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ENTREPRENEURSHIP

IMPACT OF COVID-19 ON PROFITABILITY OF ICT SMALL AND MEDIUM SCALE ENTERPRISE

IMPACT OF -19 ON OF ICT SMALL AND MEDIUM SCALE ENTERPRISE

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IMPACT OF COVID-19 ON PROFITABILITY OF ICT SMALL AND MEDIUM SCALE ENTERPRISE

Abstract

The goal of this study is to look into how Covid-19 affects ICT small and medium-sized businesses. Since the beginning of the 2020, Covid-19 has been the source of changes in the global business landscape. Because the effects on ICT small and medium-sized firms are almost unknown, this research is unusual.

The purpose of this research is to learn more about how ICT small and medium-sized businesses are dealing with the epidemic. The study will explore and develop a deeper understanding of the ICT small and medium scale businesses experience through data gathering using a qualitative research method.

The literature review has been completed, and the theories are largely concerned with the digital business environment and value chain operations. The literature review has been condensed into a conceptual framework that depicts the relationships between the theories and Covid-19.

In addition, the conceptual framework was used to analyse the conclusions from the empirical data collected in a multi-case research. The analysis chapter explores the similarities and contrasts of the instances, as well as their relationship to theory.

Finally, the conclusion chapter of this research summarises the findings and analysis and includes theoretical implications, recommendations, limits, and future research suggestions.

CHAPITRE ONE

INTRODUCTION

1.1 Background of the Study

The coronavirus outbreak, currently known as Covid-19 (a shortened version of “coronavirus disease of 2019”), originally surfaced in the Wuhan region of China. The virus spreads extremely quickly amongst people, and tens of thousands of people worldwide have become sick in just a few months (Mph Online, 2020).

Furthermore, as the Covid-19 outbreak expands, businesses all across the world are being impacted. Some of the world's largest corporations experienced severe consequences such as disruption, store emptying without customers, and declining demand for their products (Eavis, 2020).

Some businesses may also struggle as a result of their investors' reluctance to lend them money following the epidemic (Eavis, 2020). Airlines, leisure, and hospitality are among the hardest hit industries. Bars and restaurants are also suffering (Fraser, 2020).

As a result of the pandemic, China, America, and Europe have been the hardest hit markets, and the Organisation for Economic Cooperation and Development (OECD) has reduced its 2020 real GDP growth projections for almost all economies (see appendix A) (Nee Lee, 2020).

Furthermore, several governments are beginning to place their citizens on various sorts of lockdown in order to slow the virus's spread. National quarantines, as well as school and work closures, are examples (Kaplan, Frias, and McFall-Johnsen, 2020).

According to Ben May (2020), the head of global macro research at Oxford Economics, in addition to the number of Covid-19 cases, another critical is the degree of distribution to economies from containment efforts.

Widespread lockdowns, such as those in China, the United Kingdom, and Italy, have been targeted as viral hotspots, and if adequate steps are not done, it can generate even more panic and further harm the world economy.

The Covid-19 epidemic has prompted concern because of the way it is affecting the global economy and markets around the world, leading stock prices and bond rates to plummet (Nee Lee, 2020).

Furthermore, the scenario has caused significant banks and institutions to lower their estimates for the global economy, and a new OECD analysis shows that growth forecasts for 2020 have been reduced in almost all economies.

Earlier this year, the percentage for global economic growth was 2.9%; presently, it is 2.4% (Nee Lee, 2020). The manufacturing sector, particularly the Chinese manufacturing industry, has also been hurt hard by the viral spread.

Other countries with close economic ties to China may suffer as a result of such a downturn. Chinese manufacturers are taking longer than planned to restore operations, and the further spread of Covid- 19 in other countries across the world suggests that global industrial output will stay sluggish for a longer period of time than expected (Nee Lee, 2020).

According to a United Nations Conference on Trade and Development (2020) report, China's status is critical to the global economy. China not only plays a vital role in the global economy as a manufacturer and exporter of consumer goods, but it is also the primary provider of intermediate inputs (energy, raw materials, and semi-finished items) to industrial enterprises across the world.

As of present, China accounts for around 20% of global manufacturing trade intermediate products. Many companies are concerned that the measures put in place to contain Covid-19, such as restrictions on economic activity and movement of individuals, are impeding the supply of crucial parts from Chinese producers, impacting their output (UNCTAD, 2020).

Because the Covid-19 outbreak can affect any country's productivity capacity and exports, European automobile manufacturers may face a critical shortage of components needed for their operations, and Japanese companies may face difficulties obtaining necessary parts for digital cameras, among other things.

Many businesses are currently required to respond to many fronts at the same time, both to preserve their workers' safety and to protect their economic viability, as many are having challenges with their supply chains (Alicke et al., 2020). According to a McKinsey & Company report (2020), enterprises should consider certain urgent actions in response to Covid-19.

Among these efforts include optimising production and distribution capacity, as well as determining realistic final-customer demand. Some businesses may face inventory shortages as a result of travel restrictions and lockdowns, thus it is critical to plan for these potential consequences (McKinsey, 2020).

Many ICT small and medium-sized enterprises have begun to see some short-term disruptions since the Covid-19 epidemic. Americans, for example, are adjusting to e-commerce more quickly, with online grocery sales more than doubling in the middle of March compared to earlier in the month.

This is due to physical stores closing owing to the virus, which is forcing consumers to shop online for essentials (Holman, 2020). According to Adobe Analytics (2020), e-commerce has climbed by 25% overall.

However, as with most external impacts, corporations and ICT small and medium-sized organisations should react to changes brought about by the external influence by changing their marketing and operations and business models to improve customer satisfaction (Denger, 2020).

Integrity is a crucial part of corporate operations for newer and modern organisations, as is ensuring that a planned response to external effect is carried out.

According to Denger (2020), some strategies for adapting a business to the current Covid-19 situation include communicating with customers and explaining how the crisis affects one's business, meeting customer commitments, and ensuring operational continuity,

which will be difficult but is now more important than ever. Furthermore, as a result of the Covid-19 pandemic, many internet retailers have begun to develop new product offers and sales techniques; however, this may result in them unknowingly taking on tax liabilities that they have not previously encountered (Demery, 2020).

Furthermore, some digital marketing gurus believe that when people are socially distancing themselves and staying at home, e-commerce sales will increase. However, preliminary data indicate that the truth is more convoluted than that (Sterling, 2020).

According to preliminary Quantum Metric (2020) data, e-commerce associated with specific physical stores is witnessing a 52% increase in average revenue weekly growth rate and an 8.8% increase in conversion rates compared to last year (Sterling, 2020). So far, research suggests that foot traffic in shopping malls is decreasing.

This could put a strain on e-commerce, and many predict that shoppers will gravitate towards online retailers like Amazon. However, if the prospect of distribution and manufacturing issues grows,

product shortages and probable decreased consumer demand as a result of people being confined and not wanting to risk being exposed to the virus might further slow e-commerce growth. Particularly if the economy falters and enters a recession (Sterling, 2020).

These findings and assumptions also indicate that the situation for retailers is currently quite uncertain. At the time, the impact of Covid-19 is difficult to foresee in terms of society, people's health, the economy, and enterprises.

However, the impacts of earlier pandemics in history can be compared. The SARS outbreak is one pandemic where the consequences of e-commerce can be compared (MphOnline, 2020).

1.2 STATEMENT OF THE RESEARCH PROBLEM

Because the Covid-19 epidemic is still a hot topic, there are currently little research on it and its impact on ICT small and medium-sized organisations. So far, what is known about this subject is that it affects most sorts of businesses in some way, as well as global and national economies.

According to Frost and Sullivan's paper “The Coronavirus Outbreak and Its Impact on The Global Economy” (Frost and Sullivan, 2020), “the coronavirus isn't only a global health crisis, but an economic one as well” (Frost and Sullivan, 2020).

Many businesses around the world have been affected by China's response to the outbreak. Because China is one of the world's most important economies and contributes significantly to the global economy, the effects of the Chinese shutdown have impacted many people outside of China (Singh, 2020).

The Covid-19 problem is certain to have significant ramifications for consumers, yet many stores have differing perspectives on the severity of Covid-19 and its implications. According to one study by Digital Commerce 360 (Radial and Zoovu 2020),

which included a survey of 304 retailers, when asked what impact they believe the Covid-19 will have on their e-commerce business, 32% believe it will go down somewhat, while 30% believe it will go up somewhat (Radial and Zoovu, 2020).

According to the survey, online shops are still adapting to the constantly changing environment caused by the Covid-19 outbreak. Digital Commerce 360 maintains a Top 100 list of (North American) merchants based on global e-commerce sales, and as of March 23, 62 of those companies had shuttered physical storefronts owing to the epidemic.

The majority of them now feature Covid-19-related messaging on their websites, and these are some of the modifications they must now adapt to. According to the survey, internet sales have climbed by 52% compared to the same period last year. Offline retailers are increasingly reliant on digital commerce strategies and digital solutions to stay in business (Radial and Zoovu, 2020).

The virus has spread around the world. Major economic powers such as the United States, Spain, Italy, Germany, and many other countries have been heavily struck by Covid-19, and the globe has come to a halt for an undetermined period of time (Abdin, 2020).

All sorts of production, including technical, mechanical, and technological production, have shrunk to insignificance, potentially leading to a severe worldwide financial catastrophe in the near future.

Even although Covid-19 is a major health issue, certain businessmen and entrepreneurs must continue to operate because essentials cannot be stopped at this time.

If vital supplies are no longer available, the problem will worsen. As a result, when conducting business during a pandemic, some strategic preparation is required (Abdin, 2020). This involves adopting employee safety precautions and using other ways of communication, such as digital channels.

Companies must adapt to every digital instrument accessible to them and guarantee that their operations run smoothly during the crisis. Consumers do not have to go outdoors and expose themselves to the virus,

thus e-business and e-commerce are flourishing at this time. Digital tools are an excellent choice since they can be used to take orders, source supplies, receive shipments, operationalize manufacturing, distribution, and provide after-sales service (Abdin, 2020).

The situation in Covid-19 is continually changing, and new issues develop. Many people's daily lives have changed since certain countries have gone into lockdown and people are staying indoors more (Hasanat et al., 2020).

As fewer people purchase in physical stores, more people shop online, which is good for sales but might pose problems with shipment delays (Radial and Zoovu, 2020). Companies such as Amazon, FedEx, and UPS have been experiencing delays as a result of the Covid-19 problem (Porter, 2020).

This demonstrates that shops and carriers are coping with a significant growth in online orders, and according to Radial and Zoovu (2020), 57% of consumers change their daily routines to be as contactless as feasible. Online orders for household items and consumables have increased in particular.

Because to Covid-19, online order fulfilment is slowing as businesses receive more orders from customers and the time to fulfil orders has increased. The length of time taken from when a consumer clicks buy to when the order is picked up by the carrier for delivery is measured, and it has generally increased from 15.1 hours to 21.2 hours (Radial and Zoovu, 2020).

Many industries faced significant downturns due to poor patronage during the epidemic, most notably the airline industry, while others, such as the telecoms and ICT sectors, had a successful year. The remainder of this investigation will focus on SMEs in Kaduna North and how the Covid 19 epidemic affected their performance and profitability.

1.3 Research Questions

How is the Covid-19 outbreak affecting small and medium-sized ICT businesses?

Covid-19 has an impact on which elements of their value chains?

What are they doing about the Covid-19 situation?

1.4 Objective of the Study

The goal of this research is to;

To investigate how the Covid-19 epidemic affects ICT small and medium-sized companies,

to determine how their value chains are impacted

To determine how SMEs are dealing with Covid 19.

1.5 Significance of Research

This paper is intended to serve as a resource for ICT small and medium-sized organisations dealing with the pandemic or potentially comparable future events.

pandemics. Finally, the findings in this article may contribute to the literature that emerges from the Covid-19 pandemic.

Overall, this study adds to our understanding of COVID-19's economic impact on the sector. The fate of the 48% of people who work in small firms is inextricably linked to the small business ecosystem's resistance to the tremendous economic disruption produced by the pandemic.

Delimitations

This study will only look at the effects of Covid-19 on ICT small and medium-sized businesses that sell items in Kaduna North LGA; it will not look at the effects of Covid-19 on conventional or offline businesses because the empirical data would have to be limited to enterprises.

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