By: Stephen Sultana
The fallout from COVID-19 has impacted every facet of international business. Not all industries have been affected in the same way and some have been more adversely hit than others. At enterprise level, even companies within the same industry have not been jolted to the same extent. Moreover, companies are often responding differently to the pandemic’s challenge, some proactively, others reactively.
For businesses and companies most directly affected by the pandemic, the effects have been dramatic in sales and profitability. However, there are lessons to be learnt and opportunities on the horizon. Naturally, each industry and enterprise has its own characteristics and survival strategies being adopted tend to vary.
That said, the following are some survival strategies and tactics that might have general applicability.
Adopt a positive outlook. This crisis will pass and things will eventually return to a degree of ‘normality’. This might not be identical to what we were accustomed to and some ways of conducting international business might change forever, but one can expect some degree of normality to return within a year or two at most. That said, one to two years is a long time in business and companies with the right resilience are likely to survive in better shape.
Resilience is key. Resilience at enterprise level is crucial but having the ‘right’ type of resilience is more relevant. The right type of resilience is not equivalent to hunkering down ‒ resilience here refers to companies’ ability to take a proactive approach to international business. Now is the time to get out there (digitally and not necessarily physically), initiate new business, develop new leads and create new contacts.
Controlling the right costs. When international sales and profitability are hit, there is a natural tendency for companies to enter into cost-cutting mode. However, expenditures intended to generate and develop future business and future revenue streams should be treated differently. Unfortunately, these expenditures are the first to be cut when in practice they should be one of the last.
Stay close to key customers. Prospecting for new business overseas is key. It’s also vital to stay close to one’s existing client base. Your clients might be hurting as much as you are, so support them. There is also a practical reason for this. If one’s existing clients and customers have become more vulnerable, they are more likely to be open to proposals from competitors. Put differently, stay close to your existing clients and don’t forget about them if level of business is not what it used to be.
Diversify your markets. Just as different industries and individual companies have been impacted differently, the same applies to export markets. Chances are exporters that have adopted an export market diversification strategy and don’t depend exclusively on one or two key export markets are coping better than those whose export revenue is dependent on just one or two key markets. An export market diversification strategy may not be suitable for every exporter but the present crisis has highlighted the benefits of not putting all eggs in one basket.
Better use of virtual networking. The past months have witnessed a boost in the usage of digital communication platforms. While this can never replace the face-to-face contact necessary for successful long-term international business development, these tools have become part of the ‘new normal’ mode of conducting international business. Becoming adept at using these tools and integrating them within one’s export management tool kit is, therefore, essential.
Business travel redux. Non-essential business travel should be avoided but some trips and market visits cannot be put off indefinitely, especially if they are critical to securing new business or retaining existing business. While desk-based research and virtual networking have gained prominence, the physical detachment from target markets and clients could result in missed opportunities. Therefore, it pays to review any upcoming trips and conduct a risk assessment on a country-by-country basis, following official health guidelines. There is nothing quite like seeing clients in person, especially when nurturing relationships, negotiating deals or understanding how their business works.
Embrace the digitisation of exporting. Economic woes have led to an acceleration in the digitisation of exporting. As most business travel is down to a trickle and numerous international B2B events and trade shows have been cancelled or postponed, virtual export promotion and virtual export sales tools has become unavoidable, including virtual service offerings, product-service demos, virtual trade shows, virtual one-to-one meetings, webinars and virtual B2B match-making. Companies may opt to use such tools on an individual basis or participate in similar virtual events organised or coordinated by TradeMalta and its partner organisations in Malta and abroad.
Review your export strategy. The global slowdown presents companies with an opportunity to review export strategies. Which export markets are likely to be most impacted over the next six to 12 months? Which markets are likely to recover sooner? Are there export markets that require special attention? Have your competitors within specific export markets become more vulnerable and are there lacunae you can exploit? Are there emerging opportunities? Do you need to re-evaluate existing market routes? Now is the time to undertake practical export research which will serve as a basis for export action.
The COVID-19 paradox. When companies are rocked by unforeseen events, there is often a tendency for them to be more open to exploring novel ways of doing business. This applies to both sides of the international business equation – international clients and exporters of goods and services. When things were ‘normal’, it was often difficult for an exporter to get prospective clients, importers, distributors and retailers overseas to give you the time of day. Now, prospective clients and customers overseas often tend to be more receptive to offers and proposals from new suppliers.
As COVID-19 persists, life and international business must go on. We have no choice but to find ways of living and working with the virus while taking active and calculated measures to minimise risks, in the knowledge that there will be a return to some normality.
That said, the ‘new normal’ may be different from past normality and exporters need to prepare for the future with this likely scenario in mind. Export strategies that worked in the past might need to be adjusted while new business models might need to be developed.
Those involved in international business should not assume the reset button will be hit once the pandemic subsides. In the middle of every difficulty lies an opportunity and those who embrace change will be in a stronger position once the tidal effect of COVID-19 recedes.
Stephen Sultana, International marketeer and chairman of Trade Malta