The global economy after Covid-19 according to Grant Thornton International Business Report: nearly 50% of firms globally have already adjusted their business strategy with growth expectations in the technology, media & telecommunication, and health industries.
9 July 2020 – Expectations after the pandemic could certainly not be positive, however, some encouraging signs and opportunities can be observed despite the global health crisis which has had an impact on the economy, as well as on the way of doing business, working, consuming, and living.
Among such encouraging data shown in Grant Thornton International Business Report, a survey which involved 10,000 entrepreneurs and business managers in 29 countries, including Italy, there is the fact that almost 50% of respondent global firms stated that their strategy was adapted to the new scenario and will continue pursuing growth in the Technology, Media & Telecommunication sector.
Such results indicate that the greatest part of firms are adopting a multiple-front approach aimed to a more efficient management of cash. The survey also shows that most of surveyed firms have already implemented some measures to face the pandemic, with positive effects: over 50% of firms have implemented flexible working arrangements—particularly in sectors such as Professional and Financial Services. Around 30% of firms have reduced labour costs through cutting pay or staff or both.
The outbreak of Covid-19 in Hubei province in China highlighted supply chain issues for many sectors, sectors such as Automotive and Electronics Manufacturing. The results of the IBR show that there is a strong positive correlation between sectors where firms are already making plans to mobilise supply chains in preparation for a recovery and firms that identify supply chain resilience as key to future strategy in a highly uncertain scenario.
This is particularly true for firms in the Agricultural, Manufacturing, and Consumer Products sectors. Highlighting some more permanent impacts of Covid-19, over 1-in-4 firms indicated a fundamental change to products and services is needed in the future.
Travel & Tourism, TMT, and the Mining sectors in particular identify this as a key area for change in the future. With global lockdowns now in the process of being eased globally, firms are increasingly looking to the recovery and planning for the future.
Nearly 50% of firms are already considering workplace safety in preparation for the recovery in their markets. As lockdown restrictions continue to be eased, when and how people return to work will be critical to preventing a second wave outbreak and a large majority of firms are already considering how to manage this process.
Around 40% of respondents have already started planning which customers/markets and what products/services to prioritise for the recovery. Cashflow will remain a concern for many businesses—over 40% of firms have also started to plan for financial resources needed during the recovery phase.
In addition to identifying a need to use more technology and digital transformation in business strategy going forward, the Covid-19 crisis has highlighted the need-opportunity to invest more in organizational flexibility (recognized by 46% of global firms) and their relevant crisis management processes.
According to Fabio Gallassi, managing partner of Ria Grant Thornton, data show that investment in R&D are critical to gain a competitive advantage for business innovation and growth at a macro-economic level for countries and firms, especially in terms of expertise and skills useful in such a global economic uncertainty as that we are going through.
For the new Horizon Europe 2021-2027 programme, the European Union (EU) will indicate targets higher than 3% for investment in R&D and for supporting a new leading Green Deal in the world.
The United Nations 2030 Agenda indicates sustainable development objectives to citizens, public administrations and private organisations, to effectively respond to the pandemic and promote a cultural change and an innovation and transformation resilience process for a socioeconomic system that is sustainable for everyone.
Relevant opportunities will arise though collaboration and through higher investment in joint lab, patents and spin offs conceived in collaboration with universities and public research institutions, where companies operate and will invest in the future to grow in Italy and abroad.
Given the peculiar historical moment we are going through, stated Alessandro Dragonetti, managing partner of Bernoni Grant Thornton, this is a unique opportunity to bet on the future and review one’s own strategies, leading them to new growth drivers – investment in technology, digital transformation, organisational flexibility and crisis management – which are crucial for the survival of businesses in the long run. Also, organisations will have to focus their resources on those products and services that are more promising for the business, looking to the opportunities offered by international markets.
In fact, as the report shows, around one-quarter of firms report an expectation of increasing revenues from abroad, looking to increase their use of non-domestic suppliers.