Managing International Business Uncertainty in a Global Pandemic

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Table of Contents

Introduction
Literature review
Reference Bibliography

Introduction

Due to globalization, national economies have integrated their services and products into a global economic system, significantly increasing international businesses. This has increased global trade by 26 percent from 2008 to 2018 (Contractor, 2021). The global trade value rose to $25.3 trillion in 2018, with the global GDP reaching a high level of $84 trillion in 2018 (Nugroho et al., 2021). According to the World Bank, the global GDP was expected to reach $90 trillion by 2020, but the Covid-19 pandemic derailed this (Farzanegan, Feizi, and Gholipour, 2021). The pandemic affected many economies, with the UK’s international business being highly affected. However, countries like China and US have been the biggest beneficiaries of the pandemic because their economy expanded during that period. Many businesses closed during the pandemic in the UK did not have a national policy to help them in times of unexpected uncertainties. This shows that there is a need for international businesses in the UK to have strategies for managing uncertainties.

Covid-19 pandemic was discovered in Wuhan, China, one of the most thriving industrial and commercial towns in Hubei Province. In the following months, people watched as the Virus spread throughout China and later to other parts of the world. By April 2020, the global economy had declined by 13% – 32% because of the pandemic’s disruptions (Yaya, Otu, and Labonté, 2020). Flights were grounded, shops were locked, people were in lockdown, and healthcare facilities were overwhelmed, leading to the paralyzation of normal business activities.

As more people continued to pass and others were getting infected daily, Covid-19 was one of the deadliest infections in the history of humans. However, scientists, on the other hand, were working round the clock to provide vaccines or drugs that could help curb the disease (Farzanegan, Feizi, and Gholipour, 2021). The pandemic de-globalized the world, with most global activities being shut down. This affected many industries, including international passengers, global supply chains, commercial services, cargo traffic, hospitality, tourism, manufacturing, and education.

International business is mainly concerned with domestic firms moving out of a country to look for greener pastures. However, this exposes them to more risks than when operating locally because of the uncertainty of operating in foreign markets. Thus, there is vast literature exploring the nature of uncertainty and risk facing international businesses to help these companies to spot, analyze, mitigate and manage global risks (van Dorsser et al., 2020). The emergence of Covid-19 proved that businesses need to be ready for uncertainties and other risks that cannot be foreseen in the future. Many companies that did not analyze the uncertainty and risks posed by Covid-19 were forced to shut down, downsize their operations and temporarily or permanently move out of some markets (Sharma et al., 2020). This shows a need for strategies that help manage international business uncertainties, especially in the UK, where most businesses were affected, unlike in other first-world countries.

Study aims and objectives:

This study aims to develop strategies to help UK international firms against global uncertainties and risks.
It aims to review successful businesses during the Covid pandemic and evaluate their strategies to keep their businesses running.
The study’s main objective is to develop national strategies that can be used in times of national or global uncertainty.

The aims and objectives will be reviewing different types of uncertainties that international businesses are likely to face, the outcomes of those risks, strategies that can be used to mitigate them, and their impacts. This study will be helpful to multinational firms in the UK because it will help them forecast, assess, and respond to uncertain events in the future. In addition, the research will have implications for the government because it can use some strategies as policies to avoid businesses falling in the future. When international companies fell in 2020, the government was forced to come and give help through grants, leaving them in heavy debt.

One of the expected limitations in this research is the problem of selecting the type of companies for the study. Some multinational companies that operate in the UK are not primarily from the UK; hence it may pose a challenge on whether to focus on UK companies only or even foreign companies in the UK. The other limitation is that there is little or no research regarding the uncertainties of this nature that has been carried out before. The last global pandemic, the Spanish flu, was in 1908, which shows that there has not been much research to provide a clear background (Sharma et al., 2020). Finally, the resources to use in this study may not be adequate because it is a self-sponsored study.

Literature review

The socio-economic challenges imposed on international businesses by the Covid-19 pandemic exposed them to unexpected conditions. Thus, various studies have been conducted to know why the pandemic affected businesses by such a significant margin and what should be done to mitigate it in future. Although the main cause of this was the Covid-19 pandemic, a study by Sharma et al. (2020) found that other influential factors affected the response to Covid-19. It was found that top management was slow to react to the pandemic and had not learned from previous crises (Fochler and Sigl, 2018). They were slow to respond to the pandemic, and most of them seemed to be waiting for other organizations to implement their strategies. Most international businesses were not flexible and ready to alter their processes because they thought the pandemic would last for a few months and then get eliminated (Sivarajah et al., 2017). However, when it was evident that the pandemic was here to stay, the top management of different businesses started responding.

Other studies started by differentiating between risk and uncertainty. The lack of a clear distinction between uncertainty and risk may have contributed to the slow reaction of international businesses to the Covid-19 pandemic. According to Islami, Mustafa, and Latkovikj (2020), the lack of clear distinction of uncertainty may cause managers to make decisions that are risky to a business. The main arguments revolve around whether uncertainty involves the environment supporting international business or the subjective perception of a manager regarding the decisions they make (Caligiuri et al., 2020). However, a study by Li (2014) defines uncertainty as lacking the ability and knowledge of the unforeseen event. This definition seems to support the idea that uncertainty comes from the external environment and other external actors which affect a business. These may include cultural, governmental, economic, and political actors that impact international business, whether external or internal. Another study by Etemad (2020) shows that industrial uncertainties include actors who may impact demand, input, technology, and competition uncertainty in the industry. Industry uncertainty affects the sector as a whole, while firm uncertainty includes the internal actors such as operations, behavioral and research, and development uncertainties.

Although the Covid-19 pandemic has been defined as a discontinuous uncertainty because it is a natural disaster that affects businesses temporarily, other researchers have classified it as an environmental uncertainty. According to Kwong et al. (2021), Covid-19 affected other actors of the environment, such as political, firm, and industry uncertainties. However, there were three emergent themes relating to the uncertainty of international businesses: uncertainty assessment, uncertainty outcomes, and uncertainty management among multinational businesses (Maes, Gebhardt, and Riel, 2022). Uncertainty assessment was related to how the size and age of large firms affected their response to international uncertainties. Ibn-Mohammed and Mustapha (2021) found that large and more established firms had more resources and experience to predict and reduce uncertainty risk compared to smaller firms that had not stayed in the industry long. However, in a large uncertainty such as the one caused by Covid-19, neither big nor small businesses were secure. Big airline companies were seen laying off workers like small and new companies in international trade (Morgan, Awafo, and Quartey, 2021). This implies that size did not help mitigate the risk of uncertainty caused by Covid-19.

The other challenge faced by most international businesses regards the outcomes of their decisions. Most businesses could not assess the outcome because they had a limited understanding of the uncertainty. According to Priya, Cuce, and Sudhakar (2021), international companies find it hard to evaluate the outcomes of their decisions when business decisions are interconnected or asymmetrical. They had to rely on their management’s subjective and unstructured opinions to make changes. However, it was found that businesses that were not flexible experienced the most impacts because they could not adjust their operations (Zhilenko et al., 2021). Flexible companies such as restaurants changed their models from dine-in to takeaways, and drive-thru counters offered products that did not need human contact, such as bread and milk. Thus, it is evident that the varying responses of international companies determined their success regarding the uncertainty of Covid-19.

Businesses should be ready for any other uncertainties in the future. The best way to be ready is to have policies and strategies that are well defined ahead of other uncertainties. China was one of the flourishing economies during the Covid-19 because most of its industries received backup from the government on how to mitigate the risks of Covid-19 (Magableh, 2021). It implies there is still some way to prepare for unforeseen uncertainties and respond to them effectively. This research proposal will help study the different strategies that could be applied in UK firms in case there is another uncertainty looming in the future using the conceptual framework shown below. This framework will address the most common challenges experienced by multinational firms in responding to the Covid-19 pandemic and use them to develop better and more effective strategies to apply in the future.

The conceptual framework

Research Methodology

This study will rely on qualitative methodology because it focuses on finding out why some strategies were effective in managing international businesses while others were not. Qualitative data include using thematic data such as themes, codes, and interrelationships between data to gather information (Aspers and Corte, 2019). Qualitative data is an essential method for this study because the research aims at finding strategies that work most effectively. This implies it will need to compare different strategies companies use and their relationship to the continuity of the business or its output (Aspers and Corte, 2019). For instance, international firms that did not lay off their employees or give them a salary cut will successfully manage uncertainty.

This research will use secondary data in conducting this study. The secondary data will include a thorough literature search on the internet for studies on international businesses and uncertainty control. The studies will be chosen using the framework in Figure 1. It includes identifying all the relevant literature connected to the topic of international business and the uncertainty of the Covid-19 pandemic. The studies to be used should have been published between 2019 and 2022. The researchers will utilize a computerized research strategy to ensure that the studies are extracted from trusted sources such as MEDLINE, Emerald Insight, ProQuest, Science Direct, and Google Scholar. This will ensure that the information in the studies is credible and applicable or research services. A panel of researchers and a lecturer will scrutinize all the studies chosen.

Figure 1: A Framework showing the selection process

In addition to secondary data, the researchers will highlight some of the international firms based in the UK and review their annual newsletters. This will provide in-depth information about the impact of the pandemic on the firms, the strategies they used, and the outcomes of those results. Only firms with positive income during the pandemic or those that did not lay off workers and imposed a salary cut will be considered during this review. This data, combined with the literature from other places n the world, such as China, will be able to provide quality information regarding the most effective policies or mitigating uncertainties in international businesses.

Since this study will be based on secondary data, there is no data population; however, it must utilize more than twenty pieces of literature and data from ten international firms based in the UK. In addition, the companies selected for the study will be distributed across the main industries, including tourism, food, technology, fashion, and services. The sampling strategy will be based on the framework in Figure 1 to ensure that all the literature selected is reliable for this study. All the companies chosen will be given an email address where they can raise any respondent issues regarding their data. This will ensure an equal representation of all sectors, which will show that the study results will be applicable across a wide range of industries.

The most effective method to analyze data for this study will be using framework analysis. This method involves familiarizing the available data, identifying a thematic framework, coding the data, charting it, and finally interpreting the data (Stenfors, Kajamaa, and Bennett, 2020). This method will be effective for this study because it is flexible and allows changes to better adapt to unforeseen changes. In addition, the method will provide the researchers with a systematic approach to handling data and identifying themes. The reliability and validity of the data will be enhanced by ensuring that the literature used in this study is from trusted sources mentioned above. Researchers will create a central email that will be provided to the respondent companies for use in case they have any issues. The email will be given to an administrator and reviewed periodically to ensure that all respondent issuers are addressed.

Statement Of Ethics

This study shall ensure that all the data used or this research is verifiable and that the owners have given consent. Before using the organization’s newsletters data or this research, they will be conducted to give their permission and be informed that the work will be published publicly. The study may use false names to avoid disclosing the company’s information to its competitors. All the extra data gained from the companies will be sorely used for research purposes and will not be exposed to third parties. The data will be saved online with secure passwords to ensure that only authorized individuals can access it. Any firm that wishes to withdraw from the study will be given the right to do so until two weeks before the actual release of the study. In addition, no monetary incentives or kickbacks will be given to the participants of this study to ensure that all participants joined voluntarily.

Reference Bibliography

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This article provides a clear guide on how to conduct qualitative research. It provides the most effective methods and justifies the reasons for each instrument used and the method used.

Caligiuri, P., De Cieri, H., Minbaeva, D., Verbeke, A. and Zimmermann, A. (2020). International HRM insights for navigating the COVID-19 pandemic: Implications for future research and practice. Journal of International Business Studies, [online] 51(5), pp.697–713.

This article shows some of the international strategies that were used by compies in different regions, including the US, UK, and China, in mitigating the impact of COVID-19. It has used primary and secondary data to come up with the resolutions.

Contractor, F.J. (2021). The world economy will need even more globalization in the post-pandemic 2021 decade. Journal of International Business Studies, [online] 10(6).

This literature explains the impact that the COVID-19 pandemic had on globalization and what the world will need to recover.

Etemad, H. (2020). Managing uncertain consequences of a global crisis: SMEs encountering adversities, losses, and new opportunities. Journal of International Entrepreneurship, 18(2), pp.125–144.

This is an article on SMEs which highlight how they were impacted in comparison to big corporations. According to the study, SMEs were more impacted because of the lockdowns and layoffs, which led to the reduced purchasing power of consumers.

Farzanegan, M.R., Feizi, M. and Gholipour, H.F. (2021). Globalization and the Outbreak of COVID-19: An Empirical Analysis. Journal of Risk and Financial Management, 14(3), p.105.

This paper outlines the impact that COVID-19 had on globalization. It focuses more on the manufacturing and supply chains.

Fochler, M. and Sigl, L. (2018). Anticipatory Uncertainty: How Academic and Industry Researchers in the Life Sciences Experience and Manage the Uncertainties of the Research Process Differently. Science as Culture, 27(3), pp.349–374.

After the outbreak of COVID-19, researchers started looking for a quick cure or vaccine or COVID-19. This paper outlines how researchers overcame the uncertainties of COVID-19 and were still able to coordinate in seeking a cure.

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This article reviewed the impact of COVID-19 from a global point of view to highlight how it affected some economies more than others.

Islami, X., Mustafa, N. and Latkovikj, M.T. (2020). Linking Porter’s Generic Strategies to Firm Performance. Future Business Journal, [online] 6(1).

This study explains how porter’s generic strategies, which include cost leadership, differentiation, cost focus, and differentiation focus, affected firms in the COVID- Pandemic.

Kwong, C., Demirbag, M., Wood, G., and Cooke, F.L. (2021). Human resource management in the context of high uncertainties. The International Journal of Human Resource Management, 32(17), pp.3569–3599.

This study explains the most effective mays that Human Resource Managers can use in times of high uncertainty. Although some were effective, others did not succeed during the COVID-19 pandemic, and thus, they need reviewing.

Maes, T., Gebhardt, K. and Riel, A. (2022). The Relationship Between Uncertainty and Task Execution Strategies in Project Management. Project Management Journal, 12(5), p.875697282210898.

This study highlights the main difference between uncertainty and risks. Uncertanititeies expose businesses to different risks. It is important to address uncertainties in project management so all possible risks can be speculated.

Magableh, G.M. (2021). Supply Chains and the COVID‐19 Pandemic: A Comprehensive Framework. European Management Review, 18(3).

It explains how the COVID-19 pandemic disrupted the global supply chains. It highlights the impacts, challenges, trends, and opportunities presented by the pandemic.

Morgan, A.K., Awafo, B.A. and Quartey, T. (2021). The effects of COVID-19 on global economic output and sustainability: evidence from around the world and lessons for redress. Sustainability: Science, Practice and Policy, 17(1), pp.77–81.

This paper addresses the impact of COVID-19 on the global economy, mainly based on the manufacturing and fashion industry. These industries were affected largely by the pandemic.

Nugroho, A.D., Bhagat, P.R., Magda, R. and Lakner, Z. (2021). The impacts of economic globalization on agricultural value added in developing countries. PLOS ONE, 16(11), p.e0260043.

This paper addresses the main effects of globalization on African economies and other developing economies which depend on exporting raw products to developed countries or manufacturing. When COVID-19 disrupted the chains, they had to stay with their products, and this brought a significant economic downfall to them.

Priya, S.S., Cuce, E. and Sudhakar, K. (2021). A perspective of COVID 19 impact on the global economy, energy, and environment. International Journal of Sustainable Engineering, 14(6), pp.1–16.

This paper highlights the effectsofCOVID-19 on the economy, energy, and environment.

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This paper provides strategies that can be used to manage uncertainties during a global pandemic. However, it is based on a global perspective and not focused on any specific market making it too general.

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It explains how big data analytics companies had an advantage of their data to mitigate the effectsofCOVID-19.

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This paper explains how to ensure that qualitative research is credible and reasonable.

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This paper explains how to use policies to mitigate the effects of uncertainties.

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This study explains the challenges that faced the African continent as a result of the COVID-19 pandemic.

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It highlights the effects COVID-19 has had on the global economy and the environment.

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