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After two months in lockdown, Philippine cities are slowly opening up to a new reality,
Management consulting firm McKinsey and Company recently released a report titled “Beyond coronavirus: The path to the next normal” that defined this “new reality,” this “next normal” as a time when “we will witness a dramatic restructuring of the economic and social order in which business and society have traditionally operated.”
In this episode, Kristine Romano, managing partner of McKinsey Philippines elaborates on this report and applies it to the Philippine context. She tells BusinessWorld reporter Jenina Ibanez how the country’s business leaders might navigate the COVID-19 crisis and find an economically and socially viable path to the next normal.
TAKEAWAYS
This is a unique crisis.
The COVID-10 pandemic, unlike previous global crises, affects both supply and demand. Businesses have a hard time producing goods, and worried consumers are holding back on buying.
Remittances grew amid the 2008 global financial crisis, and outsourcing bounced back. But McKinsey sees the risks of a contraction in remittances, and outsourcing contracts may be cancelled among companies unable to shift to work-from-home measures.
Businesses will prioritize resilient supply chains.
In the past, economies of scale was king. But creating efficient supply chains by consolidating resources in one place is now considered risky. Supply chains could easily be disrupted by lockdowns. As a result, business priorities will shift to resilient supply chains retaining flexibility and productivity through automation and training.
The new normal will also see a shift to digital transactions, and companies that give value for money will likely capture a bigger share of the market.
Vulnerable businesses and workers may see new opportunities.
There is a significant number of Filipino workers on “no work, no pay” schemes. The social safety nets for these workers are not as strong as those of developed countries. But opportunities may shift to other sectors as the need for sanitation and delivery services requires manpower.
The country also has a reputation for high manufacturing productivity and a talented workforce that could attract firms shifting operations from China.
Recorded remotely on April 28. Produced by Nina M. Diaz, Paolo L. Lopez, and Sam L. Marcelo.
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