The current global scenario has hampered the growth of the economy and stability with almost all sectors facing a decline as a result of Covid 19. Although this has only started to emerge, the extent of this will be noticed in the upcoming months. The spread of the virus is causing different impacts in each country and governments are quickly backing up to protect its citizens and limit the damage.
The decline experienced by the global financial markets indicate that the world economy could take much longer to recover and return to normalcy. The pathway to growth and the degree to which the demand will be delayed can be explained in three scenarios – described as V-U-L.
V – SHAPED
Equivalent to the classic real economy, where the shift and decline in output eventually rebounds back. In this scenario, the annual growth rate might completely absorb the shock.
U – SHAPED
Under this scenario, the shock persists and there is permanent loss of output, with initial growth resuming and having a slower rebound.
L – SHAPED
A more downbeat scenario where one would have to assume that Covid-19 has led to significant structural damage to the economy’s supply such as labor market, productivity or capital formation. This would have a larger impact on the economic growth, triggering a global recession.
In order for businesses to survive, companies will have to be resilient and take necessary precautions to navigate past the changing times.
- Establish the facts
It becomes essential for all businesses to outline the current business scenario and its impact in the short, medium and long term, keeping in mind the present-day situation. This involves running different scenarios, revisiting key business decisions for immediate recovery to alleviate business disruptions and potential revenue loss.
- Employee Involvement
Employees, being a key part of any business, should be well informed with the transformational changes taking place. With each business and industry having different requirements, the employees should be made aware of the current situation and what is expected of them. Companies should support employees and communicate clearly about adaptation to digital workplace to ensure seamless continuity.
It is also important to utilize collaborative tools across the departments to ensure communication and quality of work or service provided to clients is not hampered/ compromised in any manner.
- Cloud Based Solutions
With social distancing being practiced by most companies, it is necessary for employees to adapt to cloud based applications and storage for easy access of data and documents by all the employees.
Working on cloud technology provides real time data, thereby resulting in transparency and deeper engagements with clients.
- Dedicated Crisis Management Team
A crisis like Covid 19 is having an impact on every part of the business. During a time of complexity and uncertainty, teams should be able to adapt and proactively coordinate in an effective way. Led by the CEO, a core team should take charge, with members from different teams and functions defining key specific goals to be achieved by the organization, focusing largely on the output to be achieved.
- Stress Testing
Stress testing helps in identifying vulnerabilities in the current business model and can be useful in managing risk, strategy, risk appetite and capital decisions. Internal stress testing should be conducted to identify gaps and work towards recovery planning. Businesses need to focus on key trigger areas, revenue and variables that will directly impact their revenue and cost.
- Managing the Funds flow
Growth objectives are key to every organization to maximize value and preserve the continuity of funds. During such times, it is important to identify areas of surplus and deficit funds and engage surplus to cover any deficits.
- Support clients
During such times, it is equally important to work closely and maintain personal relationships with customers and clients by communicating clearly to identify key areas to focus on and offer assistance beyond the areas of regular service offered.
1. Business Continuity
- Providing your team regular updates on the current situation in the region on key labor, fiscal and monetary measures taken by the Government.
2 Cloud Based Solutions
- Keeping in mind the safety of employees, we can analyze the current system and processes in place and provide support towards digital transformation to cloud services to ease access across the business.
- Affiniax Partners can help identify and maintain flexibility and synchronization between the business processes, applications and IT infrastructure.
- This can be conducted through evaluating, planning, designing, implementing and testing of cloud-based solutions for companies.
3 Cross Functional Response Team
- Setting up cross-functional teams for key workstreams – Employees welfare and ability to perform tasks, financial stress testing of the business, evaluation of budgets and closely monitor supply chain and other areas important to businesses.
4 Stress Testing
- Define risk factors and run business-wide stress testing using various platforms across the organization, supported by technology to enable reviews.
- Conduct sensitivity analysis and run scenarios on the viability and financial implications of business decisions. Review of potential opportunities to grow revenues within designated risk tolerance level.
- Scenario analysis on the variables affecting revenues and cost and identifying input variables that could affect liquidity position of the business.
- Running different scenarios of financial models (Cash flows, Balance sheets and P&L) to measure and identify potential liquidity and optimization techniques.
- Scrutiny of budgets (revenue, sales, marketing, inventory, investment capacity) on pricing changes and discounts and optimization of supply chain (inventory levels, after sales stock, delivery capacity and capability).
- Implement appropriate stabilization techniques for optimizing costs and supply chain.
5 Practice with Top Team
- Analysis and scenarios will be discussed and reviewed with the top Management via reporting tools for deeper understanding of company risk profile.
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