In response to the calls from businesses for government support due to lost profits, Kent Business School's Professor Paul Phillips said:
‘The COVID-19 pandemic is unlike any previous crisis. The recent UK Budget and subsequent financial interventions includes a business bailout package of £350 billion with cash support for employees and the self-employed. Despite these actions, stymied business leaders are looking for more.
‘There is a need for Governments across the globe to shore up their economies during the pandemic. Businesses of all sizes are currently operating with a limited lifeline, and a lack of independent places for help. We have entered the new normal environment.
‘With many existing strategic plans now in tatters, a key question for business leaders is: “What’s your Plan B?”. Without a Plan B, businesses of all sizes and in all sectors will either fall or be unable to take advantage of the upturn.
‘This has already led to winners and losers, with some companies being in the right place at the right time, and others who at best will be seriously damaged by the change. Some firms have been fortuitous with COVID-19, such as the relatively unknown company Zoom Video Communication, now worth more than market capitalisation of Delta, United, American and Jet Blue Airlines combined. Its price-earnings ratio stands at an unheralded 1,865 price earnings.
‘This illustrates the contrast of online video conferencing companies to benefit from COVID-19 with airline companies who currently have limited Plan B strategies. Some airlines companies are now using their empty seat space to expand their capacity for airline freight business. In contrast, Virgin Atlantic, who are 49% owned by Delta have already cut their flights by 85%, and according to the media have asked staff to take eight weeks of unpaid leave over the next three months. Another contrast to this is ecommerce marketplaces such as Amazon, who are adding 100,000 new jobs to cope with increased levels of business.
‘Restaurants and cafés have implemented Plan B strategies, introducing take-away and home-delivery with subscription-based deals. Peloton and other smart home bike maker’s revenues are booming too. Gyms have had to close, but some have responded with Plan B strategies by moving workouts online for virtual training. Universities have cancelled face-to-face teaching, initiating Plan B strategies involving creating a virtual learning environment. Financial service firms need Plan B strategies too if they want to survive. If COVID-19 leads to a global recession the demand for bankers’ products and services will fall too.
‘The saying “Necessity is the mother of invention” holds true today, as does another saying about having all one’s eggs in a single basket. To adapt to these times, businesses must protect loyal staff and customers, look into varying their product and embracing change, and forever remember in the future; have a Plan B.’
Professor Paul Phillips, Professor of Strategic Management, Kent Business School, University of Kent
The University’s Press Office provides the media with expert comments in response to topical news events. Colleagues who would like to learn more about how to contribute their expertise or how the service works should contact the Press Office on 3985 or pressoffice@kent.ac.uk