[ANALYSIS Bulletin No 6] Dumitru Petrascu | This analysis focuses on the pandemic crisis and its effects on the business management model during this complicated period. Despite the necessary and compulsory support by central authorities, I intend to approach this period on the basis of ‘bottom-up’ principle – from the perspective of the realities created by the pandemic for business environment, of the need to adapt to the ‘new normality’ and of the ‘investments’ needed to overcome the damages related to the crisis. Together with all the challenges, the pandemic brought forth the need to transform the business management method, as well as the need to develop a hybrid ecosystem in every business to face the future challenges.
The novel virus COVID-19 stared in Wuhan (China) in December 2019, developed timidly in the beginning and later on ballooned to the proportions of an international pandemic in the broad sense of this word. I am not an expert in virology and I don’t pretend to analyse the virus itself. The reality though is that this virus could be exported from China without difficulty. The first case of COVID-19 registered in Europe was confirmed in France on 24 January 2020. Starting with February 2020, countries like Italy, France, Germany, or Spain with strong Chinese Diaspora, were among the first affected in the Europe. Romania, Bulgaria, Ukraine or the Republic of Moldova were part of the second stage of its spread – in these countries the first cases of infection were reported among citizens who came back from highly industrialised countries after seasonal work, or among people who travelled as tourists in Italy, France, Greece.
Following the evolution of the pandemic in each country, central authorities (taken by surprise or not) imposed state of emergency with special measures aimed to limit the spread of the pandemic – suspension of the free movement, suspension of pre-school, general and high school education, restriction of cross-border movement for tourists and restriction of economic and trade activities. The reality though is that as of 18 March 2020, 250 million Europeans were under a full lockdown, certain of their constitutional were restricted, but at the same time these measures were necessary to stop the spread of the pandemic.
In the Republic of Moldova, the state of emergency was declared on 13 March 2020 with the display of the army forces on the streets of Chisinau (we all saw the Hummers with guns of the National Army strategically positioned in visible places at the crossroads from Chisinau) – probably to stir up fear of the virus and to show the organizational abilities of the authorities in the fight against this ruthless virus (SIC!). Leaving the irony aside, kindergartens, schools, universities, and markets stopped their activity following the declaration of the emergency state by the authorities and the activity of business entities was limited to the maximum.
This is where it all began
ZOOM Revolution or ‘work from home’ represented the know-how of 2020 – a new model of managing everyday activities during the crisis. Educational institutions turned to ZOOM which forced children and their parents to become dependent on a new way of conducting educational activities. Companies with developed IT infrastructure transferred rapidly the office operational processes to ‘work from home’ in order to maintain the workflow in the most important departments. Some of the employees that did not fit ZOOM Revolution entered a process of professional transformation (if the company provided this opportunity), were subject to a complex system of process and duty optimisation or were dismissed (due to the uncertainty created in relation the economic activity of the company).
During this period, various companies acknowledged the importance of a positive cashflow in the activity that they managed, the need to keep at maximum the employees and the capacity to reorient the business processes depending on the current needs of the ‘economy’ – production of masks/face shields, production of ethanol for disinfectants – in a word, maintaining the economic activities of the company afloat.
Although it seemed to be an exclusively medical crisis, the decisions taken by the Government to stop this pandemic had an enormous impact on the economy, particularly on business management during this complicated period. The way this virus spreads as well as the restrictions imposed determined the need to reinvent the business itself. The biggest challenge was to adapt rapidly to the new realities and the fast transfer of economic activities online. As a result, the pandemic provoked the ‘ZOOM Revolution’ and acted as a catalyst in the e-Everything transformation. The effects of this transformation should have a positive impact on the private sector and on the activities of state institutions given the stringent need and the opportunity to remove bureaucracy by digitalizing the services provided. Due to the panic generated artificially at the beginning of the pandemic the consumers started to behave inadequately and as a result, significant increases in the sales of large retail outlets were reported. However the e-Commerce ‘explosion’ was phenomenal and during this period an increase of 30% in sales was reported.
Directions for adaptation and reinvention
HoReCa companies were the most affected as they rely on the presence of clients in their premises and on catering services for events. Some owners were forced to develop a personal delivery system or start working on an outsourcing basis in order to maintain the company’s activity afloat. This enhanced the companies’ online presence and resulted in the establishment of delivery companies. Although the intention was to relax the restrictions, the relaunch of the activities in this sector did not allow to go back to the pre-pandemic state of affairs due to consumers’ precautions and partial restrictions maintained by authorities. As a result, delivery of products is now a strength in maintaining the activities of companies in this field. A smart upgrade was registered in the field of selling agricultural products due to the opportunities to reinvent the entire process of selling via social media, thus developing communities that support local farmers. The need to develop this direction has been discussed for a long time. Due to the restrictions imposed by the Government regarding the movement of people during the pandemic, the companies in the field of passenger transportation were also affected and had to reassess their internal processes and adapt to the new realities.
Moreover, to face the decrease in the number of orders they were forced to reinvent their portfolio of services provided by developing certain complementary services that are necessary on the market.
A significant emphasis is put now on consumer’s contact with local brands and on the change of the behaviour in order to make them interact directly with them. The pandemic revealed the need or even the obligation of brands to respond to the crisis and the expectations concerned the solutions they can currently offer. Another important factor is the communication and the interaction via social media and about the brand and the consumer getting closer, thus establishing specific communities. As a result, we note that lately, the consumers have increasingly developed their confidence in brands, despite the government institutions.
Also, the brand protection and activity moved from the internal environment in an area with national and international impact. This process generates and develops complex policies of social responsibility. During this period, brands were involved in volunteering activities and provided their own resources in order to fight the pandemic and as a result, they learned about the trends and the affinities of the communities they operate in.
Forecasts and needs
Taken by surprise by the lockdown and by the restrictions imposed during this period, it could be risky to make provisions for the following period, let alone for 2021. It is certain though that nobody predicted such a scenario and the events that happen this year. However, the lesson that we all have to learn is that the most important trends and investments in the technologies of today will play an important role in overcoming and adapting to the crises of tomorrow. The economy registered a rising trend in terms of digitalization and automation of the existing businesses and operational processes, thus allowing certain cross-border and creative businesses to develop. The pandemic, which is far from ending, created opportunities for development and reinvention of the economy in general. Given all the difficulties regarding the management of this health crisis, the restrictions imposed by the authorities had a catalyst role in changing the concept of ‘doing business’ at personal level by creating opportunities we should use in the following period.
At this stage, we distinguish the directions that we should focus our efforts on to build sustainable businesses in the future:
- Diversify and scale up the sales markets.
- Reinvent the business model by digitalising and automating the existing operational models.
- Create a hybrid ecosystem of the business (offline and online presence).
- Diversify of the product portfolio.
- Balance the financial policy of the company in order to obtain a positive cashflow.
- Invest in the development of the personal brand.
- Invest in quality human resources and maintain them.
- Interact with regional business environment to determine the current trends.
As a result, we should note that this pandemic crisis may end, but the economic effects will continue. We have to be prepared to face new challenges and the successful relaunch and management of businesses in the future will depend on the ability of each company to adapt to new realities and trends.
Let’s not forget that any crisis can create new opportunities.
Dumitru Petrascu is member of LID Moldova Council and is specialised in management, businesses, and corporate negotiations. He has an experience of more than 17 years in sales, management of key customers and development of corporate relationships. Over one year he has been involved in the development of operational processes under the biggest start-up of urban mobility from Romania, Bucharest.
This material was developed by LID Moldova experts under the project The Best Way: Periodic Bulletin funded by the Friedrich Naumann Foundation for Freedom (FNF). Opinions and conclusions expressed in this material are those of the authors and the experts and do not necessarily reflect the position of the funder.
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