Strategic Imperatives in post COVID-19 Nigerian Business Environment
Iember Margaret Tivlumun ACA, NIM (Chattered)
Finance Analyst
Abuja
The immediate concern of business leaders is the state of the economy in post-COVID-19; how it survives and navigates turbulence of recession. The global economy is in turmoil at the moment, global oil price falling to $15 per barrel, the aviation industry in comatose, the hospitality, entertainment and sport industry all sleeping, the education sector on a pause, private businesses on a standstill globally. The drastic drop in oil prices implies lower government revenue which will increase borrowings to finance government expenditure, lower external reserve and a higher exchange rate of the Naira to the Dollar. Cost of doing business will rise geometrically and consumer purchasing power is not likely to increase commensurately. Unarguably, forex rationing will have adverse effects on companies that depend on imported raw materials and finished products. More people are likely to be out of jobs, high dependence on technology for survival and social problems will be on the increase.
Industry structures, consumer behaviour, market positions and sector attractiveness will also change tremendously. For example, while e-commerce and food products will still be attractive, hospitality and tourism will be highly challenged due to contact transmission of the virus.
Similarly, there will be a push to develop local sources of raw materials for existing and new businesses and exploit local resources that had been neglected in the past.
Job cut as already seen in British Airways is inevitable as interstate travel will be strict if not prohibited and working, thus threatening teamwork and decision-making.
Technology will play a great role in the operations and processes of organisations, coupled with security risks. Increase in the high dependence on technology such as patronage of online activities which will lead to the consistent use of resources for the subscription of data for online trainings, Research, organizational meetings, and calls thereby increasing the turnover of the telecommunication industry.
Strategic Thinking Imperatives
A new approach to strategic planning and management in the Nigerian environment is now required. Scenario planning will enable companies to produce better plans for how they might effectively respond to the new, emerging future. Decision-makers who can expand their imaginations to see a broader range of the possible future will be better positioned to take advantage of the unexpected opportunities that will come along.
Businesses will have to rethink their business model and not just modify them. Resilience, the ability to absorb shock and survive better will become very important. Becoming more agile – strategic flexibility – will be a great virtue.
Entrepreneurial spirit, design thinking and innovation will become critical for success. Also, top management must develop the ability to manage complexities.
In the current market, cash is a crucial concern for every organisation, therefore a re-evaluation of capital expenditures and sticking to only very essential spending while adopting a strategic approach to managing operating costs will be of great essence. Operational efficiency and productivity will be the most important tools in managing cost. Ability to cut operating cost without compromising on consumer value will be crucial. Just-in-case and not-just-in-time will be the new normal, as scarcity and volatility will imply building back up and safety plans, such as carrying excess inventory.
Current conditions are likely to increase risks in all areas of the business. Organisations need to understand their current and potential risk exposures and make them a high strategic priority. Risk reporting to the board and senior management should now be a priority. The companies that will stand strongest during the post-COVID-19 era will be those that integrate risk management and adaption to consumer behavioural change as part of business strategy.
Most important is to incorporate a plan that prepares the business for growth through innovation. Having a process that drives innovation, scan for opportunities; invest in the right information and data about customers and the market. Creating new markets with new products that reach new customers will help in winning in this kind of environment.
Now is the time to collaborate with competitors and work with partners for success. Stay loyal to customers and maintain good customer relationship that will ensure sustainability and loyalty from the customer. As businesses close down or rationalise/downsize, gaps will appear in the market place, skilled and professional expertise will be needed to reduce the risk of uncertainty.
Flawless strategy execution should be the top priority for senior management. The leadership team must bring the strategy to life for everyone through compelling communication and creating the right organisational culture and values that support execution. This is the time to build organisational bridges with strategic partners and external allies for effective strategy execution.
Government should create small and medium scale enterprises that can sustain the economy and also provide employment to its citizens thereby making a shift from the dependence on Oil to Agriculture and small industries which will in the future grow to sustain the country better.
Lastly, leadership teams in organisations must commit to ethical principles, integrate social dimension to their strategy, implement responsible business practices, and ensure they have the right skill-sets and mindsets. Government on the other hand should make use of the fiscal and monetary policy through financial institutions to manage inflation, bring into place policies that will help in the better management of the economy and also support and encourage its citizens on improved agriculture and creating an enabling environment for the disposal of such products.
