Corona Corners Us!

Corona Corners Us!

Arise and Shine:

In the wake of a pandemic outbreak – be it a plague, virus or a natural disaster, all minds question the possibility, efficacy, scale and span for normalcy to settle in homes and by large in a nation/country. The intensity of the impact chiefly depends on the exposure and subsequent proactive relief measures – while considering not only the mourning state of the sufferers but also bearing the speculative eyes of the bystanders. It is most often this suspicious speculation that stalls a nation to recover and progress, overcoming the widespread notion that the affected country is witnessing a crisis and hence there lies little/no opportunity for growth leading to declining in a profitable business and subsequently rendering the national output accounts to log in default and a loss.

While the Novel coronavirus, (2019-nCoV), true to its nemesis is novel in many aspects, it’s not the first the world has witnessed. Recalling the 1918 influenza pandemic apart from killing 50 million people worldwide in a year, it caused 40% to 70% decline in commerce and the factories were closed due to shortage of able workers. On similar comparison, the Chinese working lot has taken a hit and by economic theory:

Okun’s Law:    Unemployment →     ↓ GDP

And as per the expenditure approach:  Will lead to crowding out.

National output (decreases) = Private consumption (C) + Investment(decreases)+Government Spending(Increases) + Net exports(decreases).

What nCoV means in world trade?

Uncertainties, in line with the speculations explained earlier, has interrupted global trade and supply chains, depressing asset prices, and forced multinational businesses to make hard decisions with limited information. With temporarily halted business activities, strict travel restrictions and broken communication networks and distribution channels, the most negatively impacted industries are retail, tourism and manufacturing.

With stock market rattling to a low, the outbreak has threatened to be a blow to the global economy as well.

The master user of Economies of scale, China has believed in reduced prices with large scale production, attracting mass production and distribution worldwide and now literally a limb is cut off for all business, be it for raw materials, distribution channel or low-cost production.

The Great Indian Inc.

With China under lockdown, India is expected to witness a major impact on imports and exports in various industries including pharmaceuticals, electronics, mobiles, and auto parts.

Apart from the mentioned, there could be evident supply and demand shock potentially altering the Aggregate supply and demand curve, leading to price fluctuations, interest rate fluctuations and potential output.

With the current situation of India under locks, the growth of business preliminary lies not in comfort causing goods and services but in basic need satisfying businesses. And naturally, the focus must not lay in development but on sustenance.

Managing Supply Chain in a Volatile, Uncertain, Complex and Ambiguous Business environment

“The Strongest Link is most often the uncertain threat.”  – P. Dhikshitha

With the massive outbreak of the Coronavirus and the ensuing collateral damage it has caused to businesses across the world, and India not at the safe spot too, has been hit with the disintegration of functional supply chains – Disrouting and Derouting operations, one is motivated to question the resilient supply chain and its ability to hold locks at the time of natural disasters.

Resilient Supply Chain to Address Natural Disasters.

Connections Capacitate

Connections Capacitate flow of information. Connections Capacitate Exchange of goods and services. Connections capacitate Trade. Connections Capacitate Business.

Be it the small Kirana shop at the end of the street or cross-cultural International trade, both the incoming and outgoing supply chain blocks play the key role in sustaining business at all times. But what at the times of disruptions due to natural (Earthquake, Virus outbreak, etc,.) and man-made phenomenon (E-vehicle delivery, Botbatches, etc,)? The supply chain must withstand these pressures until achieving stability or seamlessly transition to alternate means. These account for a supply chain to be resilient, consistently withstanding the trauma from external factors that suitably disrupt the ensuing conditional flow of all mentioned capacities. Hence disaster management becomes crucial and sane consideration, not just as a backup plan but a proactive measure.

Beyond all these speculations, uncertainties, fluctuations, bears and bulls, we’ve ultimately got to remember:

                       “In the long run, we are all dead”

                                     -John Maynard Keynes
Great British Economist, Father of Keynesian economics

References:

https://www.imf.org/en/News/Articles/2019/10/18/na102319-prolonged-uncertainty-weighs-on-asias-economy

Wall Street Journal – https://www.wsj.com/articles/chinese-markets-tumble-on-mounting-coronavirus-fears-11580695672?mod=article_inline

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The Requite

The Requite

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