IMPACT OF COVID-19 IN BUSINESS

A Comprehensive Overview of the Philippines Business Performance Before and During

the Pandemic

by;

Ornedo, Alyza Angela P.

Cayla

Lois

Usudaan

And more

BSA

2020
 TABLE OF CONTENTS
I. INTRODUCTION
i. Country Analysis
ii. Brief of the Country

II. THE COUNTRY

i. Political Analysis
ii. Economic Analysis
iii. Social Analysis
iv. Technological Analysis
v. Legal Analysis
vi. Environmental Analysis

III. SWOT ANALYSIS

i. Strengths
ii. Weaknesses
iii. Opportunities
i. Threats

IV. GUIDELINES AND RECOMMENDATION IN ENTERING THE MARKET

i. The International Market Analysis
ii. Market Entry Strategy

V. CONCLUSION
i. Analytical Summary
ii. Concluding Statements

VI. REFERENCES
I. INTRODUCTION

i. Country Analysis

The country analysis provides an analysis of multiple factors concerning the

comprehensive overview of the country before and after COVID19. These factors
include information regarding the country’s Economic Indicators, Government
Policy, Political Scenario and economic outlook. The purpose of this is to understand
the past and current environment of the country because of the pandemic and to
compare and contrast each. In addition, we also evaluate any breaks or trends in the
data that are present.

ii. Brief of the Country

Since the end of the Second World War, the Philippine economy has had a mixed
history of growth and development. Over the years, the Philippines has gone from
being one of the richest countries in Asia (following Japan) to being one of the
poorest. Growth immediately after the war was rapid, but slowed over time. 

2016 saw the election of President Rodrigo DUTERTE, who has pledged to make
inclusive growth and poverty reduction his top priority.  The administration wants to
reduce the poverty rate to 17% and graduate the economy to upper-middle income
status by the end of President DUTERTE’s term in 2022.

However, the need to finance rehabilitation and reconstruction efforts in the

southern region of Mindanao following the 2017 Marawi City siege and the current
COVID19 crises may compete with other spending on infrastructure.
II. THE COUNTRY

i. Political Analysis

The Duterte government’s top priorities include combating illegal drugs and
crime, promoting rapid infrastructure development, sustaining economic growth and
making it more inclusive, enhancing peace and development in Mindanao, and
reorienting the Philippines’ foreign relations.

To support these goals, the government has significantly increased spending on

infrastructure, raised the salaries of government employees, expanded existing social
development programs, revived the stalled peace process with the Moro National
Liberation Front (MNLF) and the Moro Islamic Liberation Front (MILF), entered into
negotiations with the communist insurgents, and established a closer relationship with
China.

Today, amid the ongoing crisis, unspeakable grief tempers gratitude as life
struggles to unfold. By midnight of March 17, when the lockdown was widened to the
entire Luzon, all hell broke loose in Metro Manila, home to a population of 57
million. Thanks to special power granted by the Congress to President Duterte in late
March, rights to speech and free expression have emerged as collateral damage in the
country’s disjointed and delayed response to the pandemic. At least a dozen
individuals have been summoned to the National Bureau of Investigation on
allegations of spreading “false information” on the coronavirus
 Just what constitutes this putative infraction is as nebulous as the Duterte
administration’s strategy to flatten the curve. With the progress mass testing having
only begun on April 14. Not everything is dark and gloomy, though, amid life I the
time of COVID-19 in the Philippines. Some local chief executives are demonstrating
proactive and exemplary governance that contrast sharply with the national
government’s lackluster coronavirus efforts. They are a breath of fresh air in a nation
inured to corruption, patronage, nepotism, ineptness, cronyism, and propaganda.

ii. Economic Analysis

Rodrigo Duterte was elected in May 2016 for a term of six years, succeeding
Benigno Aquino. His ethos is twofold: combatting inequalities, and law and order.
Like his predecessor, he intends to introduce universal healthcare (currently 93%) and
free education from pre-school up to a basic university degree level. Combating drug
trafficking, maritime piracy and Islamist terrorist groups (Abu Sayyaf and Maute
groups) is the other priority. In this regard, the country is building closer ties with its
neighbors, Indonesia and Malaysia. Philippines improved in last year’s Ease of Doing
Business index, but it continues to lag significantly relative to other peers in the
region such as Malaysia, Vietnam, Thailand and even Mongolia.

After quarantine restrictions imposed in the middle of March, the Philippines is

now slowly working its way around the coronavirus disease (COVID-19) pandemic
with the loosening of restrictions to allow businesses even in several non-essential
industries to restart operations, given health and safety protocols. 

‘Build, Build, Build’, has been allowed to resume by the Inter-Agency Task Force
as the government looks to accelerate the program as a way to revive the economy
while some industries such as tourism suffer significant setbacks due to the pandemic,
some industries such as e-commerce experience unprecedented growth as Filipinos
opt for digital channels amid mobility restrictions. 
iii. Social Analysis

There have been various problems for decades in areas like birth control,
corruption, pollution, traffic etc. Corruption was a major problem during the Marcos
era and there are still issues today during election time. Manila traffic and the
resulting pollution are real concerns. Also the Oligarchy bordering on dynastic rule.

In response to the COVID-19 pandemic, the Philippine government is pursuing a

four-pillar strategy to safeguard Filipinos from its impacts. These are: 

Pillar 1: Emergency support for vulnerable groups and individuals 

Pillar 2: Expanded medical resources to fight COVID-19 with an increased budget 
Pillar 3: Fiscal and monetary actions to finance emergency initiatives and keep the
economy afloat with an increased budget 
Pillar 4: An economic recovery plan to create jobs and sustain growth, which will be
funded by pillar 3

The Social Amelioration Program (SAP) is under the first pillar of providing
emergency support or lifeline assistance to vulnerable groups. While the delivery of
SAP under the DSWD was relatively successful, it also encountered problems and
challenges along the way.

iv. Technological Analysis

The Philippines has made rapid progress over the years in terms of technology
and innovation. The demand for tech products, services, and automation across
sectors is on the rise. The use of smartphones and social media has permeated every
socio income class in the Philippines. Educational organizations have blended
traditional learning methods with technologies to increase the digital literacy of the
average Filipino.
 In fact, the country has a very tech-savvy work force that has made the operations
of multinational companies easier in the country. However, many analysts argue that
the government should invest more on advanced science, technology, engineering,
and mathematics (STEM) education. As we slowly move and open up to the “new
normal,” science and technology is moving center stage in the global fight against the
spread of the coronavirus disease 2019 (Covid-19). The Philippines, home to
enterprising inventors and creative engineers, now sees tech-savvy Filipinos rising up
to the Covid-19 challenge.

v. Legal Analysis

The constitution of 1987 is the main source of law. The Labor Code of the
Philippines, enacted in 1974 governs the employment practices and labor relations in
the country. It provides guidance on employment issues such as hiring, firing, holiday
pay, retirement pay, working hours, overtime, collective and bargaining (GOVPH,
2020).

On 16 March 2020, the Philippines announced an ECQ, which extended to 31

May for Metro Manila, and was downgraded to a General Community Quarantine
effective from 1 June. These and other emergency measures are guided by the
limitations set forth in the Constitution (Article VI, Section 23) and relevant
international law. On 25 March, the Philippine Congress passed the Republic Act
11469 – also known as “Bayanihan (United Efforts) to Heal as One Act” – effective
for three months unless extended or terminated earlier by Congress, which gives the
President emergency powers to address the COVID-19 crisis.
 vi. Environmental Analysis

On some rainy days, thick haze would blanket the sprawling metropolis of the
Philippine capital, leaving the city skyline barely visible.

Unfortunately, Filipinos have become used to Metro Manila’s air pollution. So

much so that when air quality improved during the COVID-19 lockdown in
March many were surprised to learn that the majestic Sierra Madre mountain
range was visible from the heart of the metropolis.

Photos of clear skies, breathtaking sunsets and the Sierra Madre as a backdrop
to the sprawling city went viral just a week after the government suspended public
transportation and non-essential businesses in an effort to curb the spread of the virus.
By following in the footsteps of other nations battling the COVID-19 pandemic, the
Philippine government inadvertently helped reduce air pollution in Metro Manila.

III. SWOT ANALYSIS

i. Strengths

The strengths of the Philippines include large population that is young (50% is
under 25), qualified and with good command of English, diverse geographic and
sectoral origin of remittances from expatriate workers (10% of GDP), thriving
Business Process Outsourcing (BPO) sector, poverty reduction (Pantawid Pamilyang
Pilipino Program). Tourism is also one of the strengths of the Philippines with
thousands of beautiful islands and a lot to offer.

Challenges with regards to the currents pandemic is that the economic is suffering
with hundreds of business being closed and the opportunity to employment is serious.
Apparently, the rise of digital shops has been pushing through despite the current
economic status.
ii. Weaknesses

The weaknesses include inadequate infrastructure levels / low fiscal revenues,

governance shortcomings and high corruption perceptions, high levels of income
inequality, terrorism in the South of the country and strict bank secrecy and casinos
that facilitate money laundering.

iii. Opportunities

Filipinos have an excellent command of the English language. English is the

primary language used for schools, businesses, and government agencies. The
country has a high literacy rate of 96.5%. Public education is available to the majority
of the entire population. Evidence suggests that globalization has a positive effect on
the country's economic growth and employment. In particular, trade openness and
foreign portfolio flows have contributed to higher per capita GDP growth in the
Philippines, following the implementation of FX liberalization reforms.

iv. Threats
Threats before the pandemic includes the fluctuating political, environment,
increased population density and urban sprawl kidnappings and bombings by
separatist groups, such as the Abu Sayyaf and the MNLF, ongoing maritime dispute
over claims to parts of the South China Sea raises China sanctions risk.

During the pandemic, threats to economic sustainability was obvious. Also one of
the threats that we are facing today is the current academic status for learning, the
education was far more reachable especially during these hard times as many private
schools were closed and a number of students decided to continue their study until the
pandemic ceases.
VII. GUIDELINES AND RECOMMENDATION IN ENTERING THE MARKET

i. The International Market Analysis

The global marketplace today encompasses 6 billion people. Many companies are
beginning to see themselves as international rather than national acting on a global
arena. An essential aspect of going abroad is to know where to go and why to go
there. Before the pandemic, the world market continues its upswing. But with the last
year’s major events, which composed of the US and China Trade war, North Korea-
U.S. Nuclear Talks, US and Iran Tension but despite of that the global order was
in flux well before the COVID-19 crisis.

The world after COVID19 is unlikely to return to the world that was. Many trends
already underway in the global economy are being accelerated by the impact of the
pandemic. This is especially true of the digital economy, with the rise of digital
behavior such as remote working and learning, telemedicine, and delivery services.
Other structural changes may also accelerate, including regionalization of supply
chains and a further explosion of cross-border data flows.

Coronavirus has accelerated three of the key geopolitical trends that will shape
our next world order… which will await us on the other side of this pandemic.

The first trend is de-globalization; the logistic difficulties brought to light by the
current crisis are already pointing to a shift away from global just-in-time supply
chains. Yet as economic difficulties mount, the inevitable growth of nationalism and
“my nation first” politics will push companies to localize business operations that
favor national and regional supply chains. The third trend is how the world will now
see China, the fear and suspicion directed at China in the devastating early days of the
coronavirus outbreak have made a 180-degree turn: It is the West that now frightens
Asia and the rest of the world.
 ii. Market Entry Strategy

Breaking into a foreign market – especially one with strict rules and
regulations – can be a very daunting task. Often, business owners have the ambition
to venture internationally. By selling your product or service in another country, you
can introduce your company to huge markets, increase your sales and profits, gain
brand recognition, reduce the risk of only operating in one market and extend your
product’s life cycle. There are several things to consider before entering the
international market.

 Choosing the country

In choosing which country to enter, one has to carefully consider whether your
product/service is suitable. Keep in mind the culture, religion, and laws of the
countries you are considering. The consumer tastes and preferences are also important
factor.

 When to enter
Competitors may also be considering to venture to the same country, and
timing your entry to the market is crucial. In aiming to be “first to market”, the
business will have to bear several risks. Regardless of how thorough the market
research is, there is no guarantee that consumers will buy what you are selling. Also,
depending on the market entry method, you may have to invest high capital or meet
resistance from potential local partners who are unsure that the product will succeed.

 Scale of Entry
Entering a market on a large scale will require significant resources. Although
this is more likely to make an impression on a new market as it will attract the
attention of customers and local businesses alike, it may be risky financially if your
company does not take off. While entering on a smaller scale can offer business
owners the chance to learn about the new market and limit risks – however, it is
much less likely to gain significant amounts of attention.
 When you know the scale of entry, you will need to work out how to take
your business abroad. This will require careful consideration as your decision could
significantly impact your results. There are several market entry methods that can be
used.

 Exporting
Exporting is the direct sale of goods and / or services in another country. It is
possibly the best-known method of entering a foreign market, as well as the lowest
risk. It may also be cost-effective as you will not need to invest in production
facilities in your chosen country – all goods are still produced in your home country
then sent to foreign countries for sale. However, rising transportation costs are likely
to increase the cost of exporting in the near future.

 Licensing
Licensing allows another company in your target country to use your property.
The property in question is normally intangible – for example, trademarks, production
techniques or patents. The licensee will pay a fee in order to be allowed the right to
use the property. Licensing requires very little investment and can provide a high
return on investment. It also has low risk, as the licensee will also take care of any
manufacturing and marketing costs in the foreign market.

 Franchising
Franchising is somewhat similar to licensing in that intellectual property rights
are sold to a franchisee. However, the rules for how the franchisee carries out
business are usually very strict – for example, any processes must be followed, or
specific components must be used in manufacturing.

 Joint Venture
A joint venture consists of two companies establishing a jointly-owned
business. One of the owners will be a local business (local to the foreign market). The
two companies would then provide the new business with a management team and
share control of the joint venture. There are several benefits to this type of venture. It
allows you the benefit of local knowledge of a foreign market and allows you to share
costs. However, there are some issues – there can be problems with deciding who
invests what and how to split profits.

 Foreign Direct Investment

Foreign direct investment (FDI) is when you directly invest in facilities in a
foreign market. It requires a lot of capital to cover costs such as premises, technology
and staff. FDI can be done either by establishing a new venture or acquiring an
existing company.

 Wholly Owned Subsidiary

A wholly owned subsidiary (WOS) is somewhat similar to foreign direct
investment in that money goes into a foreign company but instead of money being
invested into another company, with a WOS the foreign business is bought outright. It
is then up to the owners whether it continues to run as before or they take more
control of the WOS.

 Piggybacking
Piggybacking involves two non-competing companies working together to
cross-sell the other’s products or services in their home country. This reduces the risk
and costs because it is essentially selling domestically and the larger firm is
marketing your product or service for the product internationally. Although it is a
low-risk method involving little capital, some companies may not be comfortable
with this method as it involves a high degree of trust as well as allowing the partner
company to take a large degree of control over how your product is marketed abroad.
 VI. CONCLUSION

i. Analytical Summary

Real GDP will shrink by more than 4% in 2020 owing to the preventive measures
taken to combat the coronavirus pandemic. Such an aggressive strategy could slow the
spread of the virus, but it will also weaken the economy. The administration, led by the
president, Rodrigo Duterte, has a strong parliamentary position and broad public support.
The Philippines has been one of the fastest-growing economies in South-east Asia, we
expect the economy to rebound once the worst of the outbreak is over.

After quarantine restrictions imposed in the middle of March, the Philippines is

now slowly working its way around the coronavirus disease (COVID-19) pandemic with
the loosening of restrictions to allow businesses even in several non-essential industries
to restart operations, given health and safety protocols.

‘Build, Build, Build’, has been allowed to resume by the Inter-Agency Task Force
as the government looks to accelerate the program as a way to revive the economy while
some industries such as tourism suffer significant setbacks due to the pandemic, some
industries such as e-commerce experience unprecedented growth as Filipinos opt for
digital channels amid mobility restrictions. 

The Social Amelioration Program (SAP) is under the first pillar of providing
emergency support or lifeline assistance to vulnerable groups. While the delivery of SAP
under the DSWD was relatively successful, it also encountered problems and challenges
along the way. Apparently, the rise of digital shops has been pushing through despite the
current economic status.
 ii. Concluding Statements

As a limited-resource country during a progressing pandemic, we are applying

recommended interventions including travel restrictions, community quarantine, risk
communication, and testing despite limitations in resource and capacity. Our country’s
approach has been similar to that of South Korea and Singapore – gradual control through
effective use of public health best practices (7). We have a fairly functional system for
quarantine and a disease surveillance system that is able to do contact tracing. But unlike
South Korea, our laboratory capacity is limited and we are unable to deploy extensive
laboratory testing to find infected cases. Unlike Singapore, our defenses at the primary
level health are poorly organized and resourced, so that patients go straight to hospitals
where overloading easily occurs. And we have limited number of critical care beds in the
country to care for patients who need ventilators for acute respiratory distress caused by
viral pneumonia. But we have a government that is willing to listen to advice from the
scientists and so have implemented community quarantine as a way of slowing down
transmission and ‘flattening the epidemic curve’. The next few weeks should tell how
effective these efforts to control COVID-19 will be.

In conclusion, Covid-19 looks like a “bend but won’t break crisis” for globalization.
International flows are plummeting, but globalization — and opposition to globalization —
will continue to present business opportunities and challenges. Careful attention to the
drivers of globalization’s future can help companies navigate through and even profit from
globalization’s turbulence. A volatile world of partially connected national economies
expands possibilities for global strategy even as it complicates the management of
multinational firms. Now is the time for global corporations to show their value by
harnessing the best of the world’s capabilities to end the pandemic and bolster the recovery.