COVID Pandemic: New Business Opportunities from Procurement and Supply Perspective

Did anybody ever imagine that Nokia, once the world’s largest mobile handset manufacturer, would almost go into oblivion in the face of a new entrant in the industry, namely Apple? It took just seven years for Nokia to go from being the market leader to getting sold to Microsoft in 2014. 

How could one explain that three of Indonesia’s current unicorns (companies with a market value of over US $1 billion)- GoJek, Tokopedia and Bukalapak- started their journey within two years of the 2008 global economic recession? It was a time when industry-leading organizations like Lehman Brothers and Washington Mutual suffered bankruptcies. (Tech Collective 2021)

Could we ever imagine that Apple’s entry into the smartphone market in 2007 would not only disrupt Nokia’s dominance in the market, but it will affect the sales of clocks, cameras, calendars, maps, and even gum? The emergence of smartphone culture has liberated consumers from the monotony of waiting at checkouts in supermalls, leading to a significant decline in the impulse buying we once used to do.

These are some of the realities that went against all odds, defying our sensible, rational expectations. For example, handset manufacturer Nokia, in the early 2000s, held as much as 40% of the global market, but since Apple’s iPhone launched in 2007, the Finnish company experienced a sharp decline in its market share, reaching as low as 3% in 2013. Nokia’s market dominance can also be described by the fact that it contributed one-fourth of Finland’s economic growth during the 1998-2007 period. (Lamberg 2019; Lane 2016)

The unexpected nature of these events definitely took all the stakeholders involved by surprise, and they had their impacts, be they positive or negative, worldwide. However, all these events may not, yet, be comparable to the ongoing global pandemic in terms of the latter’s severity of the negative impact felt across the world for more than two years now, and it is still counting.

The world has seen rapid changes over the past three decades in terms of globalization and the emergence of modern technology. It has only made businesses ever more competitive in a fast-paced world. When there was once insufficient information to make informed decisions in organizations, there is now an overflow of information coming in from all directions as a result of open and easy access to information technology. From lack of information to information overflow, this positive shift over the years has brought some challenges along the way. Today, the question is not about the quantity of information; rather, it is about interpreting information into knowledge that can be used to the organization’s advantage.

Global Impact of COVID 19:

The COVID-19 pandemic has severely affected people across the world, from their personal to social lives, leading to an economic crisis across the world. According to Statista, the world has lost around the US $2.96 trillion of economic output in the year 2020 alone. The United Nations, back in mid-2020, predicted the world would lose the US $8.5 trillion worth of economic output in two years. Almost every sector, from the economy to business, has faced challenges, many of which have never been seen before in human history. Millions of people have been reduced to extreme poverty as a result of the loss of jobs and businesses. (Statista; UN)

Small and medium-sized enterprises (SMEs) have been hit the hardest, given their lack of cash reserves to survive the indefinite lockdowns and shutdowns in almost every part of the world. As bilateral trade, too, was disrupted to a large extent, there was a severe shortage of daily commodities, including energy resources like gas and oil, in many parts of the world. Food security has been a huge cause of concern for poorer countries, including those in Africa. A mass vaccination drive has not been administered as successfully in developing and poor economies as has been in developed ones. In more than one and a half years since vaccination began, only around 65% of the world’s population got at least the first dose of the vaccine. But what is even more concerning is that Africa only got 20% of its total population partly vaccinated. (Our World in Data 2022)

Not all gloomy in the pandemic-hit World Economy:

The economy may have shown glimpses of recovery in 2021 with a 5.6% global economic growth predicted, but the growth was not expected to be evenly distributed across the world, with large contributions from the US and China predicted by the World Bank (WB 2021). The potential threat of another wave of COVID massacre, coupled with a huge discrepancy in vaccination drive, points to a slow recovery of the global economy, as it will take a considerable time for the world economy to go back to its pre-pandemic state.

The pandemic-induced lockdowns derailed economic activities, resulting in slower or negative growth across the world. Food and beverage, hotel and restaurant, aviation, public transport, education and other industries have been severely affected by the pandemic. There is a saying, however, that every crisis brings with it some opportunities as well. All that one needs to do is to identify those opportunities and utilize them to his or her business advantage. Resources and abilities required for this purpose are what David J. Teece terms Dynamic Capabilities (DC).

Businesses, both in major and minor economies, faced either permanent or temporary shutdowns. Yet, there are a few who not only survived this crisis, but eventually grew over this period in terms of financial output. While, in some sectors, the pandemic was felt a bit more intensely, there are sectors that have seen unprecedented growth, such as online education, takeaway food, grocery delivery, home fitness, online games and board games.

A closer look at these sectors would clearly show that these are nothing but alternative choices consumers consciously made in the face of the pandemic. The common factor in these choices is the use of internet-enabled digital devices, both from the buyer’s and consumer’s end. This is where technological innovation helpful. For example, education has been one of the worst-affected sectors since the global pandemic was declared. Indefinite closure of educational institutions, however, saw a growth of 426% in online education within the first year of the pandemic. Similarly, work-from-home contributed to extraordinary growth in gym and fitness products, video-conferencing tools like Zoom, home entertainments like board games, online games and internet-based streaming platforms like Netflix. (Mint Formations)

So, the innovation observed so far has been largely based on the strength of the internet. The online route was well-explored and adopted by a large number of people worldwide, as it has created significant value for both the business operations and end-users.

Business Opportunities and Successes during Pandemic:

Let us begin with an established company like Coca-Cola. The soft-drink giant’s supply chain has seen a digital shift recently, paving the way for faster, smoother and more accurate order processing. Earlier, it used to be done manually, which was time-consuming as well as not cost-effective. This is a standard example of how technology adoption can lead to improved operational performance.

Nike, the global footwear giant, has also gone online during the pandemic, introducing its digital ecosystem, which includes applications, such as the Nike app, the Nike Training Club, and the Nike Run Club. This way, they have moved closer to their customer base, without the interference of any intermediaries. By implementing this technology, Nike has tapped the ‘how to sell’ aspect of innovation. This digital transformation of customer-end operations will help them take a more customer-centric procurement approach, unlike the traditional approach in which value creation is limited to savings and compliance.

Early adoption of innovation or advanced technology has always yielded a certain number of competitive advantages. So, the companies that had a strong online presence from the pre-pandemic time found it much easier to keep their businesses operational as their customer base had already been used to it. IKEA, which sells ready-to-assemble furniture and kitchen products, did not face too many challenges in staying operational online as it had already gained a significant online presence even before the pandemic hit the global economy. Its competitive advantage can be attributed to its successful identification of market opportunities through scanning the external environment.

Environmental scanning is an effective tool used to analyze information found in the external environment of the organization with a view to making informed decisions regarding the organization’s future plan of action. The sole objective of scanning external events, trends and forces is to derive a sustained competitive advantage over competitors in the long run. To this effect, successful scanning requires an investment of both money and time over a period of at least three years. (Choo 1999)

Two Small-business Success Stories from Singapore:

Singapore, as a country, would rank higher than most others in terms of its COVID management measures. Still, their economy suffered significantly during the “circuit breaker,” a two-month lockdown measure to stop spreading the virus. Singapore has also been highly successful with its vaccination drive, thus, easing off the restrictions much earlier than many other developed economies. The Singapore government has also provided stimulus packages for various groups, such as Jobs Support Scheme (JSS). Yet, many had to close their business operations. The interesting fact is that Singapore has seen a lot of new businesses open up even during the pandemic-hit 2020, so much so that new businesses outnumbered the aggregate closures by 20,000, which was even larger than 2019’s number of 14,000. It was probably because a large number of people lost their jobs during the COVID crisis, and the government packages encouraged them to set up new businesses. (CAN 2021)

While many were forced to shut down their businesses, there are some motivating success stories found in the same market. The first success story is that of Ms. Sandra Sim. She was the owner of a successful Cantonese restaurant and bar, which she had to close during the pandemic crisis. She gave all her effort to save her business from being shut down, but when sales continued to decline even after the “circuit breaker,” she did not have any other choice but to stop the operations in the face of a struggle to meet the operational costs.

But, in the end, it is not all gloomy for Sim. After closing the restaurant, she launched a private dining service, which is going very well. She is also selling a new chicken dish online. This way, she is doing her business without having to commit a large fixed cost.

The second success story is that of a former sneaker shop owner Mr. Vince Foo, who, before the pandemic, was enjoying a profit margin of 45 to 55 percent on retail prices. However, as fate would have it, he made some wrong decisions during the pandemic. First of all, he kept his shop open for too long before going online and then invested too much in his inventory, which he would later clear by offering high discounts online.

Finally, Mr. Foo has found a new avenue of earning by using his experience in the sneaker business. He continues with his online business, but with a shifting focus from products to services. He is now offering training on customizing and refurbishing sneakers.

It is not that Ms. Sandra Sim and Mr. Vince Foo have been highly successful, but they have found their own ways to survive in business, while many others could not. Their success lies at this particular point in a pandemic-stretched economy.

Mr. Foo has looked to survive in the market by employing a product or service differentiation strategy in which he is offering something that would probably have less competition while also focusing on mitigating risks as it does not involve large capital investment or attack a large fixed cost. He is basically selling his knowledge.

Mrs. Sim has also minimized her costs by exclusively going online. She is basically employing the “focus” approach in which she is targeting a narrow segment, touching upon both the “cost focus”- reducing the cost, thus offering competitive price- and “differentiation focus”- as she is giving a new chicken recipe online.

At the beginning of the article, I mentioned the example of Nokia’s losing out to Apple. Yes, Apple had cutting-edge technology, which they still enjoy over their competitors, a clear competitive advantage based on Apple’s highly sophisticated technology, which is rare and hard to imitate. The Resource-Based view, as postulated by Birger Wernerfelt (1984), would certainly attribute sustained competitive advantage to Apple in the long run.

But that does not mean Samsung and other major players have had to leave the market. Several bad choices, coupled with a disadvantageous organizational structure, led to their retreat from the market. They initially failed to identify or sense their needs (through scanning), and then, once they sensed them, they failed to seize that opportunity with the capabilities they possessed. But then, they could have pursued a cost-leadership and focus approach, as proposed by Michael E. Porter’s (1980) generic strategies, to stay in the market, though in a different segment.

Learning Lessons and Future Plan of Actions:

Both success and failure provide us with valuable lessons. It is important for all of us to learn them and use that experience in our future course of action. Those who earlier faced challenges like 2008’s economic recession or the SARS epidemic in 2003-04 have been better equipped to deal with the current pandemic and its challenges.

Mr. Kelvyn Chee, who is the owner of a growing apparel business based in Singapore, was 26 when he experienced how his father failed to save his apparel business during the SARS outbreak in 2004, which almost forced the family into bankruptcy. But during COVID, Mr. Chee, who started his own business back in 2005, has in fact grown his business significantly while others struggled to stay on the market. During the pandemic, he opened 12 new stores, capitalizing on the lower rental costs due to the current economic downturn. He also did not repeat his father’s mistake of borrowing large amounts from banks, and would never present himself or his family members as personal guarantors for bank loans.

Learning lessons is an important way to enhance one’s experience and capability, which is an invaluable asset for any business.

Works Cited:

Tech Collective (2021) We take a closer look at the Indonesian unicorn startups. Available at:https://techcollectivesea.com/2021/02/22/we-take-a-closer-look-at-the-indonesian-unicorn-startups/ (Accessed: 26 March 2022).

Schaefer, S.(2011) ‘The Great Recession's Biggest Bankruptcies: Where Are They Now?’, Forbes, 10 August. Available at: https://www.forbes.com/sites/steveschaefer/

2011/08/10/the-great-recessions-biggest-bankruptcies-where-are-they-now/?sh=5c567c184b7e (Accessed: 26 March 2022). 

F&L Asia (2018) ‘Advanced and future technologies: Avoiding the ‘Nokia effect’ ’ , 6 November. Available at:https://www.fuelsandlubes.com/fli-article/advanced-future-technologies-avoiding-nokia-effect/ (Accessed: 27 March 2022).

Lamberg, J.,Lubinaite, S.,Ojala, J., and Tikkanen, H.(2019) ‘The curse of agility: The Nokia Corporation and the loss of market dominance in mobile phones, 2003–2013’, Business History ,63(4),pp.574-605.doi:https://doi.org/10.1080/00076791.2019.1593964

Lane, E.(2016) ‘Nokia: Life after the fall of a mobile phone giant’, BBC , 18 March.

Available at: https://www.bbc.com/news/business-35807556 (Accessed: 30 March 2022).

Szmigiera, M. (2022) Impact of the coronavirus pandemic on the global economy - Statistics & Facts. Available at: https://www.statista.com/topics/6139/covid-19-impact-on-the-global-economy/#topicHeader__wrapper (Accessed: 30 March 2022).

COVID-19 to slash global economic output by $8.5 trillion over next two years. Available at:https://www.un.org/en/desa/covid-19-slash-global-economic-output-85-trillion-over-next-two-years (Accessed: 1 April 2022).

Engidaw, A.E. Small businesses and their challenges during COVID-19 pandemic in developing countries: in the case of Ethiopia. Journal of Innovation and Entrepreneurship 11, 1. doi: https://doi.org/10.1186/s13731-021-00191-3

Our World in Data (2022) ‘Coronavirus (COVID-19) Vaccinations’. Available at: https://ourworldindata.org/covid-vaccinations?country=OWID_WRL (Accessed 29 March 2022).

Teece, D.J. ‘DYNAMIC CAPABILITIES’ , DAVID J. TEECE THE SCHOLAR ENTREPRENEUR,. Available at:

https://www.davidjteece.com/dynamic-capabilities (Accessed: 2 April 2022).

Velayuthasamy, R. (2022) ‘[Infographic] Not All Doom & Gloom: Coronavirus Business Success Stories,’ Mint Formations, Available at:  https://www.mintformations.co.uk/blog/infographic-coronavirus-business-success-stories/ (Accessed: 1 April 2022).

Choo, C.W. (1999). The Art of Scanning the Environment. Bulletin of the American Society for Information Science and Technology, [online] 25(3), pp.21–24. Available at: https://asistdl.onlinelibrary.wiley.com/doi/10.1002/bult.117 [Accessed 10 Mar. 2022].

The Big Read: COVID-19 decimated their promising business, but some entrepreneurs aren’t afraid to try again. (26AD). CNA. [online] Apr. Available at: https://www.channelnewsasia.com/singapore/big-read-covid-19-decimated-their-promising-business-some-entrepreneurs-arent-afraid-try-again-241866 [Accessed 4 Apr. 2022].

Birger, W. (1984). The Resource-Based View of the Firm. Strategic Management Journal, [online] 5(2), pp.171–180. Available at: http://web.mit.edu/bwerner/www/papers/AResource-BasedViewoftheFirm.pdf [Accessed 3 Apr. 2022].

Porter, M.E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. 1st ed. New York: Free Press.