Challenging midyear business review
How fast time flies. The day after tomorrow will be the start of the second half of the year.
This is the time of the year when businesses usually take a look at their operations during the past six months to see if their plans are still on track or would require some adjustments to meet the challenges of the rest of the year.
The review would have to be made against the backdrop of a pandemic that continues to wreak havoc on the country’s economy.
Because of COVID-19, as of the latest count, 4.14 million Filipinos are jobless and thousands of medium and small scale enterprises that provide the bulk of the country’s employment have shut down.
Although the government has stepped up the vaccination process, it’s still a long way to go before the Philippines can reach the desired level of herd immunity.
To aggravate matters, the Delta variant of the virus—which the World Health Organization had described as “the most transmissible of the variants identified so far”—has the potential of spreading to the Philippines.
According to economic think tank Moody’s Analytics, economic recovery will remain at risk if the country cannot speed up mass vaccination and contain the spread of COVID-19.
As expected, the government’s economic managers have put up a brave face amid the economic crisis. They expressed optimism the economy would gradually return to prepandemic level as the government eases quarantine restrictions.
For businesses that thrived (and continue to do so) during the pandemic, e.g., logistics, energy and telecommunications, a midyear review of business plans would be a walk in the park.
It would simply involve tweaking some parts of the plans to improve their ability to meet increased demand for their products and services by clients or customers who, due to quarantine restrictions, have to remain at or work from home.
The only “problem” that may arise from that review is getting additional staff or facilities to service that demand.
But the situation would be different for businesses whose viability has been adversely affected by quarantine restrictions.
They have to decide whether to continue operating despite low returns and hope the economic managers’ optimistic forecast would come to fruition, or cut their losses and call it quits.
Note that for the government’s positive outlook to be realized, it is essential that, first, COVID-19 would not mutate to more deadly or transmissible variants; second, the vaccines ordered from abroad would be delivered on schedule; and third, assuming they are timely delivered, they are promptly administered to their intended beneficiaries.
Obviously, the first and second assumptions are beyond the government’s control. And with regard to the third, it would depend on the efficiency of the local governments that would be tasked to implement it.
Under these circumstances, marginal businesses that opt to continue operating despite the odds may have to undertake strong measures to remain open until the end of the year and, probably, beyond.
In this effort, their options are limited to reducing operating costs or downsizing, or both.
But cost reduction is easier than done. Only so much cost-cutting can be done without adversely affecting the quality of the product or service of the business. And when a product or service no longer meets the standards or expectations of the customers or clients, the business may find itself struggling for survival.
Neither is it any easier to downsize (or to put it bluntly, dismiss employees), especially if it involves employees who have been in the service for decades and rely on their employment as the sole source of sustenance for their families.
As in cost reduction, a vastly reduced employment staff may result in inefficiency in operations that would have deleterious effects on the business’ products or services.
To the staff tasked with conducting a midyear review on their companies’ business plans, good luck. May your actions redound to the best interests of the people who would be affected by them. INQ
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