Businesses worldwide have now completed at least two quarters and making changes to their strategies and execution plans. In our studies and interactions with clients, we discern six fascinating corporate strategic responses to the pandemic.
- The Pivot
- Ride out the storm
- Use the life-line
- The Nibble
- Surge with the tail-wind
- Bid adieu
In this article, we look at each of these strategies with some notable examples
1.The Pivot Strategy
The pivot has been the most common strategy as businesses re-deployed resources to find alternative sources of cash flow and keep the leading line of business in a survival mode to fight another day. As Veronica Schnitzius, President of American Leather (AL), known for its upholstered furniture products, says, “We shut down our furniture manufacturing operations on a Tuesday, and by Wednesday we were revamping our operations to make personal protective gear for hospitals…”
2. Ride out the storm strategy
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Businesses in the travel, transportation, wellness, hotel, restaurant industries are confident of an unknown future. For, now they need to ride out the storm and stay well capitalised. As Airbnb Co-Founder and CEO Brian Chesky says, ” While we know Airbnb’s business will fully recover, the changes it will undergo are not temporary or short-lived. Because of this, we need to make more fundamental changes to Airbnb by reducing the size of our workforce around a more focused business strategy
3.Use the lifeline strategy
Markets are awash with liquidity. Yet, small businesses struggle to access capital at a reasonable rate. For reasons not fully known and at best partially explainable, a sinking company sometimes receives a lifeline to make a once-in-a-lifetime comeback. Kodak, known for cameras and film, seems to have such a moment now to manufacture pharmaceutical drugs. Peter Navarro, Assistant to the President and Director of the Office of Trade and Manufacturing Policy, USA, says, “What we have with this project and Kodak may be one of the greatest second acts in American industrial history”
4.The Nibble Strategy
Strong businesses looked at the current scenario as an opportunity to nibble in a new or adjacent area. The investments were modest relative to the size of the existing business and provided a chance to test some hypotheses in the market with potentially significant upside. Amit Syngle, Managing Director of Asian Paints, India’s leading paint company, says, “We’ve been working on our health and hygiene platform for the past three years, and we felt that sanitisers could supplement and add value to the existing platform”.
5.The Surge with tailwind Strategy
Some businesses were at the right time at the right place, and the COVID environment is a tail-wind with a great chance to improve business and increase investment. A Bloomberg article says, ” United Parcel Service Inc. and FedEx Corp. shares jumped after the couriers said they are raising prices aggressively to boost profit and help manage an avalanche of residential deliveries spurred by the coronavirus pandemic.”
6.The Bid Adieu Strategy
Sadly, some businesses saw no chance for revival in the future in the current format and ownership. They bid adieu– many shut shop and some iconic franchises filed for bankruptcy court protection. A spokesperson for Brooks Brothers, the oldest men clothier in the United States, says, ” … have been evaluating various strategic options …Covid-19 became immensely disruptive and took a toll on our business… We are in the process of identifying the right owner … to lead our iconic Brooks Brothers brand into the future”
Summary
While existing businesses strategise and execute in one or more of these ways, start-ups are emerging in the same industries leveraging big data, block-chain and cloud technologies.
Will the established survive and thrive or will leadership pass on to the new?
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