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How has COVID-19 Impacted International Business?

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Over 200 countries worldwide have reported cases of COVID-19 since early 2020. The rapid and deadly spread of the virus has necessitated national lockdowns, which have had a devastating effect on countries’ economies. As more people are vaccinated, and we start to look forward to life after a global pandemic, it’s time to take stock of how the virus has impacted international business.

With businesses in every sector forced to close and most of the remaining workforce telecommuting, how has the global business market changed? Let’s take a look.

1. Hospitality & travel were among the hardest-hit industries.

COVID-19 has had the most significant impact on businesses in the hospitality and tourism sectors. Hotels, pubs, restaurants, and clubs worldwide have been forced to close their doors to guests to prevent the spread of the virus.

Millions of jobs were cut, many independent companies went under, and billions of US dollars were lost due to canceled flights, vacations, and business trips.

In May 2021, the UK announced its traffic light system for international travel, and though thousands of people have already taken advantage of it and been on vacation to countries on the “green list,” it is estimated that international travel will not return to pre-pandemic levels until at least 2025.

2. Unemployment rates have risen. 

Before the pandemic, global employment rates were relatively steady. However, since the emergence of this virus, the number of people out of work worldwide has risen exponentially. In 2020, the numbers looked like this:

  • 4.9% (UK)
  • 7.3% (EU average)
  • 14.8% (USA), the highest unemployment has been since records began in 1948

A year later, new job opportunities in Europe are still scarce compared to pre-pandemic levels. However, vacancies in Australia are back to where they were in 2019.

3. Impact on international stock markets

The world’s biggest stock exchanges, including the FTSE, Dow Jones Industrial Average, and the Nikkei, were hit hard during the first few months of the pandemic. Since the first vaccine was announced in November 2020, the major Asian and American stock markets are back on track, but the British FTSE is still in the red.

However, the impact of COVID-19 upon international business has not been 100% negative.

Perhaps unsurprisingly, global pharmaceutical companies involved in developing the vaccine have seen significant rises in their share prices over the last 12 months. In 2020, Moderna was by far the biggest beneficiary; its share value rose by a massive 715.5%, outstripping its nearest competitor, Novavax, by over 200%.

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Looking beyond the medical/pharmaceutical industry, a survey of Chief Financial Officers (CFOs) carried out by Globalization Partners and CFO Research identified three positive trends for large corporations looking to expand internationally. These were:

1. Expansion plans are going ahead, despite the pandemic.

The majority of respondents made no or minimal changes to their expansion plans when COVID-19 hit. 45% of the CFOs surveyed said they are continuing with their development plans despite the pandemic or delaying their plans by less than a year. A further 9% reported they would be expanding their operations in or very soon after 2021.

North America is the number-one market that organizations in other locations want to crack. The Asia-Pacific region (excluding China) comes in at a close second. This is because newcomers in those areas have the chance to capture a significant share of the market. Respondents also cited sales expansion, diversified investments, and a larger talent pool as reasons they wanted to expand into these regions.

Other benefits of global expansion include:

  • Increased revenue
  • Extended product lifespan
  • New audience 
  • Less competition
  • Enhanced reputation

2. By making remote working a necessity, COVID-19 has created a more diverse and creative workforce.

The spread of COVID-19 has rapidly accelerated the rate of digitization within global companies. The shift from onsite to remote working has forced organizations to implement new practices that allow colleagues to communicate and teams to continue working together from home.

Learn more about the digital transformation process and how the multinational heating technology company Vaillant responded to this challenge during the pandemic by checking out some of our other recent articles.

In 2021, government restrictions still apply in many countries, and they vary from region to region, but as the majority of us begin to emerge cautiously from strict lockdowns, the question is whether or not employers will continue to offer remote/flexible working in a post-pandemic world.

83% of respondents to the Globalization Partners/CFO Research survey said they thought a global, remote workforce was the solution to the challenges of a world in confinement—and beyond.

In May 2020, Jack Dorsey, CEO of Twitter and Square, announced his employees could work from home “forever” if that was what they preferred.

The pros and cons of remote working have been disputed since it became a widespread practice during the first wave of the pandemic. However, the majority of studies show that a dispersed workforce is more productive. Plus, now that location is no longer a barrier to employment, organizations embracing global, remote working are building more diverse teams, expanding their skill sets, and promoting creativity, all of which are net positives for any business!

3. Employee wellbeing is now a top priority for organization heads.

Health & safety beat new business strategies, increased revenue, and reduced costs to become the most important consideration during the planning stage of a foreign expansion. This has and will likely continue to lead to more consideration of employee needs, and provide opportunities for workers to grow and spend more time on personal development than they might have in a pre-pandemic work environment.

Are you interested in learning more about what it takes to be the CFO of an international business? With EU Business School’s BA (Hons) in Business Management, you can. We offer a comprehensive course in Management, or you can specialize in Finance or International Business, learning from globally renowned leaders in your chosen field.

Previously the International Business course was held exclusively at our Barcelona campus. However, due to COVID-19, we too have adopted a hybrid approach to learning. Get your degree online, in the classroom, or through a mixture of virtual and in-person learning.

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