seek help in a situation like this. First is the government, second is the bank or the financial institute.
So what would be the effect for financial institutions?
like in any economic recession, banks will start losing their credit as their customers facing temporary and permanent closures, the value of their investments would fall.
Further, it would cause banks to cut credit facilities for the other businesses as well resulting in affecting the whole economy at a time that the lending needs are high.
Providing relief to the existing customers would be inevitable for financial services as it is absurd to pressure them in a situation like this destroying the relationships.
The one thing financial services could do is seeking the government support as everybody else.
Cashless payments are becoming more popular and mandatory in some countries with the virus spread situation through exchange of cash. The banks can surely look into grow their credit and debit card customer numbers.
Seeking the support from the governments and the financial institutions would be the number one surviving method for most of the industries above.
However, with a little bit of thinking and management, businesses could minimise the effects of the outbreak and even turn this uncertain situation into a breakthrough opportunity.That’s the beauty of marketing.
Comment below if you are from any of these industries and what actions your company’s are currently considering.
Stay safe and stay healthy everyone!