Essay Example on Navigating Turbulent Markets: Challenges of the External Business Environment

A market is a place where goods and services are sold or purchased and can either be physical or online markets. (Zhao & Deng, 2017). The current external business environment is described to be in a state of 'turbulent fields' which means that markets are highly unpredictable. The smallest of changes have a huge impact on organisations that depend on these markets. (Selsky, 2016). An event like the outbreak of the Corona Virus (COVID-19) lays testament to this claim. Many countries, even the developed ones, have been hit hard. It's ironical that the most developed countries of the world (USA, China and European Countries; especially Italy) have had among the worst results with record-high death tolls. This has called for governments to put up stiff measures to curb the spread of the Corona pandemic measures like; total lockdown (Italy), quarantine and curfews. The aim of this research paper is to cover a report on the situation in the United Arab Emirates (UAE), a country in the Middle East. The questions to be discussed will attempt to answer questions concerning how the market conditions in the external environment of businesses there have been affected or altered due to the Corona Virus Outbreak.

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The UAE is made up of 7 emirates (Abu Dhabi, Dubai, Ajman, Fujairah, Sharjah, Ras Al Khaimah and Umm Al Quwain each ruled by a Sheikh/dominant family. It is a world-renowned business and tourism hub with a GDP of over $ 425 billion in 2019 generated by a population of 1 million natives and about 8 million foreign citizens engaged directly and indirectly in over 340,000 businesses of all sizes and types. The Corona Virus has some legal, social, economic and technological implications to the country's business environment.

Legal measures have been put in place to counter the spread of the COVID-19. For example, the UAE Central Bank has issued orders on banks to reduce commissions and interest rates for the citizens. One of the banks, Apex Bank, has even convened an advisory committee to give way forward. The UAE labour laws require that sick persons go on leave or compulsory quarantine for 90 days leave. First 15 days will be paid, the next 30 half-paid and the remaining 45 days unpaid. The law has placed fines of 2000 to 50,000 Dirham for violation of health precautions, e.g. unnecessary meetings, leaving home for no reason. Effective, 26th March 2020.

The social context presses for; the unnecessary movement of people, limited visiting of health facilities, public transport should not exceed the prescribed passenger number. People are expected to keep a physical distance between them and wear masks in places that are crowded. Violation of this attracts heavy fines. The situation has clearly affected the social life of people. They can no longer move around as often as usual. Social distancing is compulsory. Life is not like it used to be.

The economic implications are, by far the most significant. For example; China, the major trading partner of the UAE, has had to withdraw major business transactions. This has resulted in losses running into billions of Dirham. China, the epicentre of the Corona outbreak, has had to shut down the majority of its businesses and send thousands home.

Sectors like Trade, Tourism and Transportation have suffered the most. People have limited their movement, a big hit to the transportation sector. Prices on consumer goods have been reduced, meaning reduced profit to companies across the UAE. It makes sense as the working class has been forced to stay at home. This collectively translates to a lowered GDP (Gross Domestic Product) in the national economy, especially if the situation does not improve by the end of the financial year, 2020.

Technology may be impacted positively, in my opinion. Online jobs, where people can work from home, have become the norm. Use of emails and online platforms is preferable. New medical concepts will be used, e.g. Virtual Medicine where, a medical practitioner can remotely communicate (mobile phone, video conferencing) with a patient on how to treat ailments. Makes sense, since going to medical facilities in person has been discouraged. The mobile phone is likely to become the most preferred mode of communication since socializing in person is also to be avoided as much as possible.

The consumption trends of the customers are fast changing. Examples include; people have shifted their attention to the use of online goods (Jumia, Glovo etc.), more use of hygiene-related products (detergents, sanitizers), and increasing preference for the purchase of basic goods in bulk to ensure to reduce movement from homes. People are also going for the cheapest available products meaning the high-end goods have a reduced number of consumers. This is due to reduced income due to the indefinite loss of jobs among citizens.

Consumers, as of now, have shunned some services in response to the Corona outbreak. A good example is the preference of private over public transport. The rationale is; public transport, unlike private, has many users hence a higher chance of contracting the deadly virus. Food items from open-air markets, though potentially healthier and cheaper, have been replaced with those from 'cleaner' sources like; malls and supermarkets.

Nature shows that the fall of one is an opportunity for another to rise. The death of an animal in the savannah is a chance of survival for scavengers (Beasley, 2019). In that line of thought, some businesses have seen opportunity amid the crisis. The ones that have suffered the most are; tourism, trade and transportation because; international travels have been greatly limited, people have closed down the business and gone into quarantine and movement is extremely restricted, respectively.

On the other hand, sectors like; health and sanitation have seen a boom. It is known that the Corona Virus can be killed by detergents or disinfectants. Thus, companies dealing in such products have increased sales and profit from it due to a spiked demand. Companies dealing with health-related products have also gained. Pharmaceutical and medical equipment manufacturers have increased profits due to the high demand for products like; medicine, surgical equipment etc. Imagine if whole neighbourhoods need disinfection, how much is the demand for such, on a daily basis??

The directives from bodies like the World Health Organisation (WHO), is that people should limit physical contact and interactions, i.e. social distancing. As such, the movement of goods and services has had to change. For some companies, the products will be exhibited on online platforms and sold. Thus the distribution channels change from actual places to online or virtual places. A good example is Jumia Global. An online consumer goods retailer.

Apostle Gino Jennings once said that; 'Ignorance is the worst bondage to man.' The best weapon is the good old education. The COVID-19 virus has obviously disrupted the learning activities of scholars across the world. Most, if not all, learning institutions have been closed down to prevent the spread of the disease, especially for school children, who are classified as a high-risk population apart from the Elderly.

The result is that learning has now been shifted from classroom learning to online study as of right now. Lectures, notes, assignments and even exams, are done online. Use of software like; Turnitin, to check for exam irregularities or plagiarism is incorporated. In my opinion, online learning is a pro-active way of dealing with the onset of a raging pandemic. It is a good way to ensure that time meant for education and learning is not wasted in the name of a disease outbreak.

As a College student, if I had to choose between online education and campus education, I would choose both of them. Why?? As a future professional/ entrepreneur, one must have a 'contingency' plan. The rationale is that tomorrow is unknown. Between 2002- 2004, SARS (Severe Acute Respiratory Syndrome) was the equivalent of the Corona Virus today. No one saw it coming. Nobody knew the Corona Virus would come. It is thus imperative that we have a back-up plan in all areas. In this case, online learning is the perfect back-up plan where campus learning is no longer suitable.

Pharmaceuticals, e.g. Pharmax and others, in the UAE, are currently facing three challenges which present threats and opportunities. The challenges; Preventing the disease from spreading, treating it and developing the needed equipment and measures necessary to deal with the disease. They have responded by; first, developing Preventive drugs/vaccines to prevent further spread or recurring in the future. Second, developing curative medicine (antibiotics) to kill off the virus and heal affected persons.

The third is more of intellectual property as it will mostly involve the creation of knowledge through research (books and research findings) to help in the development of physical equipment or measures to eradicate the COVID-19 virus. A good example of a research finding is that; the virus can be killed by exposure to heat that exceeds 270C and that it cannot be spread by air but more through physical contact.

Conclusion

Markets in the business environment have been designed over time to be flexible to change and to deflect or adapt to situations. The struggles that many organisations across the world are going through are not for good. Like any economy goes through; prosperity and depression the recovery stages, so will the market conditions and the organisations that depend on them be restored to their former glory. The COVID-19 pandemic should be treated as a passing storm.

References

Beasley, J. C., Olson, Z. H., Selva, N., & DeVault, T. L. (2019). Ecological Functions of Vertebrate Scavenging. In Carrion Ecology and Management (pp. 125-157). Springer, Cham.

Ramirez, R., & Selsky, J. W. (2016). Strategic planning in turbulent environments: A social ecology approach to scenarios. Long Range Planning, 49(1), 90-102.

Zhao, X., Zhao, K., & Deng, J. (2017). Origin Location Advantages in Online Markets for Foreign Branded Products.