Final Exam Assignment

Course: Microeconomics

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Imagine yourself as CEO of a company. Your sales have been affected due to this
coronavirus pandemic. What would be your strategies or changes to combat the current
economic changes?

The growing threat of the coronavirus has created a serious risk to supply chains, as
manufacturers and retailers face the possibility that suppliers will halt production, and they won’t
be able to replenish run-down stockpiles. Our company is a logistic company namely Agile
logistics (hypothetical company) which focuses on freight forwarding across Malaysia. Due to
the new pandemic (Covid-19) every industry and sector is being affected and our company is not
in exception.

Logistic Manager’s Index Report explains that for February, both transportation prices and
inventory levels are taking a negative turn, and we can expect the coming months’ indices to
continue this downward pattern. Now is the time to revisit or create a real estate strategy that
supports an overarching long-term supply-chain strategy, so that when this pandemic is brought
under control, you are ahead of the game.

The coronavirus pandemic is threatening a logistical and transportation slowdown. It’s too early
to quantify the full impact on production, but devising backup plans is a must. Companies must
expect that temporary supplier shifts will become permanent, evaluate current warehouse and
fulfillment spaces, and make decisive changes. Some of those temporary stopgaps will become
permanent. In the current situation there is no hope of revival of different sectors as the logistics
is linked with the production and transportation of raw material. It is not easy to estimate the
negative impact of coronavirus on the economic conditions of logistic companies.

Strategies to overcome

The strategies to overcome the pandemic require the company to prepare for the future. The
initiatives may include activities such as shifting budgeting from fixed costs to variable spending
to provide flexibility in times of uncertainty. Below I highlight four strategies which our
company would think about to defend themselves against the pandemic.

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1. Protect your employees

The Centers for Disease Control and Prevention (CDC) and the WHO are updating their
guidelines frequently. Our business should ensure these are followed and that staff are aware of
them. It’s also a good idea to restrict contact and non-essential travel where possible.

2. Set up a cross-functional response team

We need to establish a dedicated team to ensure a simple but well-managed set of processes that
maximize the health and safety of colleagues and customers. This team should be led by a CEO
or someone at a similar senior level. The focus of the team should be broken down into five
distinct workstreams:

 Employee management and wellbeing

 Financial stress-testing and contingency planning

 Supply chain monitoring

 Marketing and sales

 Any other business

3. Test for stress, ensure liquidity and build a contingency plan

Defining scenarios can be difficult, but it is advised to try to identify trigger variables that will
affect revenue and cost. These triggers can then be applied to established scenarios so that cash
flow, profit and loss and balance sheets can be modelled. Contingency plans can then be drafted
for varying outcomes, such as portfolio optimization through divestments, cost reduction etc.

4. Policy Management

As the pandemic evolves and new information arises, policies will need to be revisited and
updated and communicated. For example, reviewing and revising a work-from-home policy will
be effective only if dissemination of that revised policy is made with governance tracking for
adoption across the organization.

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5. Do not lose sight of other risks

COVID-19 is not the only threat on the horizon — and often organizations are at their most
vulnerable when dealing with a crisis that dominates their attention. There are many other risks
that our business might faces are not diminished by an epidemic. Therefore, it is important to
consider other business risk in consideration so that our business should consider those risks and
develop the strategies by considering those risk as well. Cybersecurity, for example, should
always be top of mind.

We do not know what the next few weeks and months could bring. If the World Health
Organization upgrades the current COVID-19 epidemic to a pandemic, the tone of the
conversation will shift from containment and prevention to protection of key workers to keep
businesses running.

References
Biody, M., & Sibilla, T. (2020, March 20). The impact of the coronavirus on supply chain and
logistics. Retrieved from https://www.bloomberg.com/professional/blog/the-impact-of-
the-coronavirus-on-supply-chain-and-logistics/

Global Focus. (2020, March 17). Coping with Coronavirus: Five Strategies to Mitigate Business
Risks. Retrieved from https://knowledge.wharton.upenn.edu/article/coping-coronavirus-
five-steps-mitigate-business-risks/

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