Question

The global COVID-19 pandemic have resulted in many companies contemplating to shut down or close permanently their operations. Discuss the decisions that must be considered by management before taking such a move.

Answer 1

COVID-19 pandemic has disrupted lives all over the globe. No country is left untouched by its impact. It had resulted into lockdown in many countries. The lockdown is never good for any economic activity. People were forced to sit at home, every industry except the essential products industry was closed. So many businesses suffered heavy losses due to the lockdown caused by COVID-19. As a result many businesses were forced to close there operations as they were unable to survive.

Management should consider the following decisions before taking such a move:

1) In case of lack of funds, the management should try to raise funds by issuing right shares, preference shares or bonds in the open market. It will provide them with the capital required to run the business.

2) Whenever any business is supposed to close its operations, it has a huge impact on the employees of the organization. They become jobless and as a result unemployment increase in the area. There families struggle to survive in such testing times as they don't have money.

3) If management is finding it difficult to survive, then they should try to sell some part of there business or reduce their scale of operations and just focus on there core business.

4) They should try to mitigate the testing period, and if they are able to survive, then they can expand once the impact of pandemic is over