The Covid-19 Pandemic and Its Impact to Multinational Companies

During the pandemic, everybody gets affected despite their social status. Included among the struck ones would be businesses both small, medium, and large scale. Multinational Companies (MNCs) are not excused in this kind of crisis. With that, it would assert that MNCs' short-term and medium-term operations and profitability are affected and that they should handle it critically, considering all existing models and theories without compromising the safety of their employees.

Large-scale business addresses the needs of their customers by opening affiliates in different places. Multinational Companies (MNCs) operate subsidiaries, affiliates, and branches in foreign countries (Eiteman, Moffett & Stonehill, 2013). These MNCs have workers in various countries that make them affected by crises like pandemics heavily. The distribution of their employee can serve as both advantage and a disadvantage.

The Covid-19 Pandemic

Pandemics heavily impact businesses, just like how it affects humans. The Economist (2020) stresses that trade networks and teeming cities can make societies more vulnerable and prosperous. Still, the impact of Covid-19 is highly different from the pre-existing pathogens since there is less knowledge about the virus. It should also be underscored that there is no approved cure or vaccine for the virus, making it more challenging to deal with.

In general, the Covid-19 pandemic affects MNCs in both short-term and medium-term operations and medium term for various companies. The impact intensity depends on the kind of product the MNCs provide. Suppose the hypothetical MNC used for this paper would be Business Process Outsourcing companies (BPOs). In that case, the impact will be less compared to other companies whose services are not necessarily crucial during the time of Covid-19. The hypothetical MNC will be a company that will include IT companies, call center companies, and other outsourcing companies. Despite that, planning should be considered no matter what the nature of the products of the MNCs is. A company may consider crisis planning, which will include educating the management and employees on how to handle and react to crises and disruptive events, just as Covid-19 (Eiteman, Moffett & Stonehill, 2013). This can be helpful in at least handling the problem and controlling its impact.

A way to control the spread of the virus is by lockdown. Cities and countries undergo lockdowns, and citizens are advised to stay home. Checkpoints and police guarding the borders are everywhere. This poses a separate challenge for the MNCs because the situation varies from country to country. This is not to include the problem in the workforce and the possible labor problems if the workers are continued to be asked to report to work. Since the MNC is a BPO, the product will be the employee's services. Hence, Covid-19 Pandemic will highly affect the operations of these business process outsourcing companies.

Short-term operations and profitability

The pandemic will heavily affect short-term operations and profitability because countries have declared lockdowns that will deprive employees of public transportation. Aside from this, for companies that produce non-essential products during the pandemic, chances are their operations will be halted or kept to the skeletal force level. In a survey done in India, it was stated that most of the surveyed employees and professionals, about 67% affirmed that jobs in the BPO and MNCs will be the most vulnerable during the spread of Covid-19 (Economic Times, 2020). Despite having a pandemic, it should also be considered that the client might have different situations and manners of handling since they are situated in a different country. The different countries where the affiliates and branches of the MNCs might face different sets of problems as the control of the virus is contextual and relative to the government's decisions.

The short-term operations and profitability will be highly affected. Even if work from home is considered, the level of productivity will not be as high as that of normal operations. Other problems with work-from-home mode should also be considered. With that, companies should revise their goals, targets, and expectations for 2020, address the disruptions in the supply chain and prioritize those with high demand (Businesswire, 2020). Pandemics like Covid-19 are way beyond a company’s control, no matter how large scale it is. MNCs should stop their operations if they do not consider work-from-home mode since, in countries with lockdowns, people are restricted from going outside their homes. If they persist in asking their employees to report, the lack of public transportation will be a problem.

Given this situation, continuity plans are beneficial. The management should do an intensive analysis of the situation. Preparedness plans should deal with human factors, including hygiene, employee education, staff movement, and evacuation, sick leave policies since these are essential for the employee’s welfare (Staples, 2020). Furthermore, the operational issues should be focused on. In the case of the selected MNC, alternative plans to deliver the necessary service should be considered.

Medium-term Operations and Profitability

If the short-term operations and profitability were affected, the medium-term operations and profitability would also be affected. One thing to be considered is that the pandemic’s duration cannot be estimated and is way beyond everybody’s control. Even after the pandemic, the companies will feel the aftershocks of the crisis as people had to rely on the government, and the economy is not on the growing side. The recovery is yet to happen by the next year or two. For profitability, the condition where the affiliate is located may impact the client’s continued avail of the service. Suppose they realize how the government handled the pandemic has dramatically affected their business in another country. In that case, they might consider other companies located in a different country that can offer a better service.

After these concerns, MNCs should assess their investment strategies by pressure testing them and the resilience of their supply chains to shocks (Staples, 2020). This will involve the assessment if the company has been geared to be ready for these kinds of crises. Revision of the plans should be considered, as preparedness is the key (Nohria, 2020). MNCs would have to revisit their plans and revise what should be improved after the pandemic.

Speculation can also be done afterward. This investigates future prices through expectations (Eiteman, Moffett & Stonehill, 2013). This will help the administration of the MNCs to change their expectations and speculations based on the effect and impact of the pandemic after Covid-19 has been hurdled. Furthermore, the risks should be anticipated using the Stakeholders Capitalism Model as the financial and operating risks will be evaluated and readied in the future in case another case like a pandemic happens again (Eiteman, Moffett & Stonehill, 2013). This will help improve not only the short-term and the medium-term goals but also the long-term ones.

Conclusion

Numerous theories can be applied to the MNCs regarding the impact of Covid-19 on their companies. However, the significant points that should be considered are preparedness, the contingency and continuity plan, the consideration of risks, and the improvement of the goals. These are problems that are way beyond any company’s control, so the best way to deal with these would be enough preparation.

References

COVID-19 impacts professional life: Jobs at MNCs to be most vulnerable; virus affects hiring. The Economic Times. (2020). Retrieved 20 March 2020, from https://economictimes.indiatimes.com/https://economictimes.indiatimes.com/magazines/panache/covid-19-impacts-professional-life-jobs-at-mncs-to-be-most-vulnerable-virus-affects-hiring/articleshow/74710055.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst.

Eiteman, D., Stonehill, A., & Moffett, M. (2013). Multinational Business Finance, Global Edition. Pearson.

Nohria, N. (2020). What Organizations Need to Survive a Pandemic. Harvard Business Review. Retrieved 20 March 2020, from https://hbr.org/2020/01/what-organizations-need-to-survive-a-pandemic.

Staples, J. (2020). Preparing for a Pandemic. Harvard Business Review. Retrieved 20 March 2020, from https://hbr.org/2006/05/preparing-for-a-pandemic.

Throughout history, pandemics have had profound economic effects. The Economist. (2020). Retrieved 20 March 2020, from https://www.economist.com/finance-and-economics/2020/03/12/throughout-history-pandemics-have-had-profound-economic-effects.