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Economics

Student Videos

Coronavirus Crisis: Business Impact and Business Response

Level:
AS, A Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

In the latest of our series of videos on the coronavirus crisis, we look at how businesses have been impacted and also how they have responded. We also summarise some of the key support measures that have been introduced so far by the UK government to mitigate some of the effects of the sudden downturn in sales, revenues and jobs.

Coronavirus Pandemic: Business Impact and Business Response

Sectors that have suffered:

Many businesses suffering not just from a collapse in demand but also from a growing workforce shortage because of sickness and self-isolation – good examples include the Royal Mail and also the fruit and vegetable growing sector which is worries about a shortage of pickers during the crucial summer months (this is also linked to travel restrictions of people coming into the UK from eastern Europe for seasonal jobs)

  • CRUISE SHIP OPERATORS
  • HOTELS & B&B
  • AIRLINES & AIRPORT SERVICES
  • RESTAURANTS WITHOUT TAKEAWAY
  • SUPPLY CHAIN BUSINESSES
  • CONSTRUCTION COMPANIES
  • CINEMAS & THEATRES•EXAM TUTORS
  • SELF EMPLOYED
  • FESTIVAL ORGANIZERS
  • COMMERCIAL LANDLORDS
  • GYMS AND LEISURE CLUBS

Sectors that might have initially benefitted

  • Video streaming (Netflix, Disney +, Amazon Prime)
  • Healthcare products including sanitizers
  • Household cleaning products and DIY products
  • Sports / fitness equipment
  • Supermarkets / Restaurants with takeaway platforms
  • Logistics / delivery companies e.g. DPD & Deliveroo
  • Telecoms / Wi-Fi infrastructure providers
  • Apps (Zoom, Teams, Zwift, Peloton)
Cash flow management by businesses during the COVID-19 pandemic is all about cutting cash outflows rather than worrying about maximising cash inflows. Here are three ways in which businesses are trying to achieve that.

How are businesses responding to reduce risk from the economic crisis?

  • Plant shut-downs (all major UK and European car plants have announced shutdowns)
  • Job lay-offs (we are seeing a sharp spike in unemployment figures)
  • Furloughing workers (keeping them on the payroll but not laying-off)
  • Shifting as many employees as possible to home working / skeleton office staff
  • Negotiating deferrals of fixed costs such as monthly and quarterly rent payments
  • Simplification of product ranges to boost production of key products
  • Some firms have pivoted production for social purpose (brewers making sanitizers)
  • Attempts to increase their online e-commerce capacity & capability
  • Some businesses are seeking to raise fresh equity capital from investors
  • Cutting back / postponing capital investment spending and on share dividends

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