CASE ANALYSIS FRAMEWORK ON BUSINESS DISRUPTION DUE TO COVID-19

The COVID-19 pandemic has had a significant impact on global economy and continues to affect
businesses with worldwide operations. Bangladesh has not been spared its economy has been affected
resulting in losses for several businesses.

Though, it happened faster than anyone could imagine. The Covid-19 outbreak isn’t an isolated event.
Disruptions are increasing in frequency and magnitude, including geopolitical events, climate-related
disasters and public health crises.

For decades, low-cost supply and minimal inventory were the key tenets of supply chain management.
As a major beneficiary of globalization, Bangladesh has benefitted from the outsourcing of production of
various goods. Several times due to maintain the global compliance standard industries have taken
different initiatives to mitigate the risk of crisis. But any preparatory measures for a global crisis
management was barely taken into account. Moreover, this pandemic situation has left the world to
think about their business continuity plan from a different point of view.

Disruptions of value chain:

Footwear factories all over the world, including Bangladesh, are one of the casualties because first of all,
manufacturing factories are folding up production in the prevention of the virus outbreak.

Secondly, with the decline in sales in the forward market (both domestic and international), the buying
orders in the local industry are coming to a halt leading to the entire backward market being hampered.

Scarcity of buyers/Disruptions in forward linkage:

Covid-19 has hit badly at our major export destinations include the United States, U.K., Germany, France,
and Italy. Due to lockdown, markets in these countries are now shut. People have already limited their
discretionary spending.

As a result of this, buyers are facing challenges to clear the payment on time. They are cancelling or
modifying orders. In some adverse scenarios’ buyers are discarding the orders with out payment. Which is
a big challenge to overcome for the industries like us.

Likewise, other organizations, my company also has been facing a lot of challenges to survive amid the
affected of this pandemic. We have been facing challenges to create a new network with the buyers where
we could export our products.

Challenges in Import / Disruption in backward linkage

Industries specially leather goods and footwear industries have been facing challenges to import raw
materials from different sources. China has been a major hub for sourcing various kinds of raw materials
for completing orders. Due to the lockdown, companies are facing trouble to import or source goods
from new channels. This increased carrying cost are increasing the price of sourced goods.

Challenges to continue business

As the entire supply chain has been disrupted, the local economy is bound to face a huge deficit for raw
materials for leather footwear as soon as the pandemic ends. Subsequently, the focus should be shifted
towards non-leather footwear for the major parts in order to overcome this obstacle and get back into the
global value chain as it might take a considerable amount of time for the tanneries to start functioning
again due to shortage of chemicals, rawhides, etc. Given the current situation of the global economy, the
demand for footwear, in turn leather footwear, might not rise significantly in the near future.

Disruptive Cash flow

Many of the domestic and international brands/businesses are facing problems in supply chains because
of disrupted cash flow. Govt of Bangladesh has already declared to incentivize the leather and footwear
sector to support cashflow in business. So that, these businesses can get through this crunch period and
save their suppliers/factories.

2. ALTERNATIVE BUSINESS PLAN:

Likewise, other organizations, my company also has been facing a lot of challenges to survive amid the
affected of this pandemic. We have been facing several challenges from creating a new buyer network to
importing goods.

OPTION A: RESTRUCTURE THE BUSINESS VALUE CHAIN

Finding new buyers:

We are trying to shift our fixed concentration from USA and Europe. Rather we are trying to expand it to
Scandinavian countries, Australia and other east Asian countries where there is a good demand of leather
goods or footwears.

Sourcing channels re distribution:

Previously china played an important role for souring raw materials, reagent chemicals tools etc. As the
market has consolidated, we can source leathers from South Africa, Indonesia and Vietnam. For
chemicals Hong Kong and India will be good source. For other tools India, South korea, Vietnam can be
additional sources.

OPTION B: CHANGING BUSINESS PATTERN

Considering the current situation of the global economy, the demand for footwear, in turn leather
footwear, might not rise significantly in the near future. Whether non- leather materials seem a good
alternative. Apart from shoes already there is a huge demand of PPE and face-shield. With present set-up
we can address the demand easily. Moreover, by partnering with Bangladeshi clothing company Zaber
and Zubayer who has recently invented the anti-viral clothes we can go for PPE to shoe production easily
considering the present demand.
OPTION C: STICK TO THE PREVIOUS BUSINESS PLAN ENHANCING THE PRODUCT VARIETIES

Covid-19 hit most in our major export location in Europe, USA and most of the developed countries.
Very few of them could manage it within a short tenure. However, scientist all over the world are trying
hard to get a remedy of this health pandemics. Though, people have limited their discretionary spending
due to lockdown. It cannot extend for a longer period. Besides leather product are not fancy or luxury
products always. Therefore, if we concentrate to produce necessary winter products with average cost and
 extend variations. We will soon overcome the recession. Besides our most clients are renown brands
hopefully they will cope up with the situation better than others.

PROS
 Less dependency on one
particular zone would help the
business run smooth always.
Mitigate the risk.
 Probability of sourcing good
OPTION A: RESTRUCTURE
THE BUSINESS VALUE
products with good price.
CHAIN
 Increased production cost due
to covid-19 can be added easily
CONS
 New product lines may cause
additional technical and human
resource
 May face lack of cash flow
 May face heavy competition as
everyone wants to enhance their
buyers’ networks.
 New buyers may not have a well-
established brand value.

 May help the business run and  This business is depended on

maintain profit. covid-19 crisis. May need to
change the business plan after the
OPTION B: CHANGING  Enhance to a fusion products availability of vaccine or remedy.
BUSINESS PATTERN line in future

 Increased production cost due

OPTION C: STICK TO THE
PREVIOUS BUSINESS PLAN
ENHANCING THE
PRODUCT VARIETIES
to covid-19 can be added easily
 Consolidated production
concentrating on necessary
goods may help the business
curve flatten.
 Export to renown brands has
more possibilities to cope up
with the scenario.
 May need continuous cash flow
 Shut-down / order size
minimizing / discarding business
may hamper our business to
continue.
 Increased production cost due to
ensure covid-19 compliance may
dissatisfy the buyers

Decision:
Considering the scenario, we have decided to go for executing both Option C and option B.

Implantation Plan

Almost all European countries and Australia are going release the lockdown gradually. Though UK and
USA are still under lockdown but gradually after 2/3 month they also need to come out from the lock
down as everyone needs to keep the economy running. To ensure continuation of our business we will -
Firstly, we will supply necessary leather goods like winter cloth and footwears. Along with that non-
leather goods also be included as per demands

Secondly, with the newly invented antiviral cloth and spray we will make a change in our products line
like with bag cover or coverall, gloves, masks made of antiviral cloth. This will need an expert designer
and technician.

Thirdly, to make PPE, mask face-shield we can modify our machine slightly to go for production. Our
designers and plant engineers may help in this regard.

However, to make this total process covid-19 compliant addition cost like disinfecting the factory, workers
and products needed to arrange. To maintain the social distance number of shifts will increase.

Contingency plan:

However, there is always a chance that our forward and/or backward linkage of value chain may fails
anytime. Therefore, we need to enhance our networks to mitigate the risk by alternative sourcing.

Secondly, we can enhance our websites capability for taking orders directly from end user may help to sell
the products. Boosting the website needs to be done beforehand.

Besides, though govt assured to give incentives due to competitive market. The cash flow may not be
adequate. In that case alternative source like SME foundation or other bank or financial institution needs
to be identified before handed.