Adapting to New Economic Conditions

If there is one lesson to learn from the pandemic, it is the willingness and resolve to adapt to the changes in the business environment. Businesses, both large and small, often meet market challenges. But adjusting to new economic conditions and shifting customer preferences will ensure business survival and growth.

We’ve seen many businesses closing down their operations during the pandemic period. The lockdowns and attending mobility restrictions had proved too much for many of our small entrepreneurs. Their usual customers vanished because of their inability to commute—public transportation was scarce and practically nobody was allowed to go out during the onset of Covid-19.

Bigger establishments were not spared from the market shock caused by lockdowns. Many gas stations had to close shop—at least momentarily—while several fast-food outlets and convenience stores had to operate on skeleton force—because very few people were traveling and leaving their homes.

Yet, amid those challenging times, some businesses survived and slowly reopened as Covid infection rate eased. Several restaurants offered al fresco dining to draw customers and keep the business alive. Many fast-food outlets adjusted their operations and heeded the clamor of the market. Online food delivery services flourished as residents found a way to order their lunch or dinner without physically going to a restaurant. Ordering food by phone and through the apps found in the cell phones became a sign of the times.

The pandemic also gave rise to the so-called plantitas and plantitos. Cooped up in work-from-home arrangements and with no place to lounge around, many of our kababayans, bored and stressed by the pandemic, amused themselves by devoting their idle time to growing household plants from spider plants and monsteras to philodendrons and herbs. Many enterprising Filipinos back then saw the demand for indoor plants and catered to the “plantdemic.” A new set of entrepreneurs has emerged in the time of Covid-19.

The pandemic is ebbing in the world today. But new challenges are emerging. The Russian invasion of Ukraine has sent global oil prices spiking and inflation is surging in Western nations, one of our major export markets. China’s zero-Covid policy has disrupted its industrial production and is slowly affecting countries with links to Shanghai’s hub.

The International Monetary Fund has warned that the war in Europe could lead to stagflation in Asia—referring to an economy that is experiencing both increased inflation and the stagnation of economic production. IMF’s outlook is not far-fetched, although I still believe Asia, including the Philippines, is better off than the rest of the developed world, where inflation is more severe.

The United States, one of our major markets, is moving to check rising prices that surged 8.5 percent in March. The US Fed will likely opt for an aggressive interest rate hike to curb inflation further after raising it by 0.25 percent last month. The new impending rate hike, meanwhile, will come after the US reported a 1.4-percent contraction in the gross domestic product in the first quarter of 2022.

Against this backdrop of war and rising crude prices, Filipino entrepreneurs and businessmen may have to innovate again or adapt to the emerging global economic order to survive. But let me be clear about this: ours is a rebounding economy that has plenty of room to grow. The Philippines, in addition, is in a dynamic region where Covid-19 has largely been tamed and where the population is growing.

We have yet to reach our pre-pandemic level of economic activities and have not fully reopened. Be that as it may, I believe we must prepare for the worst and consider all options in dealing with our market and customers. For one, the pandemic has led to new lifestyles and customer preferences.

We may ask ourselves if the same market before the pandemic still holds true. Or should we tweak our business model in the light of an emerging new normal and the era of high oil prices? The most important thing in running a business is to accept the reality of change and acclimate to the new conditions. Change, as Greek philosopher Heraclitus said, is the only constant in life.

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