How Businesses Can Adapt With the World’s Greatest Recession Looming

As the effects of COVID-19 ripple through the world, governments are continuing to shut down “non-essential businesses” and urging citizens to stay home (“social distancing”) to stop the spread of the virus. Although these measures are being put in place to mitigate the effects of COVID-19, a new wave of “contagion” is now gripping an essential part of the world: the economy.

As more and more regulations and measures are implemented, countries around the world are watching as the overall movement of goods, trade, and consumer spending stalls. Harvard Business Review describes this massive effect of COVID-19 on the economy, stating that the “economic contagion is now spreading as fast as the disease itself.”

Nearly every country is facing a deep recession, and at the foundation of this recession is the economy’s impact on small- and medium-sized businesses. edited by Prof. Bruno Sergi from Harvard University, USA, et. al, which examines the after-effects of the economic slowdown and the steps that have been taken to overcome the consequences of this slowdown, as well as strategies to reduce its impact on economies and societies.

Regaining Global Stability After the Financial Crisis Edited by Prof. Bruno Sergi (Harvard University, USA), et al. Copyright: © 2018 | Pages: 383 | ISBN: 9781522540267 | EISBN: 9781522540274 Examines the after-effects of the economic slowdown and the steps that have been taken to overcome the consequences of the slowdown as well as strategies to reduce its impact on economies and societies...Learn More.

Is History Repeating Itself?

In light of the pandemic, many experts are comparing the economic effects of COVID-19 to the 2008 recessions that started in the United States. With the subprime mortgage crisis in 2006, leading to the eventual stock market crash in 2008, this recession resulted in a nearly 10% unemployment rate and the GDP declining 4.3% in the United States, according to History.com.

 “The price’s collapse on the US markets did not stop within the national borders but, all of a sudden, it transmitted the shock effect all over the world markets,” explains Prof. Andrey Pilipenko, from Peoples’ Friendship University of Russia, Russia, and Prof. Zoya Pilipenko from Bank of Russia, Russia, in their chapter “Shocks in Global Economy: Impulse Model of Macroeconomic Cycle” featured in Regaining Global Stability After the Financial Crisis (IGI Global). They continue to explain that this recession “impacted countries globally due to [the] interconnectedness of global trade and financial linkages.” ¹

Prof. Adam Christopher Wood, from Harvard University, USA, from the aforementioned publication, argues that the policy changes that were implemented as best practices in maintaining a stable, growing economy for the future.²

However, other researchers argue that due to the increased connectivity of the economy, it can indirectly influence a crisis. “A crisis can slow down economic activity and cause different problems in the economy. Some countries have a lack of capital and both inflows and outflows of capital influence the exchange rate. [The f]luctuation of the exchange rate has an impact on price, competitiveness, and consumption. Furthermore, the crisis could lead to a reduced capitalisation, fall of banking activities, decline in transactions, rise of risks, decrease of returns, increase in public debt, shrinking of the economic and business activities, and drop in GDP.”³

How Businesses Can Lessen the Impact of the COVID-19 Pandemic

Not only is the economic volatility being studied on a global level, but most notably, it is affecting businesses around the world, with many small- and medium-sized businesses forced to close their doors or transition their staff to completely remote environments. With this profound shift, according to recent CNBC article, the St. Louis Fed projects that the COVID-19 policies could jeopardize over 47 million jobs leading to an unemployment rate of over 32% in the United States alone, with other countries following suit. The Pwc, a global firm servicing up to 85% of the global fortune 500 companies, states that business are being impacted on a holistic level and for companies to be able to uphold during this turbulent time, businesses should focus on these main areas:

• Crisis Management: With the fast-moving uncertainty that COVID-19 is bringing to businesses, companies need to have a crisis management plan in place to effectively and efficiently communicate to stakeholders, employees, and partners. Additionally, they need to plan how to meet governmental regulations.
• Human Resources and Workforce: It is imperative that companies have the resources and human resource facilities involved to support their employees, including supporting remote work, and/or implementing temporary furloughs.
• Operations and Supply Chain: Review the supply chain and identify alternative scenarios or channels. For items that businesses are unable to acquire, look for alternative substitutions, if possible. Additionally, for those who are creating supplies, adapt to customers and review pricing strategies.
• Finances, Tax, and Trade: Review current costs of operation and consider disclosures related to the uncertainty of the future. Additionally, adopt a more agile tax and trade model to stabilize supply chains and human resources.
• Branding and Marketing: Adapt current marketing plans to meet the needs and concerns of customers and consider shifts in core markets as a result of the pandemic. Additionally, embrace the shift to digital in marketing efforts, including remote working, strengthening gaps in IT, and shifting marketing to an online space.

Although the above list is a simplified viewpoint of mitigating the effects of COVID-19 on businesses, the key factor is being agile and receiving feedback from customers. Prof. Binod Timilsina, from University of Vaasa, Finland, author of “Overcoming the Barriers of Strategic Planning, Implementation, and Monitoring in Turbulent Business Environment: A Qualitative Study on Finnish SMEs” from the publication Research Anthology on Global Business Expansion: Concepts, Methodologies, Tools, and Applications (IGI Global), solidifies these points, explaining that it is important for businesses to have a flexible and flowing strategic business plan to remain competitive, especially in a turbulent economy. Small businesses that change and adapt to the needs of customers in an ever-changing market are the ones that remain competitive and succeed long-term despite instances of recession.⁴

Research Anthology on Global Business Expansion: Concepts, Methodologies, Tools, and Applications (3 Volumes) Edited by Mehdi Khosrow-Pour, D.B.A. (Executive Editor of IGI Global, USA) Copyright: © 2018 | Pages: 1,760 | ISBN: 9781522554813 | EISBN: 9781522554820 Is a comprehensive reference source for the latest scholarly material on the emergence of new ideas and opportunities in various markets and provides organizational leaders with the tools they need to be successful...Learn More.

While the rapid decline in national stock markets and economies may seem startling, it is important to remember that the economy is cyclical in the way it rises and falls. Often markets and economies will recover with proper planning, adaptation, and trade policies.  It is important to be aware of business trends and remain educated on the best sustainable business practices and governmental regulations.

The publications featured in this article, Regaining Global Stability After the Financial Crisis (ISBN: 9781522540267 | EISBN:  9781522540274), edited by Prof. Bruno Sergi from Harvard University, USA, et. al. and Research Anthology on Global Business Expansion: Concepts, Methodologies, Tools, and Applications (ISBN: 9781522554813| EISBN: 9781522554820), edited by Mehdi Khosrow-Pour, D.B.A, Executive Editor of IGI Global, USA, are currently available both in print and electronic format through IGI Global’s Online Bookstore at a 20% discount, and are featured in IGI Global’s InfoSci®-Books database (5,300+ e-books). Recommend these publications, the InfoSci-Books database, and the InfoSci-Journals database (185+ e-journals) to your library to have access to this critical research as well as thousands of other research resources, including the chapters and articles below.

Featured Publications Surrounding Business and Economics:

Learn More Recommend to Library Regaining Global Stability After the Financial Crisis Prof. Bruno Sergi (Harvard University, USA), et al. Copyright: © 2018 | Pages: 383 | ISBN: 9781522540267 | EISBN: 9781522540274 This publication examines the after-effects of the economic slowdown and the steps that have been taken to overcome the consequences of the slowdown as well as strategies to reduce its impact on economies and societies. Highlighting a wide range of topics including economic convergence, risk management, and public policy for financial stability, this book is geared toward academicians, practitioners, students, managers, and professionals in the financial sector seeking current research on regaining a sense of safety and security after a time of economic crisis. About the Editor: Dr. Bruno S. Sergi is an Instructor at Harvard University, where he is also an Associate of the Davis Center for Russian and Eurasian Studies, and a Faculty Affiliate in the Institute for Quantitative Social Science. He also teaches at the University of Messina and has taught at New York University…... Read Full Bio.

Learn More Recommend to Library	Emerging Tools and Strategies for Financial Management Prof. Begoña Álvarez-García (Universidade da Coruña, Spain) and Prof. José-Pablo Abeal-Vázquez (Universidade da Coruña, Spain) Copyright: © 2020 | Pages: 357 | ISBN: 9781799824404| EISBN: 9781799824411 This publication is a pivotal reference source that explores both practical and theoretical perspectives on how financial management is evolving and how future consequences of technological innovation will affect individuals, businesses, and society. While highlighting topics such as financial imbalance, venture capital, and shadow banking, this publication explores the relationship between companies and their customers and the methods of generating changes in today’s enterprises. This book is ideally designed for business managers, financial analysts, financial controllers, directors, finance officers, treasurers, entrepreneurs, CEOs, academicians, students, and research professionals.

Learn More Recommend to Library	Service Marketing Strategies for Small and Medium Enterprises: Emerging Research and Opportunities Prof. Muhammad Sabbir Rahman (North South University, Bangladesh), Prof. Mahmud Habib Zaman (North South University, Bangladesh), and Md Afnan Hossain (North South University, Bangladesh) Copyright: © 2019 | Pages: 171 | ISBN: 9781522578918| EISBN: 9781522578925 This publication is an essential reference source that provides guidelines on how SMEs can achieve sustainability through positive marketing outcomes and effective customer services. Featuring research on the assessment of SMEs’ customer service expectation, listening to customers through qualitative research, service quality model and its marketing implications, integrated marketing communications for SME environments, effective service encounters, and relationship developing strategies for SMEs, this publication provides new models for managers, industry professionals, academicians, and researchers.

Learn More Recommend to Library	Optimal Management Strategies in Small and Medium Enterprises Prof. Milan B. Vemić (Higher School of Academic Studies “DOSITEJ”, Serbia) Copyright: © 2017 | Pages: 437 | ISBN: 9781522519492| EISBN: 9781522519508 This publication is a key source on the latest innovations in enhancing all main management functions, such as working capital and marketing, and examines how to implement sustainable business management practices. Featuring extensive coverage across a range of relevant perspectives and topics, such as human resources development, market orientation, and knowledge management, this book is ideally designed for business managers, professionals, graduate students, and researchers working in the field of smaller-scale business development initiatives.

Learn More Recommend to Library	Handbook of Research on Financial and Banking Crisis Prediction through Early Warning Systems Prof. Qaiser Munir (Universiti Malaysia Sabah, Malaysia) Copyright: © 2016 | Pages: 514 | ISBN: 9781466694842| EISBN: 9781466694859 This publication addresses the inequity of developed and developing nations from the bottom up through an exploration of current literature, specific case-studies, and data-based recommendations for new crisis indicators. Touching on such topics as the Greek debt crisis, electronic banking, and financial crises in developing economies, this publication targets an audience of academics, financial analysts, researchers, post-graduate students, and policymakers working in the fields of international finance and liability management.

Disclaimer: The opinions expressed in this article are the author’s own and do not reflect the views of IGI Global.

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