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Novel coronavirus pandemic has challenged global economics in a way no government or business was prepared to deal with. As the first signs of the potential damage it might have upon global markets, economists across the globe predicted a course of situation that revealed the weaknesses of various processes in the supply chain. For example, the exceptionally high demand for medical equipment exposed the inability to rapidly reshape the businesses to satisfy the need for essential items (Seifert & Markoff, 2020). In turn, several other markets had suffered dramatically from low consumer demands, as their sales numbers plummeted after several countries have established quarantines and self-isolation rules. This report analyzes the current situation of marketing channels, how they were impacted by pandemics, and how they will have to be changed to be resistant against similar breakdowns of the market system.
While supply chains were broken in the past by disasters or crises, this time, the situation is different. Lin and Lanng (2020) state that “governments, businesses, and individual consumers suddenly struggled to procure basic products and materials, and were forced to confront the fragility of the modern supply chain.” Statistics on weekly transaction volumes by country show that in Europe, the United Kingdom, and the United States these numbers went down by 26% on average, and in China by over 50% (Lin & Lanng, 2020). As lockdown is still in effect, these numbers continue to plummet, and it will be hard for many companies to recover after such a massive hit on supply chains.
Many current supply chains rely heavily on overseas manufacturers, which were cut off for many non-essential goods, such as clothes, personal vehicles, etc. Cost control factors that were prevalent before the virus outbreak became the primary source of shortages on the global market, and regional markets were not ready for such a shift (Cordon & Buatois, 2020). Cordon and Buatois (2020) state that the “pharmaceutical industry in Europe, which has imported 80% of the active components for its drug supply from China and India”, will have to restructure itself to focus on local manufacturers. This example sets a new course for many other companies that have been impacted by COVID-19. Domestic producers will have higher priority over international ones in the future.
Moreover, food supply chains will have to change their structure to stay available to all markets. Food-related marketing channels are considered essential, with many vital food products that can be grown only in specific regions, such as Brazil, Argentina, and Africa (“The impact of Covid-19 on global supply chains”, 2020). These producers are facing the need to pay more attention to their logistics, to the point when these countries have to prioritize the movement of goods over people (“The impact of Covid-19 on global supply chains”, 2020). Unlike assets like medical equipment, food has a constant level of demand, therefore, this market needs a distinct approach to stay stable.
In conclusion, the current situation, while having a massive negative impact on global trading, provides an opportunity for smaller industries to grow and take their niché. Lin and Lanng (2020) state that markets experience “a decentralization of manufacturing capacity, with companies looking to bring production home.” The recovery process is estimated to be lengthy and drastic, creating flexible and smart supply chains will help the global economy in the future.
References
Cordon, C., & Buatois, E. (2020). A post-COVID-19 outlook: The future of the supply chain. International Institute for Management Development.
Lin, J., & Lanng, C. (2020). Here’s how global supply chains will change after COVID-19. World Economic Forum.
Seifert, R., & Markoff, R. (2020). Digesting the shocks: how supply chains are adapting to the COVID-19 lockdowns. International Institute for Management Development.
The impact of Covid-19 on global supply chains. (2020). Oxford Business Group.
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