Chapter 1

THE PROBLEM

Introduction

COVID-19 has severely affected national and global economies. Various

enterprises are facing different issues with certain degree of losses. Enterprises

face problems such decrease in demand, supply chain disruptions, cancelation of

export orders, raw material shortage, and transportation disruptions. It is quite

clear that enterprises around the globe are experiencing the significant impact of

COVID-19 outbreak on their businesses. One of the major victims of COVID-19

outbreak are micro, small & medium-sized enterprises (MSMEs), in comparison

to large enterprises, usually do not possess sufficient resources, especially

financial and managerial, and not prepared for such disruptions likely to go longer

than expected (Bartik et al., 2020; Prasad et al., 2015). The impact is more

significant among micro-enterprises for there are more of them decided to shut

down or lessen the number of their employees than their larger counterparts.

Crisis is unexpected event that causes stress, requires intervention, and

mandates proper planning to ensure survival and sustainability in business (Doern,

2014). COVID-19 pandemic has prompted government departments to enforce

tight closures on cafes, farms and factories in order to retain security measures

and introduce social distancing and strict health protocols. Entrepreneurs

experience business cancellation or closure and reduced income due to the

closure of several supporting sectors such as retails and transportation. There is

still a lack of study on the impact of pandemic on micro-enterprises in developing

 2

countries, especially regarding business continuity and recovery strategy. (Fabeil,

et al., 2020).

To ensure continuous contributions to the economy, Business leaders

should implement written strategies to survive an unexpected interruption to daily

operations (Hermes & Mainela, 2014).

Coffee is one of the most purchased beverage at the present. Coffee is

popular not just because of its health benefits, but also because of its unique blend

and taste, no wonder why a lot of customers are being addicted to it. As the

business of coffee became known, consumers also grew to love the drink. It is

apparent how multiple coffee shops started doing business in the city during the

past years. The coffee consumption of buyers also increases. Even before the

pandemic, coffee is one of the top choices and most purchased beverages.

The researcher is interested in the challenges they have encountered in

managing their business during the pandemic and how they manage their crisis

management strategies.

Considering the impact of this problem on the crisis management of micro-

enterprises in the country during the pandemic, the answers to these research

questions must be provided to understand how to address this problem.

 3

Statement of the Problem

The main problem of this study is “What are the challenges and crisis

management strategies of local coffee shops in Iloilo City during the COVID-19

pandemic?”

Specifically, this study aims to answer the specific questions:

1. What is the profile of the respondents according to:

a. number of years of operation;

b. number of employees; and

c. location?

2. What are the challenges of local coffee shops during the pandemic in terms

of:

a. marketing;

b. finance; and

c. operations?

3. What are the crisis management strategies of local coffee shops during the

pandemic in terms of:

a. marketing;

b. finance; and

c. operations?

Objectives of the Study

The main objective of this study is to determine the challenges and crisis

management strategies of local coffee shops in Iloilo City during the COVID-19

pandemic.
 4

Specifically, this study aims to:

1. Determine the profile of the respondents in terms of:

a. number of years of operation;

b. number of employees; and

c. location.

2. Determine the challenges of local coffee shops during the pandemic in

terms of:

a. marketing;

b. finance; and

c. operations.

3. Determine the crisis management strategies of local coffee shops during

the pandemic in terms of:

a. marketing;

b. finance; and

c. operations.

Significance of the Study

This study could benefit the following groups:

Local Coffee Shop Managers. This study could help them on how to make

a crisis management plan and enhance their crisis management strategies to

adapt on different crisis for survival of their business.

Entrepreneurs. This study could help them to have an idea on how they

can adapt these strategies to their own business.

 5

Business Management Students. This study could help the students to

improve and understand how important crisis management is in operating the

business. This will let them aware of the crisis management plans that they may

use when starting a business.

Hospitality and Tourism Industry. This study could help them in

developing and implementing the most effective crisis management strategies to

ensure continuous contributions to the economy.

Future Entrepreneurs. This study could help those individuals who are

willing to have a business. This study could give them an idea on how to strategize

a business to achieve a goal on the business.

Future Researchers. This study could help them as a basis for further

study about challenges and crisis management strategies on micro-medium

enterprises, specifically local coffee shops. They could also use this study as their

reference and as their guide in doing their own study.

Scope and Limitation

This study aims to determine the challenges and crisis management

strategies of local coffee shops in iloilo city during the covid-19 pandemic. This will

be conducted during the S.Y. 2022-2023. The main respondents are the managers

or its equivalent position of the local coffee shops who will be available to answer

the questionnaire. The researcher-made questionnaire will be used to gather data

from the respondents.

 6

Definition of Terms

For the clarity of the study, the following terms are defined conceptually and

operationally:

Challenges. The situation of being faced with something that needs great

mental or physical or financial effort in order to be done successfully. (Afolabi,

2018)

In this study, it refers to the problems that local coffee shops encountered

during the covid-19 pandemic specifically in marketing, finance and operations.

Coffee Shops. Establishment where coffee is the main beverage offered

although food and other beverages are also available, especially non-alcoholic

beverages and specialty snacks. (de Luca & Pegan, 2014)

In this study, it refers to the micro-enterprise where the respondents will

come from.

COVID – 19 Pandemic. Coronavirus disease 2019 (COVID-19) is defined

as illness caused by a novel coronavirus now called severe acute respiratory

syndrome coronavirus 2 (SARS-CoV-2; formerly called 2019-nCoV), which was

first identified amid an outbreak of respiratory illness cases in Wuhan City, Hubei

Province, China. (Cennimo, 2022)

In this study, Covid-19 pandemic refers to the situation experienced by the

local coffee shops and other businesses in the country.

Crisis Management. It is the use of strategies to plan and help organization

deals with a sudden and significant negative event. (Wigmore, 2020)

 7

In this study, crisis management refers to the organization’s action plan to

survive the challenges it faces during the covid – 19 pandemic.

Finance. Refers to the management of money and includes activities like

investment, borrowing, lending, budgeting, saving, and future forecasting of shares

or financial issues. (Naidoo, 2021)

In this study, finance refers to how the managers or its equivalent position

of the local coffee shops handle their money due to the Covid-19 pandemic.

Iloilo City. Very rich in natural resources, competent human resources,

cultural and heritage attractions, and is strategically located, making the City the

preferred destination for meetings, incentive travel, conventions, and events and

for investments as well. (LCP Secretariat, 2015)

In this study, Iloilo City serves as the setting of the study.

Marketing. The strategic functions involve in identifying and appealing to

particular groups of consumers, often including activities such as advertising,

branding, pricing, and sales. (Kasemsap, 2016)

In this study, marketing refers to how the managers or its equivalent position

of the local coffee shops advertise their coffee shop business during the Covid-19

pandemic.

Operation. In business, operation can be defined as the deliverable or

activities that the business performs every day in order to enhance the value of the

enterprise and derive income from it and sustain itself. (Nigam, 2022)

In this study, operation refers to the performance of the employee on a daily

basis to make a profit.

 8

Strategies. A plan of action that determines the direction, scope of an

organization and configuration of resources, skills, and competencies in creating

competitive advantage, leading to the attainment of the overall goals in the long

term. (Hu & Kee, 2021)

In this study, it refers to the plans or actions that the managers or its

equivalent position of the local coffee shops made in order to survive the covid-19

pandemic.