Fatima Alam, Warwick Business School, analyses the impact, lessons and opportunities that the Covid crisis presents for human connection and the globalised economy.
“Our fundamental course of survival is directly reliant on the production of goods and services in this globalized world.”
COVID-19, the virus of social distancing and human connection: The lessons and opportunities that the Covid crisis presents for people and the globalised economy are many.
If you are reading this article in the year 2020 or even if the year is further ahead in time, you would probably remember that year as the time in which terror gripped the world and shook it to a standstill. The C word (Coronavirus) was probably the most commonly used word of the time. I am writing this article in the midst of this global pandemic, which initially sparked off as an epidemic constrained to the borders of China but gradually transformed into the deadliest propagator of contagion, fear and more importantly, the hardest-hitting global recession.
Distancing business: Restructuring global business in recession
Tracing back the roots of the origin and nature of the virus, it is sufficiently easy to connect the dots and realize the contributing role of the global economy in exacerbating the spread of it. While globalization has fuelled our world economy into the connected and unified system that expands businesses and generates larger revenues, the internationalisation of trade and business has also caused the unprecedented spread of the virus into the global pandemic that it has become today. Not only does globalization play a role in aggravating the health crisis, but there is also a reverse causality that can be established.
The COVID-19, as it is scientifically identified, has shackled the global economy. The political, social and economic players of the world have predicted a far worse economic recession than the global financial crisis of 2008. In a situation where media-induced panic and wide-spread reports of analysis and predictions of negative outcomes arising of this pandemic are prevalent, it is absolutely crucial for businesses all over the world to step back and reflect on the value propositions provided by their products and services.
While the Corona pandemic is probably the most detrimental factor in shrinking the global economy into stagnation through the lockdown of the world, businesses can bounce back from this negative experience through reframing the situation and experience in their favour. The COVID-19 outbreak provides the perfect opportunity for all business organizations to rethink and innovate their fundamental models of operations.
Although there are inevitable costs and losses to be incurred as a consequence of supply chain disruptions, international border complications and lack of consumer demands, the rising availability of technology in the current age of digitisation can prove to be a saviour.
When worst-case scenarios reduce risk: Human connection
On the one hand, businesses with a predominantly customer-interface model are facing difficulties in developing and maintaining the essence of the ‘human connection’ that is integral to their core values and mission. On the other hand, some businesses have found it particularly convenient to transition online. Organizations in the technology industry have been identified as experts who can leverage their technical know-how in combating the challenges faced by this pandemic.
While most governments and public speakers across the world are substantiating on the concerting global effort to focus on flattening the curve through efforts of social distancing, the narrative should also accommodate the duality of the epidemic curve with the learning curve, a model inversely relational to the former concept. While the crisis has etched out all loose ends and generated world-wide pandemonium, ironically in a world that has been silenced to a standstill, there are a number of lessons to be learned and opportunities to be seized from this global pandemic.
The globalization-fuelled competition between different industry players had a consequential impact on the ways in which we conducted business. An important focus in business-planning is preparing revenue models in accordance with the different possibilities that can arise out of future situations. This foreseeing of changes in the near future and equipping the organization with sufficient resources to prepare for any scenario is called contingency planning. Human beings have a psychological proclivity of avoidance of the extreme-worst case scenario.
This could be a possible explanation as to why businesses do not incorporate a zero-revenue model while executing their contingency planning. The deepest and most significant lesson to be learned from the COVID-19 outbreak is that there needs to be measures and resources directed towards the worst possible situation, in which the business fails to accomplish any revenue at all and consistently falls under the margin of zero revenues.
There needs to be sufficient money devoted to those quarters in which the businesses are performing at their lowest capability. A possible recommendation of following a zero-revenue model would be conducted a PESTEL analysis of the business, which holistically examines all the macro factors, political, economic, social, technological, environmental and legal factors that could play a role in shaping the business or affecting certain outcomes.
When globalization gives positively
Another way in which globalization has influenced the control of the COVID-19 outbreak is noticeable in the immense powers of public policy. There has been profound pressure on various government officials, health practitioners, workers in the medicine industry while combating this virus. However, globalization has made possible the deployment of knowledge and expertise across borders.
Governments across nations are following suit and taking inspiration from various facets of policy of other nations. When Italy reported a deluge of cases and officially announced a lockdown of the whole nation to curb further spread, most governments adopted the same model in their own nations.
One of the major opportunities that the Covid crisis presents for the globalised planet has been seized. The global economy, with the support of efficient channels of communication, has made possible measures of precautions and facilitating aid amongst different governing bodies across the globe. The Finance Minister of India, Nirmala Sitharaman, announced a 1.7 lakh crore initiative targeted towards distributing resources and helping the poor in the country, who cannot access the same privilege of meeting their rudimentary survival needs. In America, the Senate approved of a $2 trillion economic relief package, which includes relief from unemployment through insurance, business loans and increased health-care resources.
Crisis: Survival, humanity, innovation
This global crisis drives home the essential point – one of the major lessons that the Covid crisis presents for people and the globalised economy – which is mobilisation of resources are possible in times of immediate need. The global economy meets the trajectory of our daily human needs and it is fascinating to note the fluctuating rise and fall in prices of stocks through the various companies’ shares that are listed in the stock exchange. With airline companies being severely affected, the fast-moving consumer goods sector has witnessed a sharp increase, through the obvious impact of panic buying.
The crisis sheds human beings of their rational economic logic and epitomises the need for human survival, lost in the race of the fulfilment of our needs. The virus is representative of the human reliance on the global economy. Our fundamental course of survival is directly reliant on the production of goods and services in this globalized world.
The trending pattern of appreciating the healthcare workers by ordinary citizens coming out in their balconies and clapping, the global economy reminds us of our similarities across nations. There are recurring threads of similar actions adopted across the world. It is enlightening to witness the humanity that spurs out in times of crisis. The convenient exchange of research insights of doctors, medical experts and researchers of COVID-19, has tangibly resulted in cross-functional teams, with diverse insights and perspectives on fighting the pandemic.
Although the COVID-19 pandemic has shoved our global economy into recession, the widespread conveyance of innovative ways of working through these challenging barriers will enable us to emerge from this storm. The stimulation of the global economy through various economic tools and strategies, of interest rate cuts, fiscal stimulus packages, liquidity injections among others, will revive the economy into functioning normalcy.
The lessons and opportunities that the Covid crisis presents for people and the globalised economy are many. The COVID-19 pandemic will give foundational learning insights of catering the global economy in accordance with the situational context of the time. There are going to be inevitable blows caused to the economy. However, like every global recession cycle of the past, the contraction of gross domestic product is followed by an upturn in economic activity. We will definitely emerge from this pandemic as wiser and more conscious consumers and the global economy will return to normalcy.
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