This theory was proposed by the Nassim Nicholas Taleb in his book 'The Black Swan' in the year 2007 that is utilized to define the influence of actions that come as a shock in communal aspects. Besides, this particular theory is a mixture of mathematical and logical thinking to clarify and define the randomness of improbability. There are three major features of this theory namely thrilling impact, reconsidering predictably, and rarity. Although these events are difficult to forecast however they may have disastrous influences. The author suggests that people must assume that a black swan event may occur and must prepare themselves for the same. The on-going global pandemic Covid-19 can be considered as a black swan event that the people could be prepared for (Ponkin, I2019).
It is the trendiest topic all over the world. Covid-19 is a communicable disease produced by an afresh discovered coronavirus. This outbreak is the first and foremost human tragedy that is affecting a large number of populations in almost every country. This has a substantial impact on the global economy.
The cases of coronavirus are increasing at an alarming rate in Ireland country. The Tourism economy of Ireland has transformed intensely in the space of just a short period. The COVID-19 has been posing a catastrophic impact on the Irish tourism companies since the first case of this pandemic arose in the country. The impact of this pandemic on the Irish tourism has been overwhelming and instant that can be evident from the closing of tourism sites, termination of trips between the United States and Europe including Ireland, termination of St Patrick's Festival, the prohibition of gatherings of a large number of people, and more. Tourism is the largest economic model for Ireland that is job intensive sector of the country. It supports numerous stakes of the nation like hotels, pubs, carnivals, exhibitions, business sessions, air travel, and more. Besides, rural Ireland is mainly reliant on the feasibility of the tourism sector. The COVID-19 has a large impact on the rural regions that are less resilient to this pandemic (Tourism Ireland, 2020).
The present effect of coronavirus is difficult to compute precisely with several of the flights that did not fly virtually unfilled but the number of flight parting from Dublin Airport was dejected 90% recently. Numerous challenges are being faced by the Irish tourism business.
Individuals have been openly prohibited from traveling: Most of the boundaries are locked and there is insecurity for the reopening dates. The seasonal reservations are typically made by April. However, intra-European union reservations can be completed on the last-minute base that is doubtful for American travelers, who signify over a sector of external visitors to Ireland each year.
Individuals cannot have enough money for tourism due to less throwaway income due to this pandemic crisis: As according to a forecast, there will be a decline in the disposable income mainly for the tourism markets of Ireland. At the time when income will stabilize, the present improbability and disaster outlook may make clients less probable to spend generously.
Individuals will become unwilling to travel: The people will scare to travel due to the fear of their health impact from coronavirus pandemic. It has been seen from the earlier crisis that the countries affected took 6-9 months to return to the pre-crisis movement stages. It has been forecasted before the peak season of tourism in Ireland that its situation will take a minimum of 2 years to return to the normalized stage.
Individuals will not have an intention to travel: The event business is the main driver of vacation and corporate tourism like sports events, festivals, and more, that are most probable to get affected by this crisis for a longer period. The upcoming events in Ireland have been canceled and the authorities are planning to take suitable restrictive actions and measures for the second peak (Cabrol & MacAllister, 2020).
Cash flow challenges by SME's: The tourism organizations in Ireland are facing the problem in respect of cash flow. The hospitality businesses are significantly losing the revenue since the pandemic COVID-19 is forcing consumers to cancel the bookings and reservations. The SME's got a relief when the government declared not to apply interest rate on late VAT returns from them who are experiencing cash flow challenges due to COVID-19. However, the tax collection agency said that the SME's must constantly send in their tax returns online even in the problem of cash-flow. The government has done its efforts in deferring the viable rates for the tourism business, however; this suspension is useless for the tourism companies that have no income as it only means they are being asked to assemble the obligation. The government fails to challenge the principal problem and will do slight to get individuals in Irish tourism back to work. The challenge that is facing is of cash flow and no revenue thus, the rates must be waived off till the cure of this pandemic (Irish hotels federation, 2020).
The Strategy can be defined as the set of actions, goals, and the guidelines of actions that are intended to achieve a particular objective in the organizational framework. Although, the tourism companies are now facing numerous challenges in their businesses due to Covid-19, however, the strategic approach to management can aid the SME's to survive and re-establish the competitive advantage by overcoming these challenges. The strategy has been set by the ITIC (Irish tourism industry confederation) for the companies so that they could survive in the industry even in this pandemic. The government intervention is the only way to minimize business closures and job losses that are created due to the devastating effects of COVID-19. The ITIC has proposed a three-step plan or strategy that entails the liquidity measures, business survival, and demand stimulation.
Business survival: The tourism companies in Ireland have no revenue due to the cancellation of an existing business, and no new bookings, this situation makes their survival difficult. The challenge of cash flow is to be solved as early as possible during the crisis. The actions that need to be taken by the government in respect of the same are as follows:
There must be interest-free debt cessations from the support banks
There must be a postponement of water custody
There must be interest-free payroll tax and VAT restraint
There must be waving of local authority charges.
Liquidity measures: There was a challenge of working capital that tourism businesses are facing nowadays. These businesses will need working capital and business expansion funding to continue trading even after the COVID-19. The actions that need to be taken for fulfilling the working capital requirements are as follows:
There must be a relaxation of state assistance rules
European Union should support particularly for Ireland's tourism industry and its businesses.
There must be support from the industry to sustain employment.
Accessibility of state assured working capital and business stability mortgages.
There must be financial funding to industry for the termination of large events due to coronavirus.
In addition to this, there must be interest-free loans from the strategic banking organizations and the leading banks of Ireland
There must be a pledge from the insurance industry with the provision of a business intermission cover.
Demand motivation: Even after the passes away of this pandemic COVID-19, there will be slow bookings and demand from the international markets. Therefore, there must be a wide range of measures of administration, industry, and agency so that tourism businesses could survive. The required measures are as follows:
The government must double its investments in the global markets.
There must be an increase in domestic marketing to drive family trips
The VAT rate for tourism must be zero percent for the period of COVID-19 and after its recovery; it must be set as nine percent.
There must be assistance from airlines to preserve and reintroduce the main directions
There must be a renewal of VAT aid measure on VRT for tourism car payment (ITIC (2020).
The above-mentioned strategies, if implemented properly, will help the tourism businesses and small & medium scale enterprises to survive in such a difficult situation.
The strategies that companies must form individually rather than reliant on the government's actions are numerous. The other strategies that could help the small & medium scale organizations to survive and gain competitive advantage are as follows:
Communication to stakeholders: The SME's must consult its investors to plan the right form of communication with stakeholders like customers, and employees. They must have an authentic discussion on the condition and its influence on business with their whole management team. This strategy aids the business to stand united in all good or bad situation facing the organization.
Supervising workers and correlated optimization: A strategy that SME's should adopt is to lower the salary of the highly paid work so that the least afford worker could be retained in the organization at this time of COVID-19. This strategy certifies that the morale of the employees is not affected.
Interconnect transparently with the clients: The transparency in the communication between company and clients brings a sense of the reliability of the business in this pandemic crisis.
The team must be engaged: Every business must-have strategy to engage all its employees in every development of the company. All organizations must connect with them through a wide range of virtual meetings via Google Hangouts, and the Zoom app. It is extremely essential to keep higher spirits within the team and appreciates the overall mood within the isolated staff.
Plan policies and strategies for the subsequent 1 year or 2 years: If a small and medium scale company think about and develop plans for the next 1 or 2 year then it can be able to recover from the losses it has incurred or incurring from the Covid-19. The company must prepare itself for numerous situations like cash shortage, the requirement of loans, and more. The strategies it can take are to reconfigure its corporate strategy to decrease the inconstant expenditures, renegotiate secure expenditures like rent, and focus just on the most important things for survival.
Reviewing the viability of the business model: SMEs must tract their existing financial measures and cash flow. Moreover, they need to assess the impact of this crisis on the newer deals, credit successions, possible bad debts, and collections.
Review the continuity plans: The SME's must review the endurance and alternative activation plans to alleviate the influence this situation will have on serious business operations, services, and products. This strategy can be applied even when the plague effect relaxes (Priya, 2020).
A directional strategy can be defined as those grand strategies that are proposed to offer elementary direction for the strategic movements. It enables an organization to stipulate the values it desires to represent and the objectives it struggles to attain. Companies utilize directional strategies as a prototype for guiding operational resolutions and procedures. The directional strategies enable management to concentrate on a company's operative efforts and assets on realizing greater growth heights, supporting a stable environment, or implementing financial limitations, reliant on the needs and goals of the company. The main aim of these strategies is the long term sustainable development and expansion of the company. The long term objectives of the company entail concentration, market development, innovation, vertical integration, diversification, product development, and more. There are three types of directional strategies namely growth, stability, and retrenchment. These are described as follows (Gozali, 2016).
The growth strategy entails the redefining of business and is pursued by it when it serves the public in additional product or service sectors and concentrating on strategic decisions on the foremost increase in the speed of the activity. There are four main strategies by which firms can grow and expand namely diversification, product development, market development, and vertical integration. The common growth strategies are as follows:
Concentration: It entails concentrating resource distribution and operational effectiveness on the range of business operations. It further entails penetrating a prevailing market with current value proportion, evolving a novel market by appealing new clients to a current value proposition, evolving a novel value proposition to present in the current market. However, the fluctuations in the market like new value propositions, buyer opinions, price variations, might cause the growth strategy to be ineffective. The examples of firms that are mainly reliant on these strategies are Starbucks, McDonald's, and Subway so that they could become dominant in the industry. The market penetration strategy can be seen in the example of Nike Company which contained well-known sportspersons in print and advertisement on TV intended to take market share in the sporty shoe business from Adidas and other competitors.
Diversification: It is the strategy that entails diversifying the value offered by the company through conglomerate diversification and the concentric diversification. The conglomerate diversification means entering into the newer markets whereas concentric diversification means developing a newer value proposition that is related to the existing value proposition. This strategy aids in minimizing the threats associated with a particular industry. For example, Philips Company wished to diversify into a connected business like cellular handsets, telecommunication, and more to expand its main advantages in the form of related technology. Another example is IBM who has its present products including the terminals, communication equipment, and more, however, the product was just a mainframe computer in the early days of initiation of business (Alengo, Okello & Malenya, 2019).
Integration: This strategy entails the alliance of operational components everywhere along the value chain to make better effectiveness and create economies of scale. The two major types of integration are horizontal and vertical. Horizontal integration means an alliance of operations at the same point the value chain and it may be done between businesses or by acquiring the competitors. The vertical integration arises when a company is offering its inputs or owns bases of delivery of outputs.
Cooperation: The growth of the firm via cooperation strategy involves functioning closely with a rivalry that offers both the competitors a benefit that outplays any advantage. The ways through which a company may expand through cooperation are strategic alliance, joint venture, and merger
Internationalization: This approach entails developing newer markets for a value proposing by observing external to the direct nation. There are numerous strategies available to the company for the same namely international strategy, global strategy, transnational strategy, and multi-domestic strategy (Castaño, Méndez & Galindo, 2016).
This strategy entails the maintenance of the status of the company's operations and outcomes. This is the best strategy for the company which operates in a consistent market and brings in reliable revenues on savings. Furthermore, this strategy is needed when there is no considerable deviance from the current strategy and there are no major variations in the goals of the company. Stability strategies are as follows:
No-change strategy: Doing nothing in the business does not mean that there is no existence of strategy rather it means considering no decision is also a strategy within itself. The companies make an aware decision to preserve its present strategic goals. It is more common in little competition surroundings, with no main changes in the market and the competitive position of the firm is steady. The small and moderate companies usually function in the restricted marker and source products and services with the usage of period confirmed technology, such companies will choose to endure with the current work.
Profit strategy: This strategic action is required for maintaining and improving profitability. The major actions entail selling assets, increasing sales, raising prices, and more. The profit strategy is appropriate for those companies which are lucrative but are fronting provisional pressures that are bullying their success like market conditions, inflation, competition, and more. The measures like raises prices, reducing investments, control expenses, may aid the company to preserve its profitability for the short period.
Proceed with caution strategy: A company, before integrating any specific strategy, must wait and access the market conditions. This strategy prevents businesses to take any wrong decisions concerning investment, pricing decisions, and more. This strategy is suitable for manufacturing companies that desire to launch newer products in the market as this requires some certain evaluation of markets.
These are those strategies that companies adopt at the time of downturn, harder competition, reformation of the firm, and shortage of resources. These strategies pursue to decrease the size of business operations and reduce the range of diversification to a lesser number of businesses. These are also known as defensive strategies that entail divestiture, liquidation, turnaround, and more that are describes as below (Ung, Brahmana, & Puah, 2016).
Turnaround strategies: A turnaround is intended to converse an undesirable movement and bring the company back to standard profitability and wellbeing. This is also known as a restructuring strategy that further readjusts processes to be more cost-efficient. For example, a company named lee Iacocca adopted this strategy to recuperate the locus of Chrysler Company that was proved to be a successful strategy (Mann & Byun, 2017).
Divestment: This strategy refers to the situation that is responsible for minimizing the business operations due to the consequences like sustained loss, undesirable cash flows, obsolete value proposition, improved substitute use of resources, poor business integration, and more. It is the strategy of selling off a business division as it is experiencing failure in terms of profits. When the turnaround strategy become ineffective then there exists a situation of divestment
Liquidation: This strategy means the closing of the activities of the business and it results in the loss of employment for the workers. The potential reasons for this situation are the failure of the current strategy, lack of profitability, extensive losses, obsolete technology, resources, and more.
Other Strategic Directions Available to Business
The above strategic directions like growth, stability, and retrenchment could not be successful without the competitive strategies of the business. These are described below.
These strategies are needed for the above-explained strategies of business and these entail business methods and ingenuities assumed by a company to appeal to the clients and to provide the greater value to them by satisfying their desires and reinforce their market position. These strategies are usually adopted by firms to build maintainable competitive advantage in the industry. There are mainly four generic strategies given by Michael porter for competitive advantage explained as follows.
Cost leadership strategy: The organizations usually follow this strategy to become the largest low-cost supplier in the industry in which they function. Also, this strategy can be defined as the situation when the organization sells its products at lower prices as compared with its competitors in the market. Moreover, the company focuses on cost reduction without affecting the quality of production. Numerous firms adopted this strategy namely GE (general electric), Wal-Mart, McDonald’s black & decker, whirlpool, and more.
Differentiation strategy: This is concerned with product differentiation meaning that when a company creates its product diverse from the related products of rivalries. A product of one company can be differentiated based on the shape, quality, consistency, style, stability, and other traits. The main aim of this strategy is to attain a competitive advantage by providing an exclusive product to the consumers. The unique exclusive products attract the consumers and hence bring higher value to the firm comparative to the competitors. In this strategy, business charges higher prices to customers to enhance its profits and outperform in the market.
Best cost strategy: This term refers to the low price and high quality at the same time. The situation when a company is doing constant efforts to attain the lower cost as compared with the competitors who offer the same products and trying to develop the quality. Using this strategy, a business is capable of attracting the value-conscious consumers. For example, this strategy has been followed by the Japanese company namely Toyota so that its cars can beat the BMW cars. Another instance is of Microsoft Company that adopted this strategy in software by constantly improving the quality of software and reducing its cost at the same time as compared with its competitors.
Focus strategy: This is also known as a niche strategy that is concerned with offering niche consumers a product tailored to their tastes and preferences. It is focused on attending the needs of a restricted user group. This strategy is to be followed by companies in case of serving a slight part of the market better than rivals. Moreover, this strategy is used by Coca-ColaCompany when it introduces diet cola to serve diabetic patients that is a niche market for the company. Other examples of this strategy can be seen for the companies namely e-Bay who served online auctions; Nissan Motor Company whose niche market is mid-sized cars; Amazon with niche market online books; and more (Larsen et al, 2018).
These strategies are those that are related to reordering the structure of the company to attain more proceeds from its operations. It is the comprehensive process through which a company consolidates its business operations and strengthens its position for attaining the goals of becoming successful, competitive, and synergetic. There are two types of corporate restricting namely financial and organizational restructuring. The organizational restructuring can take the form of decentralization, outsourcing, business process engineering, enterprise resource planning, total quality management, and more. The activities in this strategy include expansion through mergers & acquisitions, tender offers, joint ventures; sell-offs through split-off, spin-off; corporate control through premium buyback, anti-takeover; change in ownership through a leveraged buyout, share repurchase, and others (Shin, 2019).
The main objective of the portfolio strategies is to evaluate the present business portfolio and agree which business must accept more or less investment. There is numerous model for this strategy in strategic management of which two are most widely used namely GE matrix and BCG matrix.
BCG matrix: This model was proposed by the Boston consulting group that can be utilized to define what priorities must be offered in the product portfolio of business. There are four categories in the portfolio of business that are stars, cash cows, dogs, and question marks. The stars are high growth products that are competing in a market where they are relatively strong concerning its competitors. The star strategy is BUILD. The cash cows are the low growth products with a moderately high market share. The cash cow strategy is HOLD. The question marks are products with low market share however operating in a higher growth market. The question mark strategy is to HARVEST, DIVEST, and BUILD. The dogs represent the products that have a low relative share in unappealing markets (Madsen, 2017).
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