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THE IMPACT OF COVID-19 ON ICT SMALL AND MEDIUM-SIZED BUSINESS PROFITABILITY

THE IMPACT OF ON ICT SMALL AND MEDIUM-SIZED BUSINESS PROFITABILITY

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Abstract

This study’s objective is to explore how Covid-19 impacts small and medium-sized ICT firms. Since the beginning of the 2020, Covid-19 has been the source of changes in the business environment across the globe. The implications on small and medium-sized ICT enterprises are mostly unknown, making this study unique. This research aims to learn more about how small and medium-sized ICT enterprises are adapting to the epidemic. Following a qualitative research methodology, the project will gather data to get a greater knowledge of the ICT experiences of small and medium-sized organizations. The literature research has been conducted, and the majority of theories relate to the digital business environment and value chain operations. The literature study has been condensed into a conceptual framework that depicts the relationships between the theories and Covid-19.

In addition, the conceptual framework was applied to the analysis of the empirical data collected in a multiple-case study. The analysis chapter explores parallels, contrasts, and connections between the instances and theory. The last chapter of this study summarizes the results and analyses and includes theoretical implications, recommendations, limits, and recommendations for further research.

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CHAPTER ONE

1.1 Background of Study

The coronavirus epidemic, now referred to as Covid-19 as a shorter form of “coronavirus illness of ,” originally surfaced in the Wuhan, China area. In only a few months, tens of thousands of individuals throughout the globe have contracted the virus due to its rapid human-to-human transmission (Mph Online, 2020). In addition, as the Covid-19 epidemic expands, it is affecting businesses throughout the globe. Some of the world’s largest corporations had negative repercussions such as production disruptions, vacant storefronts without customers, and declining demand for their products (Eavis, 2020). Some businesses may also suffer as a result of investors’ reluctance to lend them money in the wake of the epidemic (Eavis, 2020). Airlines, leisure, and hospitality are among the industries most severely affected. Additionally, bars and restaurants are severely impacted (Fraser, 2020).

This pandemic has become the greatest threat to the global and financial markets, as China, North America, and Europe have been the hardest-hit markets and the Organization for Economic Co-operation and Development (OECD) has reduced its real GDP growth projections for 2020 for nearly all economies (see appendix A) (Nee Lee, 2020). In addition, several nations have begun to implement different types of lockdown in an effort to halt the spread of the virus. Among them are nationwide quarantines, school and workplace closures (Kaplan, Frias and McFall-Johnsen, 2020).

 

According to Ben May (2020), the or of global macro research at Oxford Economics, in addition to the number of instances of Covid-19, the amount of distribution to economies from containment efforts is another important factor. Widespread lockdowns, such as in China, the United Kingdom, and Italy, have been identified as some of the viral hotspots, and if sufficient precautions are not done, it may create even more fear and further harm the world . The Covid-19 outbreak has sparked concern on its influence on the global and markets, resulting in falling stock prices and bond rates (Nee Lee, 2020). In addition, the scenario has prompted significant banks and organizations to reduce their expectations for the global , and a recent study from the OECD indicates that growth projections for 2020 have been lowered in almost all nations. Earlier this , the worldwide economic growth rate was 2.9%; as of today, it has fallen to 2.4%. (Nee Lee, 2020). In addition to being one of the hardest-hit industries by the viral pandemic, the manufacturing sector, particularly the Chinese manufacturing industry, is also among the hardest-hit industries. Such a slowdown might have a detrimental impact on other nations with strong economic ties to China. Chinese factories are taking longer than anticipated to restore operations, and the continued spread of Covid- 19 in other countries suggests that global industrial output will stay sluggish for a longer period of time than anticipated (Nee Lee, 2020).

 

China’s condition has been vital to the global , according to a study by the United Nations Conference on Trade and Development (2020). China has a vital role in the global not only because of its manufacturing sector and exporter of consumer goods, but also because it is the leading provider of intermediate inputs (energy, raw materials, and semi-finished goods) to foreign manufacturers. China is now the source of around 20% of intermediate items in the global manufacturing trade. Many businesses are concerned that the measures put in place to limit Covid-19, such as restrictions on commercial operations and the movement of persons, are impeding the delivery of vital components from Chinese manufacturers, therefore harming their production (UNCTAD, 2020). As the Covid-19 outbreak can impact the productivity capacity and exports of any given nation, European automobile manufacturers may face a critical shortage of necessary components for their operations, while Japanese companies may have trouble acquiring necessary components for digital cameras and other products. As a result of challenges with their supply chains, many businesses are compelled to react simultaneously on numerous fronts, including the preservation of their employees’ safety and their economic viability (Alicke et. Alt, 2020). According to an article by McKinsey & Company (2020), enterprises should consider taking quick action in response to Covid-19. Among these efforts are optimizing production and distribution capacity and assessing the true demand from end customers. Due to the travel restrictions and lockdowns, certain businesses may encounter inventory shortages; thus, it is vital to plan for these potential consequences (McKinsey, 2020).

 

Since the Covid-19 outbreak, several small and medium-sized ICT companies have begun to see some short-term disruptions. For instance, Americans are adjusting to e- more quickly, as online sales of groceries doubled in the middle of March compared to earlier in the month. This, as a result of the virus-related closure of physical establishments, forces people to go online for essentials (Holman, 2020). According to data from Adobe Analytics (2020), e- has climbed by 25% overall. However, as with the majority of external influences, businesses, even ICT small and medium-sized enterprises, could tweak their marketing, operations, and business models to improve customer satisfaction (Denger, 2020). Integrity is a vital part of corporate operations for younger and more contemporary companies, and it is crucial that a planned reaction to the external effect be accomplished. According to Denger (2020), methods for adapting a business to the current Covid-19 situation include communicating with the consumers and explaining how the crisis affects one’s business, meeting customer commitments, and ensuring operational continuity, which will be difficult but is now more crucial than ever. Due to the Covid-19 outbreak, several internet vendors have begun to create new product offerings and sales techniques; nevertheless, this might result in them incurring tax obligations that they have not before experienced (Demery, 2020).

 

Moreover, some digital marketing gurus believe that e- sales would increase when consumers are socially isolating and remaining at home. However, preliminary evidence suggests that the actuality is more complex (Sterling, 2020). According to Quantum Metric’s (2020) early statistics, e- connected with particular physical shops is witnessing a 52% rise in average weekly revenue growth rate and an 8.8% increase in conversion rates compared to the previous (Sterling, 2020). The available research indicates that mall foot traffic is decreasing. This might put pressure on e-, and many think that customers will gravitate toward Amazon and other online retailers. Nonetheless, as the likelihood of distribution and manufacturing problems increases, product shortages and a possible decline in consumer demand as a result of individuals being quarantined and unwilling to risk exposure to the virus might impede the expansion of e-. Especially if the weakens and a recession ensues (Sterling, 2020). Moreover, these facts and hypotheses show that the current situation for retailers is quite unclear. Currently, it is difficult to foresee the effects of Covid-19 on society, people’s health, the , and businesses. However, by examining past pandemics, it is possible to compare the impacts. SARS is one epidemic with which the consequences of e- may be paralleled (MphOnline, 2020).

1.2 Problem of study

As the issue of the Covid-19 epidemic is still current, there is a dearth of research on its relationship to small and medium-sized ICT enterprises. According to what is now known about this topic, it affects most sorts of businesses and global and national economies.

Frost and Sullivan’s paper titled “The Coronavirus Outbreak and Its Impact on The Global Economy” (Frost and Sullivan, 2020) asserts, “The coronavirus is not just a global health disaster, but also an economic one” (Frost and Sullivan, 2020). Due to China’s efforts to combat the epidemic, many companies throughout the globe have struggled. Due to China’s status as one of the world’s most significant economies and its substantial contribution to the global , the lockdown has also had repercussions outside of China (Singh, 2020).

 

The Covid-19 problem will undoubtedly have numerous repercussions for customers, but many merchants have differing ideas on the severity of the situation and its effects. 32% of 304 retailers surveyed by Digital Commerce 360 (Radial and Zoovu 2020) feel the Covid-19 will have a somewhat negative effect on their e- company, while 30% believe it would have a moderately positive effect (Radial and Zoovu, 2020). In addition, the survey indicates that online shops are still adapting to the ever-changing environment caused by the Covid-19 epidemic. Digital Commerce 360 has compiled a list of the 100 (North American) shops based on their worldwide e- sales, and as of March 23, 62 of these companies had shuttered physical locations owing to the epidemic. Most of them now have Covid-19 -related messaging on their site and these are some of the modifications they now have to adjust to. In addition, the report indicates that internet sales have climbed by 52% compared to the same time last . Offline merchants are increasingly reliant on their digital strategies and digital solutions to sustain their businesses (Radial and Zoovu, 2020).

 

The virus has spread to every region on earth. Major economic powers such as the United States, Spain, Italy, and Germany, among others, have been severely impacted by Covid-19, and the globe is at a halt for an indeterminate amount of time (Abdin, 2020). All sorts of manufacturing, including technical, mechanical, and technological, have decreased to a negligible level, which may soon result in a severe worldwide financial catastrophe. Even if Covid-19 is a significant health concern, several businesses and entrepreneurs must continue operations since consumption of s cannot be halted at this time. If the supply of necessary goods is cut off, the situation might worsen much more. Consequently, while doing business during a pandemic, strategic planning must be addressed (Abdin, 2020). This involves ensuring the safety of employees and using other ways of communication, such as digital channels. Companies must adapt to every digital technology available to them to guarantee that their operations continue to run smoothly amid the economic downturn. Due to the fact that customers do not need to go outdoors and expose themselves to the virus, e-businesses and e- have significant prospects at this period. Digital tools are an excellent alternative for collecting orders, procuring supplies, receiving shipments, operationalizing manufacturing, distribution, and after-sales care (Abdin, 2020).

 

The situation on Covid-19 is ever-changing, and new obstacles develop. As certain nations are under lockdown and people are typically staying inside more, the everyday lives of a great number of individuals have altered (Hasanat et al., 2020). As fewer people purchase in traditional locations, they are increasingly turning to e- sites, which is beneficial for their sales but might create shipment delays (Radial and Zoovu, 2020). Companies including as Amazon, FedEx, and UPS have experienced delays as a result of Covid-19-related surges in online delivery (Porter, 2020). According to Radial and Zoovu (2020), 57% of customers adjust their day-to-day activities to be as contactless as feasible. This demonstrates that shops and carriers are faced with a significant surge in online orders. Specifically, internet orders for home items and consumables have increased. Due to Covid-19, online order fulfillment is slower as firms get more orders from customers and as the time required to complete orders has increased. The amount of time from when a customer clicks “buy” to when the order is picked up by the carrier for delivery has increased from 15.1 hours to 21.2 hours on average (Radial and Zoovu, 2020).

 

During the pandemic, a number of businesses faced a significant decline owing to low demand, most notably the aviation industry, while others, such as the telecommunications and ICT sector, had a prosperous . The remainder of this paper will focus on small and medium-sized enterprises (s) in Kaduna North and how the Covid 19 epidemic influenced their performance and profitability.

 

1.3 Research question

How is the Covid-19 epidemic affecting small and medium-sized ICT enterprises?
Which portions of their value chains are Covid-19 affecting?
How are they handling the Covid-19 circumstance?

 

1.4 Purpose of study

This study’s objective is to;

To investigate the impact of the Covid-19 epidemic on small and medium-sized ICT firms.
To determine how their value chains are impacted.
To determine how s are addressing Covid 19

 

1.5 Significance of study

This paper is to serve as a resource for ICT small and medium-sized organizations who are currently coping with the epidemic, or may face similar challenges in the future.

pandemics. Lastly, the findings presented in this study may add to the literature resulting from the Covid-19 epidemic.

This study adds to an understanding of the economic effect of COVID- 19 on the ecology of small businesses. The fate of the 48 percent of people employed by small firms is strongly related to the small company ecosystem’s resistance to the tremendous economic upheaval created by the epidemic.

Delimitations

This research focuses only on the impact of Covid-19 on small and medium-sized ICT firms in Kaduna North LGA that sell items. It will not investigate the impacts of Covid-19 on offline or conventional businesses, since the empirical data would therefore have to be limited to companies.

 

THE IMPACT OF ON ICT SMALL AND MEDIUM-SIZED BUSINESS PROFITABILITY

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