There has been a wide array of perspectives on the financial and social consequences of Covid-19. Many governments are rightly focusing on implementing strong measures to save people’s lives. At the same time, the coronavirus pandemic is threatening the survival of businesses across all sectors and industries at a global scale.

Some commentators have noted that about one in 10 businesses is less than a month away from shutting down completely and, despite government spending, some businesses will not be able to come back from their current deficit. Others have been even more pessimistic and predict that the devastating societal and economic outcomes of Covid-19 will cost more lives than the actual coronavirus claims in terms of fatalities.

Alarmist or not, such sentiments require key strategic responses from business leaders to effectively navigate this crisis.

There are several key lessons to be learnt from how firms have responded in the past to the shock of adverse events and which responses have enabled them to survive a crisis. According to established management literature there are four general strategic responses to crisis: retrenchment, persevering, innovating, and exit.

Retrenchment is a cost-cutting measure that potentially reduces the scope of a firm’s business activities, with analysts predicting divestment of businesses, closure of establishments, reductions in employment, and expenditure cuts on a wide range of activities.

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Article by Prof Boris Urban
MMENVC Programme Director
Professor & Chair: Entrepreneurship