Question

Task: Reporting on economic, social and environmental ramification of COVID 19

You are working as a management accountant with Clean Living Limited, a large travel company that specialises in green tours- package tours to environmentally sensitive destinations. These type of tours had been growing in popularity among local and international tourists until the breakdown of the COVID 19 pandemic in December. The Clean Living Limited has branches in Australia, China, India, and Singapore. The company management had been contemplating to expand its open tours packages to the Arctic National Wildlife Refuge in Alaska and Serengeti safari park in Tanzania by the end of 2020.

However, due to the worldwide spread of the COVID 19 as a pandemic, the company’s current operation has become totally stagnant. The company’s management is seriously considering redesign its strategic planning and operation to minimise the damage and to ensure future sustainable operations. Remember, your report is crucial for management to undertake immediate strategic changes.

Required:

You are asked to prepare a report on the following:

1. Identify and briefly explain the possible financial, environmental, social and broader economic consequences the company is being exposed to.

2. Identify the key stakeholders of the company that are going to be affected by the pandemic

4. Highlight the possible changes to the following indicator:

(a) Return on Investment (ROI)

(b) Residual Income (RI)

(c) Economic Value Added (EVA)

(d) Earnings Per Share (EPS)

5. The company management anticipates that the situation will get back to normal by the end of September. Traditionally, the peak season starts from the beginning of November and continues until the end of March. In the meantime, they are contemplating the development on a sustainable Balanced Scorecard to regain its competitive position in the market within the shortest possible time. You are given the following list of variables related to the economic, social and environmental perspectives. Select one variable from each perspective that you consider as the most important, provide your argument in favour of your selection.

Economic Profitability Diversification of tourism package Destination’s competitiveness Pricing

Social Employment Safety Health Environmental Natural heritage and biodiversity of the tourist location Cultural and historical heritage Contamination

Instructions:

Your report should be structured as follows:

Structure	Maximum Word limit	Page limit
Cover Page	50	1
Executive Summary	100	1
Table of Contents		1
Introduction	100	1/2
Body	1500	3-5
Conclusion	150	1/2
Reference list		1

Answer 1

                                    The given case study focuses on the analysis of the failure of tour operating company in the Covid-19 scenario and its consequences on the financial, environmental, social and economic sectors of the company.

Financial consequences of the crisis

· The spread of the crisis has resulted in stalling of all the current revenues and at the same time has deferred the expansionary policies given in the case

· With fall in the current revenue, the reserve capacity of the company would be affected badly which could result in lowering the expenses to restart the industry after the crisis gets over.

· The employees of the company would not be receiving salary benefits in this period and this could reduce the employee strength of the company

· The economic potential of the company to sustain its project potentials would be reduced.

· The behavioural patterns of personalised tours may be affected which could result in loss of the potential consumer base for the company

Social, Environmental and related cross border economic effects

· With the employees of the firm denied of jobs, it could affect the employment potential and also result in loss of confidence in the firm

· The expansionary projects in the global level could get affected badly and thus the foreign exchanges could decline.

· With decreasing cross border tourism, the various travel and tourism components like air travel partners, road transportation partners etc could get affected in the long run

· The sustainability pattern of the balance sheet of the firm would get affected.

· The basic pattern of tourism projects could get affected and thus reconstituting them with focus on domestic tours could be necessary

· Leisure tourism could get less promotions in the future and thus more innovative tourism projects like health tourism, knowledge-based tourism projects etc should be boosted.

· The laws associated with tourism could get changed and thus corresponding changes should be accommodated in the tourism packages which would result in extra burden.

· International tourism patterns would be facing various international constraints as each nation is getting affected in various ways.