Opportunities never

cease for entrepreneurs

with strategic minds

Name: -
Student ID number: -
Unit title and code: -
Assessment title: -
Date of submission: -
Strategic Management

1. Acknowledgement

I would like to convey my heartiest gratitude to lecturers who have helped us to build up our
knowledge and provided the guidance and ideas to success this effort in many ways. It was a
great advantageous for me to completing my assignment before the deadline.

Furthermore, I would like to express my thankfulness to (Institute Name) for providing me

this opportunity to pursue this (Diploma or degree) successfully. And also convey my
gratitude to my family and my friend for their unconditional support.

Finally, yet importantly, I would like to express acknowledge with sincere gratitude for all
other people who help me to success this report in numerous ways.

2|Page
Strategic Management

2. Executive Summary

The COVID-19 viral pandemic has negatively impacted people's lives in all countries and
communities. It will have a negative effect on global economic growth unlike anything seen in
nearly a century. 95 million people may have fallen into extreme poverty by 2020, with 80
million more undernourished. Inequality, exclusion, discrimination, and global unemployment
may worsen in the medium and long future if the social crisis caused by the COVID-19
pandemic is not appropriately addressed. People without access to running water, refugees,
migrants, and displaced persons are likely to suffer disproportionately.

Sri Lanka's economy is expected to grow by 3.4 percent in 2021, from a low base. Inflationary
pressure is likely to arise in 2021-2023. Sri Lanka's budget deficit is forecast to reach 9.4% of
GDP in 2021. The size and character of Sri Lanka's debt imply severe fiscal risks. Sri Lanka is
very vulnerable to market attitudes due to its debt repayment profile. To boost growth in the
medium term, Sri Lanka must increase its competitiveness.

Tourism and travel is one of the major industries that has been impacted by the COVID-19
pandemic. New opportunities can be captured during and after the pandemic in a variety of
ways. Three recovery strategies were highlighted using the Michael Porter's Diamond model
within the local context. The structure and size of the market, traveler tastes, and tourist desires
with the visitation process will be causative as main demand factors with the pandemic. The
"New Normal" may be the best time to cater to the domestic market.

A lack of related and supporting industries may impede tourism growth, whereas support for
related –supporting industries should be promoted. Almost all policies and regulations should
be revisited, and new regulations imposed on local industrial development, tourism MSMEs
subsidies, and destination image building. As a vulnerable industry to "external shocks" such
as a pandemic, tourism would implement a "second plan" or "plan B

The COVID-19 Pandemic caused a seismic shift in the tourism and travel industries. To rebuild
and sustain their businesses, all organizations must think strategically and creatively. Tourism
sector has potential to be an economic stimulator that improves revenue-generating sources,
employment opportunities, and foreign exchange earnings. To remain competitive, Sri Lanka's
tourism industry should recognize and highlight the factors that make the Sri Lankan travel
experience unique and authentic.

3|Page
Strategic Management

3. Content

1. Acknowledgement .............................................................................................................. 2

2. Executive Summary............................................................................................................ 3

3. Content................................................................................................................................ 4

4. List of Figures ..................................................................................................................... 5

5. COVID-19's global socioeconomic impact and the impact of these global developments
on the Sri Lankan economy ....................................................................................................... 6

6. The Sri Lankan economy in the aftermath of the COVID-19 pandemic............................ 9

7. New potential opportunities in tourism and travel industry ............................................. 12

8. Recommended strategies for Citrus Waskaduwa ............................................................. 15

9. References ........................................................................................................................ 18

4|Page
Strategic Management

4. List of Figures

Figure 01: - Potential outcomes for Sri Lanka - 2020 ............................................................. 09

Figure 02: - Key macroeconomic indicators ............................................................................ 12

Figure 03: - Porter’s diamond model of national competitive advantage ................................ 13

5|Page
Strategic Management

5. COVID-19's global socioeconomic impact and the impact of these

global developments on the Sri Lankan economy

The COVID-19 viral pandemic is still a highly personal, individual experience that is also an
unprecedented and worldwide occurrence with far-reaching consequences. The pandemic has
negatively impacted on people's lives in all countries and communities and will have a negative
effect on global economic growth in 2020 unlike anything seen in nearly a century. According
to estimates, the virus slowed global economic growth by -3.4 percent to -7.6% in 2020, with
a recovery of 4.2% to 5.6% expected in 2021. In 2020, global trade is expected to shrink by
5.3%, but it is expected to grow by 8.0% in 2021. According to mainstream projections, the
economic downturn in 2020 will be less severe than previously anticipated, mainly in part
because of the fiscal and monetary policies implemented by governments in 2020. Economic
growth estimates generally nailed the downturn and subsequent resurgence in economic growth
in the second and third quarters of 2020, but have subsequently been challenged by the long-
term nature of the health issue and its influence on the global economy (The World Bank,
2021).

In addition to the costs of greater poverty, lives upended, careers wrecked, and higher social
unrest, the human costs in terms of lives lost will have a long-term impact on global economic
growth. According to some projections, 95 million people may have fallen into extreme poverty
by 2020, with 80 million more undernourished than before the pandemic. Furthermore, some
projections suggest that as a result of the global economic slowdown, global commerce could
decrease by 9.0% or slightly less in 2020, having a devastating impact on trade-dependent
developing and emerging economies in particular. In developed economies, where vaccinations
are allowing for a return to pre-pandemic levels of activity, the economic impact of the
pandemic is projected to be reduced. New viral variant outbreaks in developing economies, on
the other hand, could extend the pandemic and undermine recovery prospects. The COVID-19
outbreak is affecting all segments of the population, but it is more harmful to individuals in the
most vulnerable social groups. It continues to affect populations such as those living in poverty,
the elderly, people with disabilities, youth, and indigenous peoples. Early research suggests
that the virus's health and economic consequences are borne disproportionately by the
poor. People without access to running water, refugees, migrants, and displaced people are
also likely to suffer disproportionately from the epidemic and its aftermath, whether as a result
of restricted mobility, fewer job possibilities, or heightened xenophobia, etc. Inequality,

6|Page
Strategic Management

exclusion, discrimination, and global unemployment may worsen in the medium and long
future if the social crisis caused by the COVID-19 pandemic is not appropriately addressed
through policymaking (Department of Economic and Social Affairs - United Nations, 2020).

The impact of global changes on Sri Lanka's economy is felt in numerous industries. The need
for agricultural exports will decrease. Under the industrial sector, this includes fisheries, which
are exported as processed foods. Tea prices are anticipated to be affected by the COVID-19
pandemic's economic difficulties in the main exporting markets. The textile and clothing
industry's substantial reliance on international markets will have a greater influence on the
industry. The supply chain for agrochemicals would be disrupted since the global pandemic
has affected the primary agrochemical markets, such as the United States and Japan. The
construction industry will have a medium to high impact. Large-scale public-sector
construction projects may be temporarily halted due to budget restrictions in order to free up
funds for other sectors, while other multilateral projects may resume. Real estate is projected
to be impacted as well. Real-estate developers will suffer as a result of the delays in project
execution. Furthermore, due to the overall recession in the economy, this industry will see a
decrease in new sales, on top of the already stretched cash receipts from presale stockpiles. The
power industry has a minor impact. In reality, falling oil prices may assist Ceylon Electricity
Board in improving its balance sheet (CEB). The health sector may have a short setback, but
its long-term performance will be excellent. Due to social distance measures, travel
disruptions/restrictions, and quarantine regulations, tourism is projected to suffer a lot of
controversies. The industrial and tourist industries are inextricably linked to the transportation
sector's performance. Both of these subsectors' spillover effects will be felt heavily in the
transportation sector (ICRA Limited, A Group Company of Moody’s Investors Ser, 2020).
(The World Bank, 2021)

Disruptions in supply, worsening exchange rates, import restrictions, and diminishing real
incomes may occur due to the challenges faced in the wholesale and retail trade. The food retail
industry, on the other hand, is better positioned due to its diverse business mix, which includes
drugstores and convenience stores. Because of its reliance on worldwide supply lines, the
automotive industry is likewise extremely vulnerable. The crisis will worsen already falling
automobile demand. The banking and finance services sector has a difficult future, as the
pandemic situation offers a significant danger to total loan growth and asset quality for banks
and non-bank financial institutions (ICRA Limited, A Group Company of Moody’s Investors
Ser, 2020).

7|Page
Strategic Management

As a result, agriculture is projected to be quite resilient and experience just a little shock. The
industry is expected to be hit harder and take longer to recover. Services suffered an immediate
blow to the sector, but they may be able to recover more quickly. All three models show that
Sri Lanka is on the verge of a recession, with negative seasonally adjusted growth rates in all
of the remaining quarters of 2020. The loss of tax revenue, according to models, would increase
the budget deficit to 7.8% this year. The government will lose roughly LKR 181 billion in
revenue as a result of this. With employers already cutting salaries, unemployment might
increase to the upper single digits if the crisis worsens. Domestic demand is predicted to slacken
as consumer incomes fall over the course of the year, resulting in inflation of 4 to 7%.

Figure 01: - Potential outcomes for Sri Lanka - 2020

8|Page
Strategic Management

6. The Sri Lankan economy in the aftermath of the COVID-19

pandemic

In the aftermath of the COVID-19 outbreak, Sri Lanka must take the required steps to rebuild
its economy. In 2021, growth should progressively improve. As immunization efforts in Sri
Lanka and its key trading partners progress, GDP is expected to rise by 3.4 percent in 2021,
from a low base. Investments in the Colombo Port City and Hambantota Industrial Zone that
have already been inked, as well as the gradual normalization of domestic economic activities,
could provide a boost to growth. However, the recovery's impetus is projected to be stifled due
to:

I. a sluggish global recovery, which has slowed export demand and tourism, as well as
remittance growth; and
II. In the medium term, continued import restrictions and a large debt burden will have a
negative impact on growth and poverty alleviation. Due to the partial monetization of
huge fiscal deficits, inflationary pressure is likely to arise in 2021-2023.

With low financial inflows and considerable financing demands, external buffers are projected
to remain low. In 2021, the current account deficit is expected to remain modest, thanks to tight
import restrictions that will essentially balance declining garment exports and tourism receipts.
In 2021, reserves will be supported by a currency swap with the People's Bank of China and a
final tranche of US $ 700 million from the China Development Bank. However, after 2021,
significant further borrowing will be necessary to address the external financial gap, with
annual external public debt service costs expected to be in excess of US $ 4 billion between
2021 and 2023. The ratio of official reserves to short-term external liabilities is likely to worsen
further due to significant debt servicing requirements. More non-debt-creating sources of
finance, such as foreign direct investment, will be critical in the medium future (The World
Bank, 2021).

High fiscal deficits will make debt sustainability much more difficult. Despite carefully
regulated spending, the budget deficit is forecast to reach 9.4% of GDP in 2021 and stay high
in 2022 and 2023, as tax collection is expected to be inadequate due to sluggish economic
activity and revenue measures imposed in 2019. As a result, PPG's debt is estimated to hit
115.0% of GDP in 2021, with further increases in 2022 and 2023.

9|Page
Strategic Management

Risks and priorities

The outlook continues to be fraught with dangers. The baseline anticipates a rapid and
widespread vaccination campaign, in keeping with the government's goal of vaccinating 60%
of the population by 2021. Delays in the vaccination process in Sri Lanka and/or key tourist-
producing countries might lengthen the duration and severity of economic disruptions. A
prolonged downturn might push many small businesses into insolvency. A simple simulation
of the effects of two scenarios on global recovery, a more positive and an adverse international
recovery compared to the baseline, shows that global developments have a significant impact
on Sri Lanka's growth path, with growth projected at 4.6 percent in the former case and only
2.0 percent in the latter. Lower growth would put more burdens on government finances and
raise macroeconomic stability risks.

The size and character of the debt imply severe fiscal risks. Sri Lanka is very vulnerable to
market attitudes due to its debt repayment profile, which necessitates frequent access to
financial markets. Given the significant refinancing requirements, limited market access during
rating downgrades remains a major concern. The market mood could be further influenced by
a higher-than-expected deficit or lower-than-expected GDP growth. The economy could fall
further in 2021, according to a basic calculation of a negative fiscal scenario. As a result,
striking a balance between stimulating the economy and preserving fiscal sustainability during
COVID-19 is critical. A fiscal anchoring reform program could assist in minimizing debt
vulnerabilities and lowering sovereign risk.

To boost growth in the medium term, Sri Lanka must increase its competitiveness. Sri Lanka,
as a tiny but strategically positioned country, could strive for long-term prosperity by shifting
to an export-oriented and private-investment-driven economic strategy. This would almost
certainly necessitate promoting trade and private investment (including FDI), creating the
conditions for a thriving knowledge economy, facilitating public-private partnerships in key
sectors (such as infrastructure, health, and tourism), investing in tourism infrastructure,
allowing productive local companies to integrate into global value chains, and achieving higher
value averaging in the manufacturing, agribusinesses, and service sectors (The World Bank,
2021) (Fernando, June 2021).

10 | P a g e
Strategic Management

Figure 02: - Key macroeconomic indicators

11 | P a g e
Strategic Management

7. New potential opportunities in tourism and travel industry

Tourism and travel industry is one of the major industries that has been impacted by the
COVID-19 pandemic. This impact extends from the industry's short-term to long-term growth.
Meanwhile, new opportunities can be captured during and after the pandemic. Michael Porter’s
Diamond Model one of best model to determine the new potential in the industry.

Michael Porter’s Diamond Model

Michael Porter's Diamond Model is an analytical tool that focuses on explaining why some
industries within a given country are competitive internationally while others are not. Porter
contends that any company's ability to compete in the international arena is primarily
determined by an interconnected set of location advantages that certain industries in various
countries possess, namely: Firm Strategy, Structure, and Rivalry; Factor Conditions;
Demand Conditions; and Related and Supporting Industries. When these conditions are
favorable, domestic firms are forced to constantly innovate and upgrade. The potential
opportunities will be determined under each factor (Administrator, 2018).

. Figure 03: - Porter’s diamond model of national competitive advantage

12 | P a g e
Strategic Management

Factor Conditions

When it comes to the tourism industry, the factor conditions refer to the product, service, and
experience combinations that comprise the industry.

In addition to natural resource endowments, the destination is endowed with general

infrastructure such as highways, new airports, local transportation, skilled and trained HR who
is fluent in major foreign languages, high literacy rates, and widespread use of English
(Fernando, June 2021).

Demand Conditions

Demand conditions are emphasized further by sophisticated demand patterns, domestic traveler
demand patterns, and novel “shifts” within demand.

The structure and size of the market, traveler tastes, and tourist desires with the visitation
process will be causative as main demand factors with the pandemic. Furthermore, increasing
investment in SITs such as spiritual tourism, health and wellness tourism, and ecotourism could
serve as a breeding ground for innovations in response to rising domestic demand.

Business Strategy, Structure, and Rivalry

This aspect of the Diamond model focuses on the structure of the industries, as well as the
strategy of the various firms, and also their interconnection and rivalry.

The core of the industry will eventually lead to the establishment of various sub-sectors, such
as hotels, resorts, theme parks, animal sanctuaries, and entertainment attractions, and so on, all
of which contribute to a country's socioeconomic development. Industry structure,
organization, and context play a critical role in domestic rivalry, healthy competition among
firms, entrepreneurial proclivity, and innovative business practice.

Related and Supporting Industries

This component of the model focuses on the industrial linkages between related and supporting
industries.

As a result, the related and supporting industry economic leakages would be kept to a
minimum, allowing the economic value addition to increase. Furthermore, a lack of related and

13 | P a g e
Strategic Management

supporting industries may impede tourism growth, whereas support for related –supporting
industries should be promoted. Shopping malls, natural resources, and venture creation,
institutions such as medical centers, local entrepreneurship development, IT, communication,
and security could all be identified.

The Role of the Government

The government can aid or damage any industry's competitiveness by playing a multitude of
roles within the system.

It can be emphasized that the government is the sole policy developer for the economy as well
as the tourism industry, in order to accelerate prosperity. In the face of the "New Normal,"
almost all policies and regulations should be revisited, and new regulations imposed on local
industrial development, protecting infant industries, venture creation, tourism MSMEs
subsidies, and destination image building.

Situational Forces or Chance

This facet can be identified as the most influential facet. Furthermore, as a vulnerable industry
to "external shocks" such as a disaster or pandemic like COVID-19, tourism would implement
a "second plan" or "plan B."

The stakeholders' vulnerability to a pandemic as an external shock as the most important aspect
of the Diamond model. Furthermore, the pandemic has been identified as being more
responsible for the market's downturn than other model forces. As a result, the above-
mentioned six themes, along with each of the identified forward-thinking strategies, are
proposed to the tourism and travel industry within the context of the “New Normal” (Fernando,
June 2021).

14 | P a g e
Strategic Management

8. Recommended strategies for Citrus Waskaduwa

The COVID-19 Pandemic caused a seismic shift in the tourism and travel industries. To rebuild
and sustain their businesses, all organizations must think strategically and creatively.
Differentiation, positioning, managing a new culture, and a new governance structure should
all be addressed in the strategies. Thus, Citrus Waskaduwa can be taken competitive advantages
by implementing following strategies which defined under the following subcategories.

Technology based tourism

To remain competitive in the digital era, it is imperative that technology be integrated into the
tourism sector. Accordingly, steps are being taken to invest in new technologies and innovative
mechanisms to manage and promote the industry. Technology will also be infused to enhance
the quality of services, human resources and the tourist experience (MInistry of Tourism & Sri
lanka Tourism, 2020).es a rapidly growing industry

I. Establishment of knowledge transfer institutions, information technology, and

communication infrastructure.

of
Position and market & sustainable and environment friendly tourism

To remain competitive, Sri Lanka's tourism industry should recognize and highlight the factors
that make the Sri Lankan travel experience unique and authentic. As a result, strategically
positioning the Sri Lankan brand and influencing consumer perception are critical.

Sustainable tourism is critical for the protection of natural, cultural, and environmental
resources that are critical to the success of Sri Lanka's tourism industry. If we do not protect
our biodiversity and cultural heritage, we will lose the primary reasons why tourists visit Sri
Lanka, as well as making the country less appealing to locals.

focusing on Special Interest Tourism (SIT) segments like spiritual tourism, health and wellness
tourism, rural tourism, Ayurveda-related segments, and nature-based travel like tea tourism.

I. Integrating Ayurvedic and herbal medicines.

II. Introducing new events, boat riding , beach volleyball .
III. Popularizing Tea Tourism through the “Ceylon Tea” brand image.

15 | P a g e
Strategic Management

People- centric tourism, new product development and promotion

The COVID-19 pandemic has presented unforeseen challenges to the stakeholders of tourism.
Sri Lanka Tourism has taken measures to support those who are directly and indirectly linked
to the industry. Promotion is a critical component of tourism. The marketing campaign's
procurement processes have begun, and the campaign is expected to be deployed next year
when tourism resumes. In the future, Sri Lanka will be positioned globally as a one-of-a-kind
destination with diverse experiences, as well as the most beautiful island in the world, offering
everything Asia has to offer in a small area. Higher yields will result from effective positioning,
branding, and communication, benefiting the entire economy.

I. Innovative experience packages as novelties catering to nature-based segments.

II. As a strategy, concentrate on specialty and niche markets.
III. Promote domestic tourism by connecting nature-based and eco-friendly vacations
together.
IV. Disseminating Ayurvedic knowledge about spirituality, health, and wellness in the
domestic market.
V. Increasing the popularity of water-related tourism activities such as coral reef diving,
whale and dolphin watching, surfing, and snorkeling in the domestic market.
VI. Branding of a destination.
VII. Collaboration between destination promotions and e-promotion platforms.

Partnership

Building partnerships with Foreign Missions, Diplomats, Institutions, and International

Funding Agencies is critical for an industry like tourism in order to advance mutual interests
and achieve long-term goals. They are also useful in aligning domestic policies and strategies
with international standards. Many partners, including fifty-two tourism-related associations,
universities and academia, the Department of Immigration and Emigration, the Airport
Aviation Authority, the Civil Aviation Authority, the Sri Lanka Army, the Sri Lanka Police,
and the Ministry of Health, have provided valuable guidance and significant support to the
industry this year. With the widespread use of social media, any experience, positive or
negative, is widely shared and has a significant impact on tourism.

I. Creating a favorable environment for related-supporting industries in Sri Lanka.

16 | P a g e
Strategic Management

II. Healthy competition among local businesses and collective bargaining

III. Increasing foreign joint ventures and investments in the country.
IV. Human Resources (HR) skill development in order to acquire the necessary skills in the
“New Normal.”

Legal and regulatory framework, a safe and secure country for tourists

A secure country is critical for an industry like tourism, which is highly sensitive to tourist
risks. If there is no guarantee of safety for a tourist to travel in peace, the Sri Lankan tourism
industry, which is known for its hospitality, will suffer immensely. The 2019 Easter attacks are
one example of the extent to which national security influences tourism, followed by the
COVID-19 global pandemic, which poses a health risk to both tourists and locals.

Establishing a solid legal and regulatory framework is critical for the tourism industry's
efficient management, operation, and growth. The current structure has resulted in inefficiency
and waste due to function overlap and a lack of coordinated effort in tourism development
(MInistry of Tourism & Sri lanka Tourism, 2020).

I. The country's safety, security, and political harmony.

II. Impose subsidies on tourism for micro, small, and medium-sized enterprises (MSME).
III. Increasing foreign joint ventures and investments in the country.

17 | P a g e
Strategic Management

9. References

Administrator, 2018. Business-to-you.com. [Online] Available at: https://www.business-to-

you.com/porter-diamond-model/[Accessed 20 09 2021].

Department of Economic and Social Affairs - United Nations, 2020. WORLD SOCIAL
REPORT 2020 INEQUALITY IN A RAPIDLY CHANGING WORLD, s.l.: United Nations
publication.

Fernando, I., June 2021. Tourism Amid Covid-19 Pandemic in Sri Lanka Way-Forwarding
Strategies Through the Porters' Diamond Model. ResearchGate, Issue Department of
Marketing Management, University of Kelaniya, Sri Lanka, p. 45.

ICRA Limited, A Group Company of Moody’s Investors Ser, 2020. Economic Impact of
COVID-19 in Sri Lanka, s.l.: ICRA Lanka Limited.

MInistry of Tourism & Sri lanka Tourism, 2020. Sri Lanka Tourism Year in Review:2020, s.l.:
MInistry of Tourism & Sri lanka Tourism.

The World Bank, 2021. Economic and Poverty Impact of Covid - 19, s.l.: The World Bank.

18 | P a g e