How Can Business Restructure to Survive Pandemic?

“Previously, our company manufactured and exported products to partners in France and Sweden, but after the Covid-19 pandemic outbreak, our export was disrupted. To utilize facilities and manpower, our company started to produce face masks and protective equipment for the domestic market and for export. As a result, our business results only decreased slightly from a year ago,” said Mr. Duong Viet Linh from Sales Department, 176 Limited Company.

Adjusting the business strategy

Like 716 Company Limited, many Vietnamese businesses are struggling to find ways to restructure for survival and growth. Mr. Hoang Duc Hung, Deputy General Director of PwC Vietnam, said, the Covid-19 pandemic caused businesses to reconsider their strategies and visions, for example digital strategy, technology and innovation to strengthen their capacity and optimize internal processes; identify and link transactions and deals with their long-term visions; and maintain a strong financial base while considering other capital sources.

According to Ms. Dang Thuy Ha, Northern Director of Nielsen Vietnam, consumers are currently changing their shopping channels and products. A Nielsen survey showed that 65% of consumers are willing to spend more on good quality and health-enhanced products and 59% want to buy domestic goods. Therefore, producers need to adjust their distribution channels, penetrate right target markets, determine appropriate prices, and offer effective promotions.

Restructuring business and competition models is always an important issue, a constant concern of every company. Experiencing the devastating Covid-19 pandemic, repositioning and adjusting business strategies, solutions and competition models is posing many urgent requirements, both in short term and long term, on both national and corporate levels. Solving this matter not only requires efforts of authorities, entrepreneurs and businesses, but also efforts of the entire political system and the whole society.

According to Dr. Can Van Luc, Chief Economist of the Bank for Investment and Development of Vietnam (BIDV), the Covid-19 pandemic opened up many new investment and business trends: Investing in safer assets such as gold which grew by 20% in value in the world, government bonds in the United States which also tended to rise and mergers and acquisitions (M&As) which also tended to increase because the Covid-19 pandemic is causing many companies to go bankrupt or sink  stock prices while some are still operating well and they are ready to buy other companies.

In addition, other new trends include drastic reduction of costs and personnel, supply and investment chain restructuring and investment flow restructuring. On the other hand, the contagion is also forcing agencies and businesses to rethink the way they work to become a driving force for digital transformation. Changing sentiment and behaviors of consumers and investors require them to reshape the way products and services are provided.

Strategic breakthroughs: Personnel and technology

Dr. Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy (BCSI), said, the Covid-19 pandemic has impacted all aspects of human life and affected almost all production and business sectors. According to surveys into 126,000 enterprises, 86% are affected significantly.

In this context, the Government responded quite quickly with many proposed solutions, including a VND62 trillion package for social security solutions, lowering interest rates and debt rescheduling in monetary solutions, and extended tax and land-rent payment. In addition, it has sought solutions to accelerate public investment, with a total fund VND700 trillion (US$30 billion).

“However, the policy is fast but the pace of execution is generally slow. The access to this support package is difficult, resulting in limited practical impacts,” he said.

Before this reality, in the coming time, Vietnam needs to continue to effectively implement consistent and comprehensive support solutions proposed by the Government, especially measures related to postponement, relaxation, exemption or reduction of taxes and fees for enterprises. It also needs to consider new economic stimulus packages till 2021, based on actual conditions. Besides, it needs to strengthen solutions to improve enterprises’ management capacity and resilience to economic fluctuations; effectively implement solutions on administrative procedure reform, facilitate business performances and increase market transparency.

“Entrepreneurs and businesses must bear in mind: Opportunity - Connectivity - Innovation - Management. Specifically, they need to seek business opportunities from their comparative advantages, market advantages and Vietnam’s advantages and opportunities from international commitments, the movement of investment capital flows, the emergence of new industries and new trades. They should connect with partners, join the value chain and enter the market with high standards. At the same time, they need innovations and movement with Industry 4.0 and new business models and fields. Particular attention should be paid to improving governance, including risk management,” Dr. Thanh said.

Besides, according to Dr. Can Van Luc, the 3R model (respond, recover and reinvent) is a solution for businesses in the new context in addition to the 2R model (Restructure and resilience). At the same time, they need to focus on four important goals: No personnel loss, good financial management, maintaining customer and keeping partners. They should be prepared to grasp new opportunities in the new phase. People and technology are always two strategic breakthroughs.

By Anh Mai, Vietnam Business Forum