Impact of the COVID-19 Outbreak on Leaders and Global Businesses

Emerging responses of leaders to the widespread crisis is crucial for businesses and the economy.

Impact of the COVID-19 Outbreak on Leaders and Global Businesses

Amidst the first report of the Coronavirus disease (COVID-19) outbreak from Wuhan China on 31st December 2019, to its declaration by the World Health Organization as a global health emergency on the 30th January 2020, there have been records and even anticipated plunges in both large and small scale businesses globally. Production processes have been slowed down, including supply chain engagements. The COVID-19 pandemic has placed demands on both leaders and businesses, alarming employees and business stakeholders. Thus, leaders in various business sectors face challenges due to the unpredictability level of the outbreak.

Several companies including those listed in the US stock market (S&P 500 companies) such as Nike, Apple, Domino’s Pizza Inc., have had their share of slowed down manufacturing processes, supply chain, and store openings. Even more, Hospitality giant Hilton Worldwide Holdings has had to close about 150 hotels in China due to the outbreak.

With the increasing spike in the proliferation of the coronavirus, several resources and services have increased in demand forcing such companies to double on their operational processes. Why? Because these companies are in sectors ladened with the responsibility of protecting the lives of the public, health workers inclusive.

Based on various updates so far, here are 6 companies cut across different sectors, facing high demands in short response time on their products and services in fighting the COVID-19 pandemic.

1. Wearables and Disinfectant production companies: 3M, Dow Chemical corporation & Clorox

Mike Roman, the CEO of Face mask manufacturing company, 3M stated they were on a 24/7 hour production pace to meet up with the skyrocketing demand of the facial mask by masses and health workers looking to get protected. This increase in demand is also attributed to the fact that the company is also responsible for the production of N95 respirators which are useful against viral spreads compared to the mundane masks. However, 3M isn’t unfamiliar with the global health crisis that has demanded a lot. An example is the SARS outbreak in 2003, which shot up the demand for its respirators.

Among several companies in the health and hygiene industry The Dow Chemical Corporation (TDCC) and Clorox, are among the disinfectant manufacturing companies being hit by the pandemic business-wise. While TDCC experiences increasing demand for its disinfectant materials and nonwoven fabric for masks and wipes, Clorox records a 10% increase in the price of its shares by investors, as the demand for its disinfect (bleach) known to be potent against viruses surges. Also noted is the cleaning services provided by Clorox, which accounts for about 34% of the company’s revenue.

2. Biotechnology companies: Moderna Inc., Novacyt

Given the outbreak of coronavirus, several companies have been on the race to meet the various demands. Hopes have been placed on the novel discovery of vaccines, as well as real-time testing kits for the virus. Amidst the demand, funding is being provided as these institutes record-high investment rates in the fight against the COVID-19. Examples include French Biotech company, Novacyt which experienced a 32% soar after it launched a search for new testing of the coronavirus. Similarly, shares of US biotech companies surged by 4.9% after it was requested to produce a vaccine for the coronavirus by the National Institute of Allergy and Infectious Diseases.

3. Remote conferencing Company: Zoom Video Communications

Zoom Video Communications proves to be the ultimate stay-at-home tool for businesses and employers instituting the temporary implementation of remote working policies. Hence the demand for the videoconferencing and adjustments in business practices (collaboration tools) has shot up as stated by its CEO Eric Yuan.

This increasing demand has had the firm removing the 40-minute limit for more than two users in affected geo-locations and a surge over 2 million active users in Q1 2020, a high when compared to its record of 1.1 million active users for 2019.

4. Consumer-goods company: A2 Milk

Business insider identified A2 Milk, as one of the agro-based firms who were marked by a spiking demand by the coronavirus outbreak, experiencing a 10% increase in its stock price with a 20% increase in revenue. This increase in demand has been attributed to the sparks of anxiety on the availability of its consumer products for its market countries (the United States, Australia, New Zealand, China, and the United Kingdom), especially China who is looking to stock up its infant formula.

5. Video gaming company: Ndemic Creations

The mobile video game, Plague Inc. by Ndemic Creations has had the business termed the dark business of coronavirus by Wall Street Journal as the game became the top paid in Apple store China and the United States on the 29th of January 2020. This is however not to say the company is as labelled, but that it happens to be the choice of fun for gaming users observing the health crisis across various countries.

A real pandemic isn’t unfamiliar for the eight-year-old British company. In 2014 Ndemic Creations was met with a high spike in the number of downloads and gaming users during the Ebola virus outbreak.

6. Telemedical Company: Teladoc Health Inc.

Multinational telemedicine and virtual healthcare company based in the United States, Teladoc Health Inc. which provides patients with remote medical services aren’t outliers in the ongoing crisis. The company amidst the rising demand for its services in reducing the widespread COVID-19 has had high investment rates. This has been observed by a 40% increase in their shares in Q1 2020, which is 27% higher than that of Q1 2019. This has been attributed to a 5% increase in its stock price and an increasing demand for the expansion of its services.

7. Funeral Company: InvoCare

InvoCare, a leading funeral home and crematoria public company has been faced with challenges in meeting the scaling demand on its services, given the global high mortality rate of coronavirus among the older demographics. These results had led to an increase in its stock purchase rate and price. InvoCare, which owns funeral brands including White Lady Funerals and Simplicity Funerals, has seen its stock price jump nearly 13% as of 26th of February 2020.

Given the crisis, it is evident that the crisis response system of top management is crucial to the development of creative and pragmatic solutions. Hence, the dilemma of business leaders aiming to mount a response time matching a crisis at its speed, scale, and impact. The struggle is to avoid employing an ineffective-reactive approach that could consequently aggravate the crisis at hand.

A report by McKinsey on their collaboration with several companies faced with the challenges of the COVID-19 has resulted in the outlining of a response structure with 5 teams and 18 major streams aimed at. With each team responsible for a number of workstreams, here is a flexible response structure.

Nerve-center Integration

Headed by a senior C-suite leader, an epidemiologist, project coordinator and an analyst (scenario-planning), the nerve-centre integration team coordinates the overall crisis response structure, providing real-time information and related actions to outbreaks. This team should be empowered to allocate resources towards the smooth running of the other four teams. Hence, its responsibilities will include:

• Singular source of information for resolving issues.
• Ensuring efficient deployment of resources to needed areas at the right time.
• Coordinating the responsive actions of workstreams across all teams to triggers.
• Organization of roundtable briefings to align leaders on scenarios and needed exercises.

Workforce Protection

Organizations are to develop health safety guidelines that can accommodate policy changes within the company. In determining the right policies and level of support, comparisons should be made with similar counterparts of the same business sizes.

The right workforce-protection policy should be explicit for the team leads on how to deal with the specific outbreak consistent with the guides by WHO, national and local health organizations. The managers should be empowered with the skills to deal with evolving situations, monitoring adherence to policies, while the staff are given room to express concerns on personal safety measures.

The workforce-protection team consists of the Human resource head, representatives from the legal, security and employee communications, and an Ombudsperson. The team is responsible for the following workstreams:

• Portfolio of policies and actions, inclusive of prevention and incident response measures
• Multichannel communications; confidential reporting mechanism; source of truth
• Aligning policies for outsourced hires with incentives
• Facility and on-site norm: work shifts, sharing of preventive measures; closures
• Engagement with federal and local health regulators, and public health officials

Supply-chain Stabilization

Amidst the crisis, companies need to develop a plan that defines the level of its supply chain engagements, especially in communities dense with the outbreak. Several factors such as the restart of supplying plants, knowledge of logistics capacity, priority status with suppliers and supply rationing are important. The developed strategy could be a long-term stabilization plan, where supply for products subject to high demand is managed.

The supply-chain stabilization team should include the Procurement head, procurement manager, a supply-chain analyst, the regional supply-chain manager and the logistics manager. This team will be responsible for the following workstreams:

• Ensuring risk transparency across all tiers of suppliers; order management; new supplier engagement.
• Inventory management: critical-part identification; parts rationing; location optimization.
• Operational-impact assessment; product-capacity optimization.
• Demand management.
• Ports; logistics-capacity pre-booking; route optimization.

Customer Engagement

This team should have the Sales head, Marketing lead, a financial analyst and managers for customer incentives, SKUs and customer communications. Together they will manage these workstreams:

• B2B transparency: communications to B2B customers; scenario-based risk communications.
• Customer protection: Spread-prevention interventions across customer journeys; customer-team training; execution monitoring.
• Customer outreach: customer communications on COVID-19 practices; fact-based reports on issues; situation communications.

Financial Stress Testing

The financial models of companies differ based on differences in the critical variables that affect revenue and cost. Hence, the need to define values affecting these variables and develop tailored business scenarios, while identifying triggers that can impair liquidity and working to stabilize against such. Stabilization measures can include cost-reduction measures and Merge & Acquisition actions.

The financial-stress-testing team should include the CFO, business development or strategy lead, treasury lead, a financial analyst and legal representative. Together the team will oversee the following workstreams:

• Scenario development: based on the latest epidemiological and economic outlooks.
• Stress tests: Assembling relevant financial data based on different scenarios, especially working-capital requirements.

This crisis response approach works because it produces top-down coordination of the management with experts, providing the organization with parameters needed to navigate through disruptions caused by the COVID-19 pandemic.