The recent global pandemic, Covid-19 has significant economic impact on financial markets and vulnerable industries such as manufacturing, tourism, hospitality, and travel which suggests millions of jobs are at risk. There is a huge potential for loss of income which of course triggers many social, physical, and mental health well-being concerns. The low-income employees are likely to be affected the most in the pandemic as cost of living continue to surge with the disruption of supply chain for produce for daily needs. The recent unprecedented measures imposed by various governments has resulted in closure of workplaces, schools, and childcare services. Therefore, there is additional pressure on working parents who now must work from home and care for their children at the same time. Additionally, with the social distancing and lockdown measures, it changes consumer behaviour.
People are not eating out like before, thus the pantry needs to be stocked. Singapore, which depends on the import and export of goods and services, finds itself in an especially precarious situation. Up to 90 per cent of the country’s food supply is imported. The decision by the Malaysian Government to abruptly close its borders triggered panic-buying in Singapore. This was followed by a surge in people buying online even groceries. There are many who used to enjoy the concept of shopping are forced to do it online as many retailers are closed. It is also important to note that Covid-19 will accentuate the shift towards healthier products and categories. Singapore previously saw a decrease in liquid sanitizer sales because of the lack of supply to meet abnormal levels of demand. Sales uplifted only recently when stocks were replenished.
As the world continues its battle with Covid-19 and adopts new measures by the government and businesses to flatten the infection curve, companies are learning to rapidly operate in new ways. Fundamentally, day to day operations have taken a new form for many companies. Working from home has instigated an upgrade in digital technology. Companies are dependent on information technology such as Microsoft Teams and Zoom to continue a “face to face” communication on a virtual sphere.
Covid-19 has brought many global supply chains to a standstill. Now more than ever, the supply chain is critical. This is one of the biggest challenges for many industries and companies. Many organizations have a high dependence on China to fulfil their need for raw materials or finished products. China’s dominant role as the “world’s factory” means that any major disruption puts global supply chains at risk. Consequently, this will lead to rise in impending delays in project timelines. In this instance, a brilliant example is the construction industry where many companies are expecting delay in their projects and will be requesting for extension of time for the project.
As earlier noted, that new buying behaviours are forming, this has caused companies to scramble to meet immediate and emergency needs. Companies that in the past has viewed digital commerce as a secondary channel, now need to reprioritize their business with a digital commerce focus. For example, retailers are rallying to provide “contactless” delivery and curb-side pick-up services for consumers. The impact of the Covid-19 outbreak requires companies to move at an unprecedented speed and that means re-evaluating how employees deliver relevant customer experiences, and how digital channels can be used. Organisation like banks will push customers toward digital channels for service and increase the need for a connected, responsive team.
Globalisation has allowed deeper integration and interconnectedness. Opening the global economy has encouraged trade between nations. Today, companies can source goods and services from locations around the globe to capitalize on national differences in the cost and quality of factors of production like land, labour, energy, and capital. Essentially, this translates into lower overall cost structure and improved quality or functionality of products and services. Globalisation has allowed companies to view the world, rather than a single country, as their market. It has allowed companies to disperse production to economical, geographically separate locations. Therefore, companies can base production in the optimal location for that activity. Improved technological change also translate into lower transportation costs, low-cost information processing and communication and low-cost global communications networks. Globalisation also lower prices for goods and services, pushes greater economic growth and allows for higher consumer income, and create more jobs.
Globally, the Covid-19 pandemic has caused countries to close their borders, by restricting the movement of people and blocking the entry of people from countries. It is true that with more contact, trade, and travel between people across national borders, there are more opportunities for micro-organisms to spread. Covid-19 has forced us to reassess the fragile assumption of free trade and open borders. Globalisation has brought huge benefits, but also huge risks.
The pandemic has devastating repercussions for corporations and businesses that have benefited from economic interdependence supported by cross-border supply chains. Covid-19 has disrupted the supply chains, consumers and companies will look for alternative suppliers in home country which gives a rise to suppliers’ bargaining power which essentially making it more expensive. Due to the perceived risks, consumers and companies will stick to domestic suppliers even if there is an increased in costs. Nearly every major car plant in the UK has shut down. They are dependent on sales and components from around the world. When both collapsed, they just stopped making cars. Risks have been allowed to fester; they are the underbelly of globalisation. There is a huge economic interdependence. This could result to globally dispersed production bases back in favour of domestic facilities.