The coronavirus outbreak is first and foremost a human tragedy, affecting hundreds of thousands of people. It is also having a growing impact on the global economy. This paper is intended to provide business leaders and relevant stakeholders a perspective on the evolving situation and implications for companies across various industries.
The Global Scenario
The head of the International Monetary Fund (IMF) has informed that it is clear that the global economy has now entered a recession that could be as bad or worse than the 2009 downturn.
“A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery but erode the fabric of our societies.”– IMF Chief
According to a simulation run by IMF, in best case scenario the global economic growth will slow down to 1.6% in 2020 but will bounce back to 3.2% in 2021. The simulation has also calculated a risk scenario in which the virus spreads further and if the latter scenario is considered the worst outcome will be as follow: economic growth in China and the global economy will fall to 0.2% and 0.7%, respectively.
The Coronavirus outbreak is causing fluid and unpredictable changes to day-to-day lives, and businesses in Bangladesh are understandably worried about the impact it will have on them. One key uncertainty faced by all the businesses is the time it will for businesses to get back to normal. Under these circumstances, we asked a number of organizations two questions:
– What is the impact of the Coronavirus outbreak in their company?
– How they are planning to combat the situation?
The answers we received from the organizations are as follow:
Zeeshan Kingshuk Huq, Co-founder & CEO of Sindabad.com
Sindabad.com is the country’s largest B2B and wholesale eCommerce. The company – one of the top 5 in terms of raising foreign investment – caters to enterprises and SME retailers. Being an eCommerce, the business is running almost as usual. Online retailer and customer orders for essentials like cooking oil and hygiene items like antiseptics sanitizers have grown multiple times. We are trying to cater to as many customers as possible at below-MRP prices in wholesale quantities, but also keeping a cap so that maximum clientele can be reached. While head office teams are working from home, warehouse, and delivery is on, but maintaining strict health guidelines. Our core revenue has shrunk from factories and enterprises – down by as high as 80%. But the B2B2C model is working well for essential items of grocery etc
Rahber Khan, Managing Director of Papyrus Communications
We are a full-service advertising agency that has been in the communications industry of the country for over a decade now. With the onset of Corona globally, we foresee a dramatic cut in business in the foreseeable future. Our business depends on our clients’ business and the state of the country’s economy. With the unfavourable impact on business and the economy, our business too will surely bear the brunt. In such a context, we shall try to sustain our HR and continue to make the boat stable but, may not have any option other than downsizing and or bring inefficiencies of work by utilizing available resources in the maximum possible way.
Faiz Ahmed, Director Chillox
Chillox is a burger joint with 5 outlets in Dhaka and Chittagong employing more than 130 people. The popular burger brand tops the ranking in most food delivery apps in terms of order numbers and sales volume with a high footfall in their outlets as well. Due to the novel Corona outbreak, both its delivery and dine-in sales have gone down significantly. The outlets are now closed according to the directions by the government. The entity was undergoing an expansion phase with three more outlets planned to be opening in early April. In this scenario, the business faces difficult times to pay off its monthly fixed costs and the installments of the loans. It has already requested the landlords to adjust the rent with the advance security deposits for three months, offered the employees one week of voluntary non-paid leave, and extended its credit limits with the suppliers. But even after that if the business goes back to its previous condition in a month’s time, the company will have to bear the losses for the next couple of months to get back to business as usual.
Ismail Sayeed, Founder & CEO VIOS Healthcare
VIOS provides same day specialists consultation. Being a physician entrepreneur provides domain expertise in the health sector to leverage the value of healthcare optimization in the private sector. COVID-19 decimated every global health system. People are more in need of digital health solutions than ever. Although several patients are active users, overburdened specialists are not able to be exposed to our digital marketing strategy. This has forced us to collaborate with a surgical mask supplier to promote discounted masks to doctors in an attempt to incentivize the onboarding process, as cost-effectively as possible given the lockdown circumstances.
Mohammed Sakib Khaled, Business & Market Development Coordinator at Swisscontact
I am a project manager at a skills development project in Bangladesh. As a project, we work closely with RMG factories, Construction contractors, and training centers in order to facilitate the training and employment of poor men and women in the RMG and construction sector. Due to the ongoing crisis, both RMG factories and construction companies have stopped hiring new workers. A good number of young men and women who left their villages to find work are currently sitting idle after completing their training. As a project, we are monitoring the situation on a continuous basis. Our aim is to facilitate job opportunities for these trained resources as soon as the situation improves.
The outbreak is moving quickly, and the business environment is shifting quickly. Therefore the first priority for any business should be to quickly stabilize cash and liquidity and take a realistic view of current options.
This means identifying and acting on opportunities for strategic, operational, organizational, and financial change. Establish solid ground for a turnaround by assessing liquidity position and creating a stakeholder management plan.
COVID-19 is likely to produce distressed situations for senior management of any organization, and under such circumstances stakeholders (primarily investors) often seek additional information or resources to help rebuild their confidence. By understanding the needs of borrowers, lenders, and shareholders, and managing stakeholder communications, a business can stay on top of issues and make informed decisions. For now, businesses should assess short-term liquidity requirements and find ways to quickly preserve value and address potential risks to stability.
The white paper was published in Dhaka Tribune: https://www.dhakatribune.com/opinion/op-ed/2020/04/02/covid-19-how-will-all-of-this-affect-business?fbclid=IwAR1ru_D0Vby8QGRIPnrJ_1vigYinamd-UbSA7eL93HbFCkGyoftu9QR28g4