The Coronavirus Impact on Global Business and How Businesses are ReactingMarch 10, 2020
The outbreak of the coronavirus has had a worldwide impact. How are businesses coping with the difficulties that the outbreak has presented?
The world is feeling the impact of the coronavirus, a rapidly moving outbreak that is affecting thousands of people globally. While the situation in China is stabilizing, there are new cases being reported in Asia, Latin America, Europe and the US on a daily basis.
What is the impact?
As you have undoubtedly heard, a growing number of industries have already been significantly impacted by the Coronavirus. For example, those dependent on goods manufactured in China and travel companies including airlines and cruise ships , as travel demand has been severely curtailed. In addition, a negative impact is also being felt by organizations in hospitality, luxury goods, retail, and tourism.
Other areas impacted include:
- Stock markets – Global stock markets have been in a volatile state with frequent precipitous falls.
- Internationally mobile employees – Travel restrictions are being imposed by governments and universities and non-essential business travel is being curtailed by employers which limit organizations’ ability to do business.
- Supply chains- The supply chain has been severely disrupted by the outbreak. The availability of labor is limited due to quarantine guidelines and there are supply shortages of materials and finished goods coming from impacted areas. We are actually seeing some relief in certain areas of China as workers are beginning to return to their factories.
- Revenue loss- Many businesses have had to postpone major events, including the Boston Seafood Expo, South by Southwest (SXSW), and Facebook’s F8 conference, to name a few. The economic cost of the postponement of major tech events, including F8 and SXSW has exceeded $1 billion. As the threat of the virus grows in the US, it’s expected that more companies will decide to cancel or postpone travel and conferences; only time will tell how big those losses will be.
- Consumer behavior - Consumers are also being more cautious in their purchasing habits due to fear of potential exposure to the virus which has limited business. Furthermore, there have been reports of panic buying in the US, Europe and elsewhere.
- Economy – With the Federal Reserve’s recent actions and rate cuts come the understanding that this may be in anticipation of a recession. With record low interest rates, the Fed does not have many options to combat a recession using monetary policy.
What are business’s focusing on and what are they doing now?
- Establishing a team to monitor the Coronavirus developments and lead the organization’s response efforts.
- Understanding the impact of the Coronavirus on the organization’s finances under different scenarios.
- Understanding the impact on their supply chain, including tier-1, 2 and 3 suppliers.
- Keeping in regular communication with customers so they understand the impact on their business relationships
As the world continues to feel the impact of this outbreak and economic turmoil, we are here to help you and keep you updated.
Questions? Contact us.
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