Business Management during Crisis
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Business Management during Crisis
Businesses are very sensitive to events that take place in both the micro and macro-environments. Outbreaks of pandemics and/or natural catastrophes affect the operations of businesses adversely and mostly call for elaborate strategic actions to ensure that the businesses remain operational. Occurrences of such incidents majorly affect the operations of businesses of all kinds as they disrupt the normal operations of such businesses, for instance, the outbreak of COVID-19 has stifled corporate activities for firms by lowering their profit margins, interfering with their routines in terms of nature of work as well as disrupting supply chains of these businesses. The following paper seeks to discuss the strategic steps that the leadership of a Focus International (an imaginary international business in the tourism industry), a start-up business, can put in place to ensures that the business remains operational even during the difficult moments created by the COVID-19 pandemic. It will specifically elucidate the financial, HR, and supply chain management strategies that the ownership of a business can apply during critical moments like the ones presented by the novel Coronavirus.
Financial Strategies for Survival during the COVID-19 Pandemic
The COVID-19 pandemic has affected the hospitality industry since there are restrictions to movements imposed by governments that have since resulted in a drastic decline in clientele traffic to virtually all hotels. Secondly, this situation has resulted in a drop in revenue margin to businesses in the hospitality and tourism industry. Focus is equally affected by this situation, and the business has to grapple with financial losses and to meet its financial obligations to its employees and clients, as well as meeting fixed costs such as power and lighting. The management has to employ financial management strategies that will minimize unnecessary expenditures and thus cut down costs. To ensure proper financial viability and sustainability, Focus International needs to resolve to lean operations. Lean operations have the advantage of reducing inventory-related costs hence minimizing the chances of having money stuck in stock that is slow-moving. The company can, for instance, resolve to supply food with the order, where food is prepared with the order. This will also help the company in reducing wastage (Morin & Gans, 2020). Again the business should review its budget and eliminate all the unnecessary elements (or necessary elements that it can do without). This will help the business to cut its costs and free some funds that could be used to cushion the fixed costs that the business has to meet. Besides, the business can also apply for emergency financial funding from the government to help it meet some of its financial needs. For instance, the Federal Government has set aside emergency financial funding for business entities under the CARES Act. By accessing these additional funding, the business would be able to stay on track and continue with its operations even during these difficult moments created by COVID-19.
The business can also enter into an agreement with the government to give out its facility as a COVID-19 quarantine center on condition that the government allows them to supply the patients held in their facility with food and other items they may need. Through such an arrangement, the business will be able to have some income from the government for the services they offer which would help in keeping them financially stable during these difficult moments for businesses.
Human Resources Management
Human capital is one of the most important business resources. Therefore leadership of every business must have proper plans for his/her personnel during this COVID-19 pandemic. As opined by Chambers (2020) the best way to manage the crisis by companies is to develop policies and procedures for employee management. For instance, companies can organize personal or family leaves for some of their employees as a way of managing their workforce. Given that the traffic has substantially decreased during this time, Focus International can arrange and send some of its employees on leave even ahead of their actual leaves. This will help the company to reduce the number of its staff reporting to work hence helping to observe the government directive on social distancing. Additionally, such arrangement will also help the company to minimise disruptions that would otherwise be caused by suspending operations altogether. Besides, Focus International shall apply a people-first strategy during this period of coronavirus pandemic outbreak. The strategy will be focusing on ensuring employee safety by availing the right protective equipment for staff on duty and also ensuring that the working environment is safe for the workers to operate in. Additionally, during this critical period the company shall also offer elaborate employee support such as standard care services, providing services such as extended child care, transport services to employees for late hours and releasing employees early enough to beat the curfew times.
Geographical segmentation is another human capital management strategy that Focus International shall put in place. Pandemics always have varying effects in different geographical areas. Therefore, as opined by Rice (2020) impact analysis assessment should inform businesses on which areas are severely affected and which areas that are not hardly hit. Being an international tourism and hospitality business, Focus International can deploy its employees to areas that are not seriously hit. The pandemic requires people to stay at home. Focus International intends to invest in a technology that will support remote and virtual operations where employees can work from their homes without visiting the office. When employees work remotely, they minimise the rate of spread of the virus by keeping safer social distance and checking the spread of the virus since it is spread by human beings (EY, 2020). Therefore, by investing in a platform that facilitates remote operation, FI will be showing concern to the welfare of its employees while also ensuring that work continues as usual. As indicated in the sentiments by Morin & Gans (2020)remote operations working is essential for service industries since employees can market their products easily online and reach out to customers without necessarily getting in contact.
Additionally, the company also intends to have regular contact with the customers. This will allow customers whose trips had been cancelled to have an assurance of the services at the end of the pandemic. The company shall establish an open policy where the customers will be given choices for the money they had used to book accommodations. The clients who shall opt for refund shall be given their money less one-quarter for those who will accept to reschedule their trips, the business shall accept to preserve them a booking at the specified time after the coronavirus pandemic. Reaching out to customers shall also allow the business to respond to any concerns that the customers may have to the business regarding specif aspects of business operation during this period. Moreover, through such initiative, the business will be able to meet any immediate needs from its customers, for instance, home deliveries for local customers who would want to buy from the business’ cafeteria (Intel, 2020).
Supply Chain Management Strategies
The outbreak of COVID-19 has affected the supply chain system since governments discourage international travels and some countries have imposed lockdowns. As a result, organizations that relied on the traditional supply chain model are finding hard times in getting raw materials for their operations. At the same time it is equally challenging to deliver end products to the market. The special distancing and stay at home orders have throttled the seamless flow of orders that was being enjoyed by businesses before the outbreak of the pandemic. To ensure continued supply of raw materials and distribution of its products, Focus International is focusing on establishing an integrated supply chain model that would result into collaboration between the supplier and the organization as well as between the organization and the customers. Foe effectiveness, FI envisages to establish a multi-tier resource model that will facilitate end-to-end network between the supplier and the organization. The model will ensure that there is constant communication between the various players in the supply chain such as warehousing, transporting and manufacturing units (AmCham, 2020). Secondly, the company will also establish a time phase view of demand and supply to establish the capacity of the inventory. This will help the company a great deal in ensuring that the capacity stored is sufficient to meet the demands of the company and its clients. Through a utilization of such a model, the company will be able to harmonize the fragments of supply chin into one and apply the inside-out intelligence model that allows proper management and coordination of internal activities.
Another approach that the company should apply is the digitization of its procurement process. EY (2020) asserts the e-sourcing has a lot of positive impact on the performance of a corporation. He further illustrates that according to the research conducted by Boston Consulting Group in 2016, utilization of digital sourcing allows firms to realize a minimum of 10 percent product availability and at least 25 percent faster response rate to the market as compared to the traditional procurement system. The company shall establish IoT and disruptive technologies alongside its traditional procurement model to ensure seamless flow of supplies even during critical moments as the one created by the global pandemic. Such technologies would allow the company and the supplier firms to gain insight of the nature of events taking place in their chains thereby enabling them to develop a better understanding of the health of the supply chain early enough before the situations get out of hand. Additionally, the predictive nature of such tools would also allow the business to plan ahead and minimise shortages during such hard times since it shall have stocked enough raw materials in its warehouse while at the same time its supplies shall have been delivered to their respective destinations.
References
AmCham, S. (February 17, 2020). Supply chain and factory openings. An AmCham Sanghai Mini Survey.
Chambers, J. (April 12, 2020). Coronavirus should inspire businesses to prepare their supply chains for the future. Fortune
EY (March 1, 2020). COVID-19 and Pandemic planning: How companies should respond to the crisis. EY Global
Intel (March 9, 2020). Intel supplier communication. Intel
Morin, A. & Gans, S. (March 30, 2020). How to Manage Financial Anxiety During the COVID-19 Pandemic. Very well mind