Analysis of the impact of the new crown epidemic situation on business strategy

  The New Corona virus has evolved from a public health emergency to a global crisis. The impact is no longer as simple as a short-term consumption decline and consumption delay. The author predicts that the impact of the new crown epidemic on the global economy is so great and far-reaching that it is not even under the 2008 global financial turmoil. The company’s business strategy environment will also undergo many changes due to the epidemic situation. It is not enough just to put into short-term tactical adjustments and increase revenues and reduce expenditures to ensure the safety of cash flow in the epidemic. The business strategy of the enterprise also needs to be adjusted accordingly.
1. PEST analysis and OT prediction of changes in business management strategy environment

  During the epidemic, people’s outdoor activities have been greatly reduced, and many consumptions have been sharply reduced or delayed. There are also some products or consumption, such as masks, hand sanitizers, disinfectants, thermometers and other medical and health supplies, demand and consumption will surge in a short period of time. Many of the above aspects will gradually return to normal with the end of the epidemic, and will not have a long-term impact on the business environment of the enterprise. The enterprise only needs to make tactical adjustments. However, in some aspects, long-term changes will occur and have a major impact on the company’s business strategy. The major strategic environmental changes that may occur after the epidemic and the opportunities or threats they cause are summarized as follows.
  Political and Policy Environment (Politics&Policy)
  1. The SARS virus and this new coronavirus epidemic are caused by non-ecological management and consumption issues (wild animal trading, processing, consumption, etc.). After the epidemic, the legislation and enforcement of ecological security, ecological balance, and ecological protection in various countries are bound to be greatly strengthened. This will promote the development of eco-friendly products. At the same time, businesses and products that are not eco-friendly, such as dependence and consumption of excessive natural ecological resources such as forest resources and wild animals (including artificially raised) fur, will produce Increasing deterrent effect. The business behavior, product structure, supply chain, etc. of the enterprise need to be changed in advance. Otherwise, it may be forced to shut down or switch production due to non-compliance with the government’s policies on ecological protection and ecological safety, or the supply of natural ecological raw materials such as wood and animal fur will be cut off. Some eco-friendly products may receive additional support subsidies from the government.
  2. Some countries, such as China and the United States, will aggravate their political and economic conflicts due to the epidemic and aggravate global protectionism. The export trade of Chinese enterprises and overseas markets will be significantly negatively affected for a long time. Therefore, companies need to re-examine overseas business strategies and investment expansion strategies.
  Economic environment (Economy)
  1. The epidemic has severely damaged the demand and consumption of most industries in the world. Many small and medium-sized enterprises will go bankrupt and go bankrupt. The employment status, purchasing power, and consumption power have been seriously frustrated for a long time. Their impact on the global economy will never be. Under the global financial turmoil in 2008. Therefore, enterprises should reexamine their expansion and investment strategies, especially their productive expansion and investment strategies.
  2. Consumers’ shopping habits will change a lot. During the epidemic, the proportion of online sales increased rapidly. Consumers who used to shop less online started to learn and get used to online shopping. A large percentage of consumers’ changes in shopping habits are irreversible. Therefore, enterprises need to re-examine the sales channel development strategy and further strengthen the construction of online channels.
  3. The epidemic will lead to the bankruptcy of a large number of small and medium-sized enterprises, thereby allowing the surging market share to promote the rapid increase of market share concentration, and the competition and market regulation will also be improved accordingly. After the epidemic, the competitive landscape of many industries may change significantly. This means opportunities for powerful companies that can safely survive the epidemic. With proper strategy, market share and market position will likely produce mutations that are difficult to reach in the “peaceful era”.
  4. The epidemic crisis will change many consumer habits and consumption structure. For products with threats and adverse effects on ecology and health, the market scale will shrink; for eco-friendly or health-friendly products, the market scale will expand. These changes will simultaneously create market opportunities and threats.
  Social Humanities (Society)
  1. The public’s public health safety awareness will be greatly enhanced, and offline large-scale assembly-type communication and promotion activities will be negatively affected for a long time. Enterprises need to re-examine the future communication and promotion strategy combination.
  2. The public’s consumption behavior and concepts, and even social etiquette, will be greatly changed by the education of the epidemic situation. Consumers’ awareness of eco-consumption will continue to increase, and eco-friendly enterprises and eco-friendly products will be accepted and selected by more and more consumers. The business behavior and product structure of an enterprise needs to be adjusted in accordance with the changes in the above-mentioned public perceptions and behaviors. Even the core operating values ​​and ethical standards of an enterprise need to be adjusted in accordance with the changes in people’s concepts and behaviors mentioned above, and in particular, ecological management needs to be incorporated into the core values ​​of the enterprise.
  Technology (Technology)
  1. After the epidemic, online communication and transaction technology will be further developed rapidly.
  2. More and more technologies and products related to ecological protection, ecological balance and health and safety will continue to emerge, and will play an increasingly important role in enterprise competition.
  Strategic opportunities (Opportunities)
  1. The impact of the epidemic has caused a large number of small and micro enterprises to go bankrupt, and the market’s standardization and market concentration have rapidly increased. Once the epidemic has entered a recovery period, the competitive environment of large and medium-sized enterprises will be improved.
  2. Eco-friendly products and numerous hygiene and safety products will usher in a better development period.
  3. Enterprises that originally had weak offline channels will be better able to use online channels to quickly increase market share and market position in the future.
  4. After the epidemic, companies will have the opportunity to acquire the production capacity and market share of the companies that failed in the epidemic at low cost.
  Strategic threats (Threats)
  1. The epidemic will lead to a decline in purchasing power and the overall global economy, and it will be difficult for a long time to return to the level before the outbreak. Enterprises need to reexamine investment expansion strategies, especially productive investment expansion strategies.
  2. Some industries and some products will be restrained and cracked down due to the changes in many government policies and people’s attitudes and behaviors mentioned above (mainly in terms of ecological protection, ecological safety and public health safety).
  3. Many companies spend huge sums of money to build offline retail channels, which will be tested for survival in a long time, and may even become a huge burden.
Second, enterprise management strategy adjustment contingency thinking

  As analyzed above, the new coronavirus epidemic has caused not only short-term tactical environmental changes, but also caused many long-term strategic environmental changes. To adapt to this change, companies not only need to make short-term tactical adjustments, but also need to make some adaptive adjustments to their business strategies. The main aspects are as follows:
  1. Reexamine the investment expansion strategy, especially the productive investment expansion strategy.
  The original investment expansion strategy of the company was based on the prediction and analysis of the consumption scale before the outbreak. The outbreak of the global epidemic will greatly affect the global economy for a long time, change the purchasing power and overall consumption scale, and the recovery of consumer purchasing power will take quite a long time. Therefore, companies need to re-examine and adjust investment expansion strategies, especially capacity expansion investment strategies.
  It is worth noting that, after the epidemic, enterprises should pay close attention to the recovery of consumption while taking cautious investment in capacity expansion, seize the opportunity to increase marketing investment in time, and implement market expansion. During the epidemic crisis, many companies failed to withstand the test and closed down, giving way to market share. Although some enterprises have survived the test, their vitality is seriously hurt, and their competitiveness and expansion capacity have declined. There are also some companies whose behavior has become too cautious and over-restricted, and even increased marketing expenses have been saved. This means that when the recovery period comes after the crisis, it will also be a good time for companies to expand and increase market share and market position. When the production capacity is insufficient, even after the crisis, the production capacity of the failed enterprises can be acquired at a low cost, and the expansion at a lower cost can be implemented. Therefore, the threat also contains opportunities.
  2. Reexamine and adjust foreign trade export strategy.
  As analyzed above, the outbreak will intensify global political and economic friction and trade protectionism, and foreign trade export business will be greatly affected. Therefore, enterprises need to reexamine their foreign trade export strategy, reduce the cost and investment of foreign trade export when necessary, and concentrate resources to consolidate the local base market first.
  3. Re-examine the product structure and innovation direction.
  As analyzed above, the epidemic situation will accelerate the government’s legislation on ecological protection, ecological safety, public health safety, etc., and enhance the people’s awareness of ecological consumption, ecological harmony and health safety. Enterprises should eliminate products that are not eco-friendly as soon as possible, and vigorously develop eco-friendly products and products with anti-bacterial and anti-virus health care functions to cater to changes in government legislation and popular perceptions.
  4. Re-examine and adjust the sales channel development strategy.
  As analyzed above, the epidemic has accelerated the development of online sales channels. To this end, companies need to think about reducing investment in offline channel construction and increasing investment in online channel construction. According to CCTV news reports, in the first quarter, some industries and products, such as electrical appliances, experienced a rapid increase in online sales and exceeded offline for the first time. After the epidemic, the online sales ratio may fall, but it can certainly be stabilized at a much higher rate than before the outbreak.
  5. Re-examine the core values ​​and ethical principles of business management.
  Complying with changes in government legislation and people’s perceptions, respecting the laws of natural ecology as one of the company’s core values ​​and business ethics guidelines, to avoid triggering similar crises again in the future.