term paper 2020 fall, Assignments of Business Strategy

Download term paper 2020 fall and more Assignments Business Strategy in PDF only on Docsity! HOW COVID 19 PANDEMIC AND GLOBALIZATION FACTORS HAVE INFLUENCED BUSINESS DECISION MAKING ESPECIALLY FOR EXISTING AND NEW START UPS 2020 NURDIN MOHAMED ABSTRACT The COVID-19 outbreak is a sharp reminder that pandemics, like other rarely occurring catastrophes, have happened in the past and will continue to happen in the future. Even if we cannot prevent dangerous viruses from emerging, we should prepare to dampen their effects on society. The current outbreak has had severe economic consequences across the globe, and it does not look like any country will be unaffected. This not only has consequences for the economy; all of society is affected, which has led to dramatic changes in how businesses act and consumers behave. This paper is an effort to address some of the pandemic-related issues affecting businesses. I will dive into the changes in consumer behavior and businesses, ethical issues, and aspects related to employees and leadership. INTRODUCTION The World Health Organization (WHO) categorized the severe acute respiratory syndrome Coronavirus (COVID-19) as a pandemic and Governments around the world has announced bold measures to contain the spread of the virus in their respective countries We live in increasingly turbulent and unpredictable times, and whilst it is early, the impact on the fragile economy and businesses will be significant. As we are in the middle of a pandemic outbreak, it is very difficult to estimate its long-term effects. Although society has been hit by several pandemics in the past, it is difficult to estimate the long-term economic, behavioral, or societal consequences as these aspects have not been studied to a great extent in the past. The limited studies that do exist indicate that the major historical pandemics of the last millennium have typically been associated with subsequent low returns on assets (Jorda, Singh, & Taylor, 2020). suppliers and customers. They also often crucially rely on a small founding team, and this can further increase their vulnerability to labor supply shocks during the pandemic. At a time marked by significant economic uncertainty and with their revenues affected by containment measures and significant drop in demand, start-ups become even more financially fragile and need support for their short-term liquidity needs, critical for their survival. In many countries, policy responses aimed at shielding the economy from the crisis are already targeting firms’ financial fragilities, especially for SMEs. These include measures to sustain short-term liquidity needs, such as loan guarantees, direct lending, grants or subsidies. However, policy responses should take into account the specificities of start-ups with respect to other SMEs. Some countries have introduced measures more specifically focused on start-ups. For example, France has set up a €4 billion fund to support start-up liquidity, including bridging start-up funding rounds; Germany has announced a tailored start-up aid programme, expanding and facilitating venture capital financing; and the UK has announced a co-financing fund for innovative companies facing financial difficulties. Start-ups are faced with new uncharted land therefore need to make important decisions on their day to day operations. COVID-19 has shaped the operations of start-ups significantly. Startups in particular seem to be getting affected a lot by what’s happening already, and there seems to be a lot more coming up on the horizon as well. Adopting home office As was expected in the beginning of all of this, the attitude towards home office has started to relax quite a lot on many fronts, and various companies are now experimenting with this more actively. Startups are among the most active in this regard, and we’ve already seen many companies on the market doing their best to get up and running with an actively established home office infrastructure already in place. Better Expertise on Board And with the stronger adoption of home office availability, it’s only natural that companies are now able to diversify the expertise of their employees by hiring more people with a wider range of skills. At the same time, this doesn’t usually come with an increase in the overall operating cost, resulting in a net win for the companies that have attempted this in most cases. And of course, it’s also a definite win for their employees who are given much more freedom and control over their lifestyles. More Prepared for the Future The pandemic has also shown us just how unprepared we are, generally speaking. Not just on the individual level like nursing home abuse and negligence in this COVID situation - one must know how a personal injury attorney can help to fight with this abuse and negligence, either – many businesses have realized that they were not entirely properly equipped to handle the situation. As a result, many companies – especially startups – have started to put effort into preparing themselves for what’s coming up ahead better, and laying down the foundations for a more stable infrastructure to support such situations. Optimized Costs And that leads us to another interesting point – start-ups have started to discover many sustainable ways to minimize their costs without impacting any other area of their operations. That’s not a small feat in general, although of course it should be remembered that the current situation has been largely unprecedented in this regard. Still, it’s good to see that so many startups have started to pay active attention to what’s going on with their costs, and have been putting active effort into optimizing them. Further Benefits It’s interesting to think about the future in this regard, too – what else is coming up on the horizon that businesses aren’t aware of and need to prepare for? It’s hard to make adequate predictions like that, but it is definitely noticeable that many companies have started to wise up to the necessity of being more adequately prepared for unexpected market developments that affect the whole world. It might take a while to see the full impact of those developments on the market as a whole, but it will definitely be interesting to follow the progress. In the end, even if the pandemic passes soon, it will leave some lasting consequences on the market, and it will be more important than ever for companies to adopt an attitude that allows them to be more flexible and adapt to new developments. Of course, that’s easier said than done – but we’re already seeing developments on that front, and it will be interesting to see what comes out of this in the end, once the dust has settled. COVID-19 is not only a challenge for existing start-ups but also for the creation of new ones Periods of crisis usually correspond to drops in business registrations. Analysis of the most recent data confirms that firm creation dropped significantly across many countries in March and April 2020, with a decline as severe as 70% in April 2020 in Portugal compared to the same month of prior year, and 46%, 54%, and 58% in Hungary, France, and Turkey, respectively. Milder but still very strong declines are evident in Australia, the US, and Spain. Notes: The figure shows the change in the number of new businesses in March and April 2020 relative to the same month in 2019. Data refer to new incorporated companies for Australia, to new incorporated companies (“Sociedades Constituídas, Mercantiles”) for Spain, to new “conventional businesses” for France (start-ups excluding self-managed micro-entrepreneurs) to new “enterprises with legal entity” for Hungary, new registration to the Trade Register of the Chamber of Commerce for the Netherlands, to the “formation of legal persons and equivalent entities” for Portugal, to “newly established companies” (excluding cooperative and sole proprietorship) for Turkey, to “new business application” for the United States. For the US data refer to weeks 10 to 13 (“March”) and 14 to 17 (“April”). Data may be preliminary.  Reduce possible barriers associated with the entrepreneur status, especially those that may be seen as particularly critical during and after the pandemics (e.g. related to access to health care and paid sick leave), making social protection more portable. In other words, link entitlements to individuals rather than jobs.  Ensure that funding remains available for innovative start-ups at all stages of their development, in co-ordination with private actors. For example, provide additional public funds to public venture capital umbrella-fund-investors, which can be used in co-investment with private investors for financing rounds of start-ups; take over shares from defaulting fund investors with additional public funds; or simplify venture capital financing). 3. Boost entrepreneurial potential  Promote entrepreneurship training, also in combination with benefits for displaced workers and lifelong learning, to facilitate (un)employment-to-entrepreneurship transitions, with particular attention to disadvantaged groups.  Promote university-business collaborations to facilitate industry applications of innovation and university-to-entrepreneurship transitions.  Promote network developments, including those linking job seekers and start-ups and those facilitating access to international markets.  Maintain investments in the start-up ecosystem, notably to ensure incubators and accelerators continue playing an important medium-term role in providing guidance, coaching, and mentoring to potential entrepreneurs and existing start-ups Tackling short-term challenges, reducing barriers to entrepreneurship, and boosting entrepreneurial potential could help speed up the recovery and preserve aggregate employment in the long term. This may occur through different margins: i) keeping start-ups alive in the short-run; ii) limiting the detrimental effects of a missing generation of new firms; iii) boosting the growth potential of young firms. References Calvino, F, C Criscuolo and C Menon (2016), “No Country for Young Firms?: Start-up Dynamics and National Policies”, OECD Science, Technology and Industry Policy Papers, No. 29. Klenow, P J and H Li (2020). “Innovative Growth Accounting”, in NBER Macroeconomics Annual 2020, Vol. 35, University of Chicago Press. OECD (2016), “No Country for Young Firms?”, Policy Note, Directorate for Science, Technology and Innovation Policy Note, June. OECD (2020a), “Start-ups in the time of COVID-19: facing the challenges, seizing the opportunities”, Tackling coronavirus (COVID-19) Contributing to a global effort. OECD (2020b), “SME Policy Responses”, Tackling coronavirus (COVID-19) Contributing to a global effort. OECD (2020c), “Supporting people and companies to deal with the COVID-19 virus: Options for an immediate employment and social-policy response”, Tackling coronavirus (COVID-19) Contributing to a global effort. OECD (2020d), “Crowdsourcing STI policy solutions to COVID-19”, Tackling coronavirus (COVID-19) Contributing to a global effort. OECD (2020e), OECD Economic Outlook, Interim Report March 2020, OECD Publishing, Paris, Sedláček, P and V Sterk (2020), “Startups and employment following the COVID-19 pandemic: A calculator”, VoxEU.org, 25 April.