Essay on The Challenges and Opportunities for Multinational Enterprises (MNEs) post-COVID-19

Introduction of the Challenges and Opportunities for Multinational Enterprises (MNEs) post-COVID-19

The world has faced a new challenge in the shape of Covid-19, which started from China in late December 2019 and quickly spread across the world. Almost all parts of the world are fighting with Coronavirus, and no one is safe except China at the moment. Things were very normal four months back, and the global community was moving forward with various other challenges and opportunities. Now, everything has been paused for the last four months, and the global community is fighting with one common enemy, which is Covid-19. There is a state of confusion and everyone is facing a situation of uncertainty, where nothing can be predicted, what will be happening in the next few months, a year, or even in the next few years. No one is sure, what is going to happen, and how Coronavirus is going to shape the future of this world (Mair, 2020). The business world and economy are going through one of the uncertain patches of time, where activities are halted due to Coronavirus, and people are losing their jobs because businesses are shutting down. This situation is happening to be a major challenge for Multinational Enterprises (MNEs) as well. These MNEs sustain the essence of globalization, whereas Covid-19 is posing serious challenges for the concept of globalisation in the practical term. In this paper, a review will be taken of the current situation for the global economy and future of MNEs to see what challenges and opportunities can be there in coming days. 

Impact of Corona on Globalisation and MNEs

It is important to understand that many businesses in the world are able to sustain their position in the market, because of the globalisation. The countries are connected with each other through a global economy, and if things will continue like this, then this connection of globalization will be affected in so many ways. The global governance and interdependency model is badly impacted due to Coronavirus. Covid-19 is not only an existing risk for the businesses of MNEs, but it can also create more challenges in coming days, and no one can predict this trend with correct estimates. There were companies, which always worked hard to minimise the risks associated with their businesses on global scale, so these companies may be better prepared to deal with this new unprecedented situation. But there are so many MNEs, which never took advanced measures to look at those broader global risks in normal situations, and now they are faced with a challenge of Covid-19 too; which is going to be a huge dent to their current strategy. Even the relevant health system was not prepared to face this huge and unprecedented challenge of Coronavirus. The countries were forced to stop international flights, freights, shipments, and travel in initial phase. Now, restrictions are being soften in this regard, but still, there is a long way to go in this regard (Smith-Bingham and Hariharan, 2020)

The important thing is to analyse more closely, how Covid-19 has made an impact on multinational businesses. A rippling effect has been measured on the global economy, where so many elements are playing their parts such as oil prices and supply & demands. So, it looks less likely for MNEs to hit their predicted targets for the year 2020, and all of them are going to miss those targets. The oil prices are going down, which may have been a positive thing for many in the normal circumstances, but this thing is not proving as beneficial in this time, as it could have been in the normal global business condition. The supply & demand is facing disruptions, and enterprises are also facing the issue of currency depreciation, which is going to be more troublesome in so many ways. The global financial markets are struggling at the moment, and everyone is looking for a safe passage, where they can preserve them from the adverse impact of Coronavirus. Keeping this situation in view, the multinational enterprises will have to make a major shift in their policy, and they will have to come up with new strategies to deal with this difficult situation. They will have to set revised expectation and targets for future outcomes, which are more realistic in the context of Coronavirus (ResearchAndMarkets.com, 2020)

A variety of multinational enterprises working in the global industries have been hit hard by the negative impact of Covid-19. The most severe impact was observed for the international airlines' industry. The airline companies have been in a very bad situation due to Coronavirus, as many countries banned international travel and many other restricted flight operations. The leisure, technology, and food sector has also hit badly in this situation. It was revealed by many enterprises that they have observed stark kinds of initial effects due to Covid-19. These multinational companies have not only faced issues due to restrictions on various things, but they are also dealing with disruptive supply and demand, along with falling demand of consumers. The people are losing their jobs and other means of earning, and their purchasing power is way lower than the normal circumstances, so the demand from the consumers is not high, especially given the fact that they are dealing with basic necessities. In this situation, they are not buying various items, which are considered a luxury or unnecessary items. One of the largest brewers of the world is Anheuser-Busch InBev, and they have revealed that $285 million has been lost in terms of their sales in 2020. It has happened because restaurants are closed and nightlife is very much abandoned across the globe. Diageo is one of the famous Smirnoff vodka maker company, and they have told that operating profits will be quite lower this year, and fall to their profits can reach up to £200 million. Many large enterprise gatherings and shows have been cancelled in May such as Baselworld trade show, the Geneva Motor Show, and F8 developers’ conference of Facebook (Asgari, 2020)

Moreover, international travel has been suspended by L’Oréal and Nestlé. One of the largest software companies in the world, Microsoft has also revealed that they are going to miss the revenue targets for its business of Windows because the supply chain is badly affected. Some of these examples show how things have changed in the last few months, but the impact of these few months is going to last for many years to come. The businesses are facing an unprecedented situation, where everything is in the world of uncertainty. The economic damage is increasing with the passage of time. It was observed that the United States has cut its interest rate percentage to facilitate the businesses so that they can feel more confident to deal with this deadly virus. This is the situation faced by the United States, which is having one of the best health systems and other systems, but they have choked due to this situation. If the same situation is applied to the developing world, they are going to face a more difficult situation. The globalization was already on a difficult path, where criticism was coming that globalization has brought too much freedom and flow of information, which should be restricted in any possible terms. That’s why; it has been observed that immigration rules have been tightened by many countries across the globe, and they are also bringing new barriers (BREMMER , 2020)

It is a fact that the concept of globalisation has been rising in last two to three decades, and it has gained a lot of space with the help of activities initiated due to international and global trade. The large international business activities started to happen due to formation of multinational corporations and multinational enterprises. The technology made things more accessible for everyone, and globalization was made more convenient in so many ways. But the way Covid-19 is making a considerable impact on global economy and the way business of multinational enterprises is being badly affected, there will be a shift in the world in terms of globalization concept. The progress of globalisation has been profound as it’ observed that global output of China was just 4% in 2003, and now this percentage from China has reached 16%. The experts have said that globalisation certainly has provided so many opportunities, but there are so many global risks, which have been injected by the concept of globalisation, and these risks are going to be a threat to these multinational enterprises. It was evident to notice when supply & demand issues created by the Coronavirus, and supply chain became disruptive, the consumers immediately went for the other options, and even those options were more expensive as compared to previous options. The consumers saw a great risk due to Corona, and they suddenly shifted their focus to domestic suppliers. If such kinds of risks will sustain and consumers will perceive these risks, then they may look to continue their reliance on domestic suppliers, rather than making a connection with global suppliers. So, these are few things to notice, which are indicating that multinational enterprises and companies will face new issues, and they will have to change their strategy. But these issues will also create more opportunities as well, and it is up to the MNEs, how they understand and grab those opportunities (Bloom, 2020)

It is a fact that various challenges are faced by MNEs, and they have to find a way out in these difficult circumstances. The productivity of employees is being effected, and it will create more issues in the future with regards to supply products as per demand, once the situation eases down, if Coronavirus is somewhat controlled, which is looking less likely at the moment. The new estimates are showing that Covid-19 is not going to end soon, and if it goes like this, then the whole world will have to reverse the cycle of globalization in a variety of ways. It has been said that economic and another impact of Covid-19 is going to stay for a longer period of time, and the world will have to find a new pattern of living with the Coronavirus. The global supply chain is badly disrupted, and people are looking for domestic products, and it is becoming hard to continue with the same speed for MNEs, as they were having before December 2019. However, many companies are looking for new opportunities, and it is a great sign for them if they realize it as early as possible that new world order is being developed due to Coronavirus, and the post-COVID-19 world will be a different one from the world, which has been going on for decades with the essence of globalisation (Benussi, 2020). It will be more important for MNEs to rely on the local supply chain system and the local workforce, and there are chances that global enterprises will shift to these new patterns. It is true that they will face a variety of challenges, but these challenges do not mean that globalization will end; rather it will be shifted with a new face. The new world order of globalisation will be based on more local markets and industries, having a basis on local supply chains, but the need for these MENs will nor decrease. The MNEs working in the medical equipment sector will have great opportunities as the world will need more medical equipment in the coming years because Corona has changed the way, people think and live (Springsteen, 2020)

Conclusion of the Challenges and Opportunities for Multinational Enterprises (MNEs) post-COVID-19

After analysing the overall situation, it can be said that MNEs will face a variety of challenges due to the adverse impact of Covid-19, and if these impacts will continue to dent the economy, then things will be more difficult for MNEs in so many ways. But the fact of the matter is when new challenges arise, they also come up with new opportunities, and MNEs will have so many other opportunities to grab if they take adequate and wise measures step by step. MNEs will have to be proactive in this regard to face challenges and find new opportunities. 

References of the Challenges and Opportunities for Multinational Enterprises (MNEs) post-COVID-19

Asgari, (2020) Companies reveal stark initial effects from coronavirus fallout, [Online], Available: https://www.ft.com/content/495d43ba-5a4c-11ea-a528-dd0f971febbc [11 May 2020].

Benussi, (2020) COVID-19’s Grim Milestones: Impact on Business is Real but Opens Up New Growth Areas, [Online], Available: https://www.china-briefing.com/news/covid-19-impact-business-real-opens-new-growth-areas-op-ed/ [11 May 2020].

Bloom, (2020) Will coronavirus reverse globalisation?, [Online], Available: https://www.bbc.com/news/business-52104978 [11 May 2020].

BREMMER , (2020) Why COVID-19 May be a Major Blow to Globalization, [Online], Available: https://time.com/5796707/coronavirus-global-economy/ [11 May 2020].

Mair, (2020) How will coronavirus change the world?, [Online], Available: https://www.bbc.com/future/article/20200331-covid-19-how-will-the-coronavirus-change-the-world [11 May 2020].

ResearchAndMarkets.com (2020) The Impact of COVID-19 on Multinational Companies, 2020 - Simultaneous Drops in Supply & Demand, Plus Oil Price Crash Create a Uniquely Challenging Crisis for MNCs - ResearchAndMarkets.com, [Online], Available: https://www.businesswire.com/news/home/20200316005719/en/Impact-COVID-19-Multinational-Companies-2020---Simultaneous [11 May 2020].

Smith-Bingham, and Hariharan, (2020) This is the impact of the Coronavirus on business, [Online], Available: https://www.weforum.org/agenda/2020/02/why-is-coronavirus-a-global-business-risk/ [11 May 2020].

Springsteen, (2020) International business models for a post COVID-19 world, [Online], Available: https://www.hlb.global/international-business-models-for-a-post-covid-19-world/ [11 May 2020].