What is the key to helping businesses overcome the Covid-19 crisis?

Management's ability to help businesses overcome the crisis

The Covid-19 pandemic has greatly affected Vietnamese enterprises' production and business activities, causing many businesses to be forced to suspend operations, even facing the risk of bankruptcy.

Vietnamese enterprises, mostly small and medium-sized enterprises (SMEs), are small in scale. They have a short operating time, so they often have limited resources and experience responding to unexpected economic changes, especially during crises with wide-ranging and long-term impacts such as the Covid-19 pandemic. As a result, when facing crises, SMEs often do not have timely preparation and do not have an appropriate plan to respond.

Over the past time, the political and economic situation in the world has experienced many complicated and unpredictable changes, causing new risks and challenges for the recovery and development of economies, including Vietnam. In addition, the business community may face other crises such as war, disease, environment, finance, human resources, etc.

Therefore, businesses need to prepare plans to respond to risks, uncertainties and crises to develop sustainably strengthen resistance to crises and increase the economy's resilience. The Covid-19 crisis is a case study selected for the study.

According to the report "Research and assess the ability of Vietnamese enterprises to respond to the Covid-19 crisis, propose solutions to improve the resilience of enterprises to the crisis" by the Australian Program to support economic reform. According to Aus4Reform and the Business Registration Administration (Ministry of Planning and Investment), governance capacity helps businesses overcome the Covid-19 crisis.

Specifically, Mr Le Anh Van, Director of the Center for Legal Support and Human Resource Development (Vietnam Association of SMEs), said that the results of a survey with more than 630 enterprises showed that 32.9 % of enterprises participating in the survey, which showed that governance capacity helps businesses overcome the Covid-19 crisis; 20.5% said that the customer market is the main reason; 20% choose the ability to adapt to the crisis based on the capital size of the enterprise.

In addition, businesses also believe that the ability to overcome the Covid-19 crisis depends on business lines, operating time, I.T. application capacity, digital transformation, etc. With cases that have overcome the pandemic, production and business activities will be developed, and revenue, profit and skills will all increase and be more complete.

Enterprises need a strong balance sheet, a good management team, and can continue to promote investment in the current period. Photo: T.D

Increase of resistance

According to Ms Nguyen Thi Viet Anh, Deputy Director of the Business Registration Administration, due to the different levels and directions of the impact of Covid-19 on industries, there will not be a standard formula for an adaptation strategy for all businesses. However, businesses will have to pay more attention to increasing resilience against adverse circumstances and unexpected risks, including developing response scenarios. At the same time, consider in-depth and broader macro effects instead of focusing mainly on micro factors as before.

In addition, businesses will have to control better the (potential) increase in supply chain costs by choosing diverse supply sources to avoid disruption or unavailability of the chain. At the same time, strengthen or diversify measures to protect workers, and apply automation in production to gradually reduce dependence on inefficient factors, including labour costs.

According to Ms Nguyen Thi Viet Anh, in terms of financial resources, businesses need to have a strong balance sheet and a good management team and can continue to promote investment in the current period to have breakthrough opportunities and rise to development. On the other hand, enterprises that are too tightly managed may have to give up the latest and short-term business opportunities to adapt quickly, flexibly and dynamically to changing business orientations and strategies. In addition, promoting the digital transformation process in enterprises will contribute to maintaining and improving the efficiency of production and business activities.

To help businesses adapt and respond effectively to crises and unexpected shocks in the future, experts say that business owners and managers need to raise their awareness about the position and role of risk management in business, thereby knowing how to plan crisis management for your business according to each level of short-term, medium-term and long-term.

For the Government and ministries, branches and localities, it is necessary to perfect legal policies and administrative reforms to support enterprises to improve their ability to respond to crises, support businesses in digital transformation, applying science and technology, exploiting the opportunities of the industrial revolution 4.0 to respond to future crises; developing quality human resources to help businesses cope with the crisis...