The massive attack on the global population by the outbreak of novel coronavirus was unanticipated. According to the World Health Organization, the outbreak has affected more than 500,000 people and 196 countries across the globe. Companies are fearing an economic crisis because of a sudden blow to both the supply and demand, caused by restrictions in place. With respect to the impact of coronavirus on the financial market, the United Nations has predicted that this viral attack has disintegrated the structure of the global trade and cost up to $2 trillion to the GDP worldwide.

Several countries have imposed lockdowns and significant restrictions to deal with this outbreak. Limitations and containments of imports and exports too have been exercised, which is leading to a shortage of supplies for essential products, medical supplies, and other amenities. Countries such as Italy and the U.S. have reportedly been affected to a vast extent, leading to a sharp fall in business revenues and economic damage. Since China has limited its exports, and Chinese suppliers are critical for many companies scattered around the world, world trade is expected to suffer a decline of $50 billion across global value chains.

There have been studies that outline that this hit on the economy is expected to result in a global slowdown and affect small and mid-size companies more than the others. In the case of industry verticals, sectors such as aviation, oil and gas, automotive, communication equipment, defense and aerospace, and tourism are anticipated to take a fall as a direct impact of this pandemic. Not only China, but other parts of the world are witnessing heavy impacts on the supply chains as factories are shut down, and transportation routes have collapsed. According to the UNCTAD, the following are the estimated effects of COVID-19 on the global value chains.

The healthcare industry is under tremendous pressure for developing vaccines and drugs that can control the outbreak and treat the patients infected with the coronavirus. However, despite signs of the declining rate of trade, companies from various industry verticals are strategically coping with fighting against COVID-19 pandemic. Several manufacturing companies have come up to aid the healthcare industry. For instance,

• BYD, a leading EV manufacturer, has been tirelessly working to provide 5 million masks and 300,000 bottles of disinfectants per day.
• Elon Musk, CEO of Tesla and SpaceX, has announced the production of N95 masks and ventilators to meet their shortage.
• High-end fashion brands such as LVMH, the multinational company which owns Louis Vuitton, Dior, and Sephora; Prada, and Gucci are assisting authorities to manufacture and deliver face masks and medical overalls.
• L'Oréal has deployed two of its brands for the production of hydro-alcoholic gels, which is used to ward off infectious germs in hospitals, nursing homes, and food distribution channels.
• Several automobile players, such as Ford, Rolls Royce, Jaguar, and McLaren, are working on producing medical equipment such as ventilators.
• Pernod Ricard, a France-based spirit and wine company, is aiming at donating alcohol to laboratories making hand sanitizes.

How Can Companies Evolve Out of This Crisis?

This pandemic has a grave impact on the global economies, and companies are looking for a fast-paced solution to ramp up their businesses. Although the governments are trying hard to flatten the pandemic curve, there’s a dying need to address the economic risks of such economy shutdowns, which otherwise might lead to severe recession. Some large firms are adapting to this critical crisis by changing their policies; however, many firms would be left crippled if this shutdown continues for another two quarters. 

Though the coming months will be crucial and will impact business targets and revenues, it is important that industry leaders and stakeholders focus on their organizational capabilities and leadership skills. Integrating the team and workforce, stabilizing the supply chain cycle, and financial restructuring models are some of the steps that will assist companies in rebuilding confidence and surviving this economic crisis while standing strong.

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