1 Factors Affecting Business& Impact of COVID-19 On Various Sectors

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Factors Affecting Business& Impact of COVID-19 on Various Sectors
FINAL ASSIGNMENT
MGT 110 - BM2001MB
Factors affecting Business & Impact of COVID-19 on various sectors
Maninder Kaur (A00101976)
Ramandeep Kaur Dhillon (A00102465)
Arzoo Nayyar (A00101437)
Canadore college @ Stanford
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Summary
Business is an economic activity which involves exchange of goods and services for profit
motive. Business environment is affected by different factors such as internal factors and
external factors. Internal factors are those factors which are inside the business which includes
organizational structure, mission, strategy, culture etc. External factors are those factors which
are outside the business which includes political, economic, technological, social, natural,
demographic and geographical factors. Coronavirus are group of viruses that cause disease in
mammals and birds. Coronavirus is a virus which can be easily transmitted from one person to
another. Almost all the countries have been locked down and it has affected almost all the
sectors of the economy which includes education, travelling, sports, banking, entertainment and
employment etc. This report focuses on the factors affecting the business, effects of coronavirus
on different sectors as well as recommendations.

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Introduction
Business environment is not concerned with a single factor. It comprises of several factors and
each factor influences the business firm in its own way. Some factors influence the performance
of the firm directly while the influence of some other factors is only indirect. These factors
provide opportunities, threats, and challenges to the firm. Thus, environment is multi-
dimensional and very complex in nature. At the same time, each factor should be studied
individually. The important factors that influence business environment are geographical and
ecological or natural factors, demographic factors, economic factors, political and legal factors,
social and cultural factors, and physical and technological factors.COVID-19 is also called as
coronavirus is a kind of common virus that causes an infection in your nose, sinuses, or upper
throat and this virus is taking lives of many people around the world. It spreads the same way as
the other coronaviruses do, mainly through person-to-person contact. The coronavirus outbreak
is human tragedy, affecting hundreds of thousands of people. It is also having a growing impact
on the global economy. COVID-19 continues to spread rapidly around the world. Almost every
country has reported coronavirus cases. To prevent the spread of the disease government issued
lockdown orders so due to lockdown many businesses are closed and there are restrictions on
travelling as well as mass gatherings and people are in quarantine, only essential businesses
remained open and even many countries has closed their borders. So due to these reasons many
sectors of the world are suffering due to COVID-19 as it is affecting education, entertainment,
food industry, tourism, sports, banking, stock market, employment as well as international
relations. This project is intended to provide information about the various factors that are
affecting the businesses as well as it will discuss the affect of COVID-19 on various sectors.
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Factors affecting Business
1. Geographical Factors:
Geographical conditions also affect the working of the business. Before taking decisions
related to which type of business to be set up or region in which to be set up to it is very
important to determine the taste and preferences of the business. As people’s taste are
different according to the regions. Some goods may be preferred by people in one region but
may not be preferred by other group in different region. For e.g. in India women used to wear
suits while in Canada women wear jeans. It is not important that people’s taste is different
according to the countries rather can be different in one country also. The climate, rainfall,
humidity and the vegetation decide the lining of people in particular area. According to these
conditions people decide which business or industry to set up in a particular region.
Geographical factors are based on the general and specific location and placement of the
business. The ease with which business can access with the customers is another important
effect of geographical factor. The more easily customers can access with the business; more
customers can be attracted towards the products of the business. It is important for business
to have optimum utilization of scarce resources.
 Climate: Climate is an important factor affecting business. According to the climatic
conditions, business produces goods in order to suit the temperature. Place where there is
extreme cold or hot temperature it is very difficult for business to survive. Rainfall also
comes under this point and places experiencing high rainfall produce more raincoats and
their demand is also high in these areas.

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 Location: Location means the place where the business is set up. It is very difficult task
to decide the location as every business wants to have such convenient location which is
free from air pollution, near to market and near to the availability of natural resources.
 Stability: Some places are stable as compared to another as some place’s experiences
more natural disasters such as earthquake, flood etc. The places which are more prone
these disasters have more business risk. Only method to protect the business from these
types of risk is to get the insurance.
2. Economic Factors:
Economic factors are the factors that affect the economy and these factors are not in direct
relation with the business, but it influences the future investment value. These factors include
customer behaviour, employment factors, interest rates etc. Economic factors have major
impact on a firm’s behaviour. For example, if there is higher interest rate then investments of
business will decrease as cost of borrowing will increase. Inflation may increase wage
demands from employees and raise costs of business.
 Customer behaviour: It is one factor among economic factor. It includes willingness to
spend money and buy new products, level of spending, purchasing power, levels of
market of demand and supply and bargaining power of customers.
 Interest rate: is the rate that is charged as interest to the borrower and is some percentage
amount on the loan taken. It determines the cost of financing the business and investment
activity. It might affect business where strategies depend on taking the loan.
 Exchange rates: are the rates related to imports and exports. Any change in exchange rate
affect how much company has to pay to its international supplier for goods and services
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which affect the profit of the business and it also affect their future decision or strategy
related to it.
 Business Cycle: It includes recession, depression recovery and prosperity. These are the
phases of the business which indicate the demand and supply of all goods and services
and also their prices. Inflation is a situation when demand or buying power of customers
decreases while price of goods increases.
 Law and Policies of the government: These policies affect the working of the business.
Any change or any modification in the policy ultimately has impact of the business.
 Demand and Supply: Demand and supply of goods and services affect the economy. As
increase in demand will result in increase in price of the goods and leads to inflation
while increase in supply results in fall in the price level.
 Balance of Payment: It measures all international economic transactions between
residents and foreign residents. It is the difference in the value of goods purchased and
sold by residents of the country. If country wants to increase the value of dollar then it
can remove all the barriers for specific goods and vice-a-versa.
 Income distribution: Income distribution may differ between different countries. Even in
the same country people have different income levels. Some countries like Kenya have
more middle-income people so business has to formulate strategy according to the
income level of the people. They have to focus on a particular income class people.
 Ecology: Ecology refers external environment in which firm has to operate. It includes
water, air, land, space. Business should take care or preserve the ecosystem.
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3. Political Factors:
Any activity which is related to government policy has an impact on the business. All the
business always watches the government policy as it has great impact on the working of the
business. These factors may be current and impending legislation, political stability and
discrimination laws. Political decisions can impact on many important areas of business such
as heath of the nation, education of the employees, quality of the infrastructure of the
economy such as roads, railways etc.
 Political Stability: Lack of political instability in a country has huge impact on the
working of the organization. Political instability such as looting, riots and general
disorder disturb the business activity.
 Foreign Trade Regulations: While doing international trade it is very important to take in
account the government policies related to imports and exports. There is some tariff as
well as non-tariff policies of government which guides the international trade. Sometimes
government wants to protect domestic market and it imposes some duties or quotas on
import and trade which become hindrance in the growth of the business.
 Employment Laws: are the laws related to rights of the employees. These laws are made
to protect the rights of the employees so that employee cannot take undue advantage of
the employees. Changes in the employment laws have a great impact on business
operation.
 Taxation-Taxes have a great impact on the business. Taxes can affect both demand and
supply. If there is increase in taxes then demand for goods will decrease while fall in
taxes will raise demand. Taxes can influence production and growth. Rise in corporate
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tax has same effect as an increase in cost which can result in increase in prices of
products.
4. Social and Cultural Factors:
Social factors include values, attitudes, beliefs, opinions and lifestyle of people which affects
business and Cultural factors includes culture, religion and ethics etc. Social factors are
related with the society as a whole and cultural factor includes all sub-cultures with its
distinct concepts, beliefs and faith. Earning profit should not be the only aim of the business.
Besides this it should also have aim towards serving society. Numbers of companies are
spending a lot investment on corporate social responsibility. Socio-cultural components
include everything which influence the ability of business to operate smoothly in the society.
 Consumer preferences: Nowadays companies are producing goods according to the taste
and preferences of the customers. Companies do market research so that they can beat
their competitors and survive in the market. Fashion also decides business new product as
well as customer choice.
 Values: Values includes integrity, honesty, trust, accountability and trust. Values help
business in the decision-making processes. Core values tell the customers as well as
potential clients about the company. Customers also expect high quality products from
businesses. Many firms have revised market strategy to respond to the changes in the
expectations of the customers.
 Religion: Religion is a set of beliefs that influences human behaviour. The demand and
consumption behaviour of people is influenced by the values and beliefs set by the
religious group. For example, if in a country there is large number of Muslims, in their
religion there is no restriction on the consumption of meat so in that country demand of

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meat will be more as compared to other countries. Another example can be of Jainism
religion who does not prefer meat then in that region its demand will be less.
 Ethics: Ethics includes loyalty, respect, care and obeying the law. Business ethics are
important as they help to maintain goodwill and help to avoid financial as well as legal
issues.
 Population Changes: Demand of goods has a direct relation with the population change.
As if there is increase in the population then demand for goods will also increase.
Business develops strategies according to the targeted group.
 Rising Educational Levels: Rising educational level also affect the demand for goods as
higher educational level people will have higher income and increase in income means
more demand for additional goods. Moreover, highly educated people generally have
high standard of living.
 Social Responsibility: Social responsibility is the expectations that a business have
towards employees as well as against society. It is the responsibility of the business to
produce goods which are environment friendly and do not work against the human rights.
Also, the goods which are provided should be of high quality or which match with the
standard. Business should not only have profit making as a goal rather it should have
some responsibility towards society.

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5. Legal Factors:
Political party in power set the legal framework. The government lays down the rules and
regulation which all the sectors have to follow. For business also government set some rules
which it has to follow and in case it does not comply with the regulation then it has to pay
fine. Rules can be related to wage fixation, health & safety, price control, import & export,
managerial remuneration and licensing policy. The rules of competition, trademark rights,
product quality laws, price controls are of special importance for global companies.
 Employee protection law: The government has made some protection laws related with
the employees which employer has to follow. These laws protect the employees from
unfair discrimination at work. It ensures that no employee is discriminated on the basis of
sex, religion, caste or color.
 Health and Safety law: This law provides protection to the employees from the dangerous
machines. It also ensures that employees are given adequate break time. Training is given
to employees in order to avoid accidents. Safety shoes are necessary.
 Consumer Protection law: In order to protect the customers from unfair trade practices
done by the sellers, government has made consumer protection law. For this some
consumer courts are set up in which consumer can file complaint against the sellers.
 Contract law: It is an agreement between the parties which is enforceable by law.
Contract law affect the business as all businesses are either providing goods or services to
the customers. So, it is a contract between the customer and seller in which all the
description given by them should be true.

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6. Technological Factors:
Technological changes are due to social, political and economic changes which can be
profitable or harmful for both individual and for society as a whole. Technological
advancements such as computer, internet helps in achieving efficiency as well as
effectiveness in the business. Technological advancements can open new markets for new or
improved products. Technological changes can reduce or remove cost barrier, shortage in
technical skills, create shorter production run which result in changing expectations of the
customers and employees. Technological advancement can result in competitive advantage.
Technology also changes production processes. The new product based on new technology
requires new production technique. New production technology changes production
processes. Machines are used in those works which are harmful for human. Technological
changes may create new opportunities for the firm or may be threat for the survival of the
business. Technological innovation is continuously changing at very fast speed. Machines are
being used even though they are hazardous for people. New technology in one industry may
impact other companies in other industry. Attention must also to be given to developments in
other industries.
 Automation: Automation of work has replaced the human capital with the machines.
Machines are very useful than humans as they are cost efficient, effective, quick. It is
beneficial for both sellers as well as for customers due to cheap and quality products.
 Internet: Internet has connected the whole world. Internet has given larger market for
businesses that interact with customers through internet. Marketing is also done through
means of internet such as social media, advertisements etc.

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7. Industry level factors:
Industry is a group of firms that produce similar products. Industry level factors are those
factors which affect the performance of the industry in a particular sector. Participants in
industry include suppliers, creditors, competitors, government and employees. Industry level
factors include threat of new entry in the industry, bargaining power of supplier, bargaining
power of customers, availability of substitute products and rivalry among existing
competitors.
 Threat of new entry in the industry- Profitable markets attracts the new entrants to enter
the market. In perfect market, there are some restrictions on the entry of newcomers.
Capital requirements, brand equity, switching cost or sunk cost, customer loyalty to
established competitors are some points which are to be considered before entry in the
market.
 Bargaining power of customers: It is the ability of the customers to put the company
under pressure which affects the price level. Availability of existing substitute products,
buyer volume, buyer information availability, buyer switching cost and bargaining
leverage are the factors which affect the bargaining power of customers.
 Bargaining power of suppliers: Supplier of raw material, labor and experts also affect the
business. Suppliers may also refuse to do work if they are getting better prices for their
material from other firms. Supplier switching cost against firm switching cost, presence
of substitutes, labor unions and supplier completion are the factors that affect the
bargaining power of suppliers.

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 Availability of substitutes: Number of substitutes in the market, buyer switching cost,
substandard product, price of substitutes, product differentiation are the factors affecting
the business. Company should all these while making strategy for business.
 Rivalry among existing competitors: Competition is seen from the price, quality and
innovation. In order to survive or protect the company, technological advancement
should be best option. Companies which are able to introduce new technology can charge
high prices and achieve higher profits like apple.
8. International factors:
Nowadays every business is expanding its operations and opening the doors of international
market for goods and services. Competition is getting more, and tougher as domestic
business is facing competition from international businesses. Before formulation of any
business strategy, business should keep in mind international factors. MNC’s have operation
in number of countries and providing tough competition of domestic businesses. These
factors include exchange rate risk, cultural differences, language and customs etc.
 Language: While doing business at international level, business generally face language
barrier as all the countries have different types of languages and it is problem for business
to interact with the suppliers or customers.
 Exchange rate risk: For imports or imports of goods currency of one country is
exchanged for another. These exchange rates do not remain constant rather it keeps on
fluctuating. There is always risk of changing exchange risk. When business sell the goods
and exchange rate increase then it a profit for the business otherwise it’s a loss.
 Culture: In order to cope up with the foreign businesses then company has to produce
goods according to the culture prevailing in that country where it wants to target the
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customers. Due to change in culture people in different countries have different tastes and
preferences.
9. Natural factors:
Natural factors also affect the business. Industries are set in those which where there is
availability of natural resources. Air, water, land pollution has greatly affected the
environment. Companies are trying to produce eco-friendly as well as recycled products to
prevent from the problem of pollution.
 Natural Disaster: The most impressive environment factor which affects the business is
natural disaster. It includes earthquakes, flood etc. In some country’s buildings are made
in such a way to protect them from earthquakes or earthquake free. In coast area, there is
more chances flood so in order to protect them all the businesses are having insurance.
 Climate: Climate also affects business directly or indirectly. There are some areas which
have extreme cold or hot climate. According to the climate only goods are produced. The
area which experience cold weather have more woolen business and only those crops are
grown which needs cold weather.
 Providing Raw Material: Generally, before setting the location of business the main thing
which is taken into account is location of raw material. If the business is located far away
from raw material, then it is a negative point for business as it involves huge
transportation cost.
 Location of Industry: Heavy industries are generally located in those areas where there is
availability of raw material. Iron and steel industry are located near the area having
deposits of iron ore and coal. Mining, oil drilling and stone quarrying industries are
located depending upon the availability of minerals.

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10. Demographic Factors:
Demographic factors include age, sex, income level, occupation, education level etc. These
factors are important as these help the businessman to understand how customers purchased
particular goods and services and how they search for information. Among all income is the
one of the important factors as people with low income are more sensitive to prices.
 Income: Companies generally tend to focus on specific type of customers either they
focused on low level or medium level or high-level income group. People with low level
of income wants more discounts and companies then tempt or attract them by providing
discounts on various products as well as various offers.
 Age: Age is another demographic factor affecting the business. Companies tend to appeal
a particular age group people. Young people are more influenced or are more ready to
buy electronic gadgets such as cellular phones, video games etc.
 Education Level: Rising educational level also affect the demand for goods as higher
educational level people will have higher income and increase in income means more
demand for additional goods. Moreover, highly educated people generally have high
standard of living.
 Population Size: Population size has also impact on the business. Increase or decrease in
the population’s birth rate, overall increase or decrease in population size etc has a great
impact on the business.
 Gender: Both males and females have different mindset and require different types of
goods. In case number of females has decreased then demand for female products will
also decrease and vice-a-versa. It can be in case of women clothing and beauty products.
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Effect of COVID-19 on the following areas
 Education
COVID-19 lead to the global lockdown of education institutions and teaching is moving
online which is going to cause major interruption in students’ learning. In higher education
many universities and colleges are replacing traditional exams with online assessment tools.
Student assessments are also going online, with a lot of error and uncertainty for everyone.
The closure of schools, colleges and universities not only interrupts the teaching for students
around the world, but the closure also lead to cancellation of many exams. Home schooling
has affected children’s social life and learning. Going to school is the best tool available to
raise skills such as social skills and social awareness but with online learning this will not be
possible. The careers of this year’s university graduates may be severely affected by the
COVID-19 pandemic. They have experienced major teaching interruptions in the final part of
their studies, they are experiencing major interruptions in their assessment too. coronavirus
had caused educational institutions to implement several measures, which includes
switching some of their scheduled courses online, delaying the start dates for some of their
courses until the following semester, changing application deadlines for their next intake,
changing offer acceptance deadlines for their next intake, deferring some of their 2020 offers
to 2021etc. Over a billion students worldwide are unable to go to school or university due to
measures to stop the spread of COVID-19. The epidemic is expected to have a huge impact
on global education. Most of the institutions are expecting declines in both domestic and
international student numbers as well as there will be decline in tuition fee. In this way
coronavirus is going to have huge impact on education which is going to affect the student
learning.
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 Travelling / Tourism
The outbreak of COVID-19 is a major challenge for the tourism sector. Coronavirus has
affected hotels, airlines, cruise lines, tourism destinations, and other sectors of the travel
industry. Many travel restrictions are imposed by the government to prevent the spread of
coronavirus. The World Travel and Tourism Council has warned the COVID-19 pandemic
could eliminate 50 million jobs worldwide in the travel and tourism industry. It also said that
it could take up to 10 months for the travel and tourism industry to recover, when
coronavirus outbreak will be over. Airlines and cruise ships were currently being more
impacted than hotels. The tourism industry accounts for 10% of the world’s GDP and jobs.
Before COVID-19 the airports were with thousands of travelers arriving or departing but
now airports are with empty hallways, empty parking lots and mostly blank screens showing
arrivals and departures. Airlines have suffered a drastic decline in activity, fly empty, so they
are already putting in place emergency plans to deal with possible bankruptcy. The volume
of international visitors has provided income to the private and public sectors both at the
macro and micro levels. Goods and services are purchased from international chains of stores
and hotels in each country, so it has affected import and export. A large share of the labor
force employed in travel and tourism industry will be out of work. During this season that is
spring and summer, when the travel and tourism industry makes a significant amount of
revenue but now the industry is losing its revenue due to coronavirus pandemic. The cruise
industry is also losing its revenue due to restrictions on travelling. In Canada, to protect
Canadians from the outbreak of COVID-19, the Prime Minister announced travel restrictions
that will limit travel to Canada. Until further notice, most people cannot travel to Canada,
even if they have a valid visitor visa or electronic travel authorization.

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 Hotel / Restaurant / Food industry
COVID-19 has also affected the global food industry as governments have closed restaurants
and bars to prevent the spread of the virus. It has led to loss of income for restaurants and
owners and it has also resulted into layoff of workers. Closures of restaurants has also
affected related industries such as food production, liquor, wine, and beer production, food
and beverage shipping, fishing, and farming. The restaurant and bar industry has been one of
the industries hardest-hit by the COVID-19 outbreak. Ontario's restaurants are only allowed
to go for takeout orders and delivery only otherwise to shut down entirely. Dozens of
restaurants from Toronto, Calgary, Vancouver have been impacted by the closures. More
than 800,000 Canadian restaurant workers are currently off the job. Many restaurants are
struggling to pay their rent and other bills with no income. The novel coronavirus has already
had a more severe economic impact on the hotel industry. The hotel industry is losing $1.4
billion in revenue every week due to the current impact of the virus on travel demand. Sales
of staples like bread and eggs along with rice, beans and frozen foods also have increased as
consumers rush to stock their pantries. It may boost profits for some food manufacturers and
retailers. There have been significant disruptions to supply chains around the world. In many
places there was panic buying which was resulting into shortages. There were some supply
chain disruptions for some products for example, many hand sanitizer bottles are in shorter
supply. The demand for certain agricultural products fell due to lockdowns and closure of
restaurants. It has been announced that restaurants, dining places were to be closed to the
public for dining and were only allowed to offer home delivery and take-away.
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 Sports
COVID-19 has significant impact on sports sector also. The COVID-19 pandemic at the
beginning of 2020 hit the sports industry hard. Many professional leagues across the globe
suspended their seasons, including the National Basketball Association in the United States.
There was potential loss of revenue between 350 and 450 million U.S. dollars in the NBA
due to the coronavirus pandemic as of March 2020. Number of people were affected by the
postponement of the Tokyo 2020 Olympics due to the coronavirus pandemic. The Olympic
Games were due to take place in Tokyo at the end of July 2020 but on March 24 the
International Olympic Committee took the decision to delay the Games until 2021. This
postponement has had a significant impact on the 11,000 Olympic athletes and 4,400
Paralympic athletes who were due to compete in the event. It has led to the loss of
advertising and sponsorship spending for the Tokyo 2020 Olympics due to the coronavirus
pandemic. UEFA took the step to postpone the scheduled 2020 European Football
Championship to 2021. This move cost UEFA an estimated 300 million euros, whereas
cancelling the event entirely would have cost the federation around 400 million euros. US
Soccer 2020 league postponed the start of its new season for 30 days due to the
pandemic. Number of games affected by the COVID-19 in European football leagues in the
season 2019/2020. It is estimated that the maximum revenue loss in the broadcasting sector
of the English Premier League due to the coronavirus is approximately 800 million euros.
March Madness is a college basketball tournament, which is very beneficial for the NCAA
and its potential complete cancellation could lead to a loss of 933 million U.S. dollars in
media rights, ticket sales and sponsorships. People have been exercising less often than usual
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as a result of the crisis. So, it is clear that the pandemic has had a major negative impact on
the sports industry as a whole.

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 Environment
Due to the COVID-19 pandemic industrial activity has shut down and flights have been
cancelled as well as other journeys, which has led to reduced greenhouse gas emissions and
air pollution around the world. As many factories and businesses are closed and there are
fewer cars on the road and fewer planes in the sky, so our natural environment is recovering
slowly. The levels of nitrogen dioxide (NO₂) over cities and industrial areas in Asia and
Europe were lower than in the same period in 2019 by 40%. Lockdowns have improved the
air quality around the world. On the other hand, the pandemic has led to the abandonment of
many environmental sustainability programs in the United States, smaller municipalities
have stopped recycling programs due to the risks associated with the spread of the virus.
With more and more consumers isolated at home, there has been an increasing number of
online purchases and meal deliveries . This has increased the disposal of single-use plastic
packaging, but it has also led to the use of more fossil fuels to be burned for the
transportation and distribution of goods. There has been an increase in medical waste because
much of the personal protective equipment that healthcare professionals are using can only
be worn once, after one use it must be disposed off. So, the pandemic will also result in an
increase in the amounts of medical and hazardous waste. There is drops in air pollution but
when the lockdowns are lifted, and life returns to what it was once then the pollution also
starts again and also the greenhouse gases emissions will occur again that lead to global
warming. Air pollution has fallen by more than 45% compared to 2019 values in some
European cities as coronavirus restriction measures have kept people at home. Air quality is
improving all over the world in countries under lockdown because of coronavirus. As people
stay at home and traffic is cut by over 35 per cent, New York has also noticed the drop in
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pollutants that are found in the air. Columbia University’s Earth Institute's monitor has
shown a 10 per cent drop in carbon dioxide and methane emissions, and 50 per cent drop in
carbon monoxide. There is significant reductions in nitrogen dioxide concentrations over
several major cities across Europe also in Paris, Madrid and Rome. Air pollution has been
linked to 4.2 million deaths, according to the World Health Organization. The major sources
of air pollution include vehicles, power generation, building heating systems,
agriculture/waste burning, and industry. Therefore, lockdowns have had a considerable effect
on the levels of nitrogen dioxide. Without millions of vehicles on the roads and the closure of
industries air pollution levels have decreased.
 Banking
The coronavirus (COVID-19) outbreak is causing big concern and economic hardship for
consumers, businesses, and communities across the globe. It is having a major impact on the
global and Canadian economies. Banks, consumers, and governments are weighing the risks
of in-person banking and opting for digital channels when they have the choice. Government
agencies and banks are shifting towards digital banking and taking relevant measures. Banks
certainly have their hands full considering the novel coronavirus outbreak. Borrowers and
businesses are facing job losses, slowed sales, and declining profits as the virus continues to
spread around the world. Banking customers are likely to start seeking financial relief,
and federal bank regulators are encouraging banks to help them. The banks need to have a
plan in place to protect employees and customers from its spread. Many banks are already
starting to encourage remote working of some employees. By implementing completely
digitized and remote customer transactions, banks can ensure that both everyday and
exceptional processes will be carried out with limited disruption. The World Health
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Organization has advised people to use contactless payment and avoid handling banknotes as
much as possible. That is because the coronavirus may continue to live on banknotes for
days, accelerating spread of the disease. The Bank of Korea has started to quarantine bills
originating from local banks, keeping them isolated for up to two weeks. The Chinese
government requested lenders to disinfect physical notes and place them in quarantine. The
U.S. Federal Reserve has instituted a practice to isolate banknotes from Asia for seven to ten
days. In case of banking the short-term impacts will affect four key areas of retail and
commercial banking that are credit management, revenue compression, customer service and
advice provision, and cost control. In case of Credit Management, the cashflow of many
consumers and businesses will collapse due to lower business revenues and employee
layoffs. These in turn will cause an increase in both commercial and retail non-performing
loans because borrowers struggle to payback interest and principal payments of loans. The
steps banks can take to mitigate this to help their customers survive and to emerge with
stronger customer relationships are support government actions, initiate credit leniency and
modification programs, prepare for losses, and extend credit. In the first few weeks of the
pandemic the banking industry market value fell to a lower level than during the 2008/09
crisis. This is because of lower net interest margins, a drop in payments revenue and a
decline in trade finance and cross-border payments. A short-term impact of this pandemic
will be rapid changes in customer servicing preferences. Many bank branches will stay open
as a vital service, customers are increasingly looking to run their banking operations through
apps and online banking.

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 Entertainment
No industry has been left untouched by the novel coronavirus pandemic, but the
entertainment industry has suffered. Clubs have closed. Movie theaters have closed. Concerts
and festivals of all kinds have been canceled. Most of the TV production including dozens of
scripted shows were shut down this week for at least the next two weeks because of the
health risk. This is the first time when every aspect of entertainment such as amusement
parks, cruise ships, Broadway, TV, motion pictures and every TV platform, streaming, basic
cable, and network, has been affected. COVID-19 has led to shutting down or delaying
production of television programs in many countries with consequent negative impacts on
revenues and employment. Cinemas and movie theaters have been closed, festivals have been
cancelled or postponed, and film releases have been moved to future dates or delayed
indefinitely. As cinemas and movie theaters closed, the global box office dropped by billions
of dollars. Chinese film industry was hit almost immediately as movie theaters across the
country were closed and major releases were delayed. Hollywood soon began to feel the
effects too and as time passes the impact of the coronavirus on the global film and
entertainment industries will undoubtedly grow. Consequences of the pandemic on these
industries could range from lowered presence at film festivals and disruptions in film
distribution to delayed or canceled movie releases and concert dates to reduced on-location
film shoots. Financial difficulties will likely be felt by studios, filmmakers, theater owners,
and more for months or even years. Cannes Film Festival delayed. The 2020 edition of
the Cannes Film Festival, the most prestigious film festival in the world, is still in question
could be delayed until late June or early July or another time an announcement from the
festival’s organizers on March 19.Disney announced that Pixar’s latest release, Soul, would
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open on November 20, 2020. The film was previously set to open on June 19. Coachella
is one of the largest annual music festivals in the US, it is announced that on March 10
that the festival would be postponed due to concerns about Covid-19.
 Stock market
The stock market is also being hit by COVID-19. Equity markets in the EU and US dropped
by 30%. The stock market has been in a sharp downturn in recent days as fears about
the coronavirus spread across the global economy and so stocks in the stock market fell once
again. This is the sort of downward turn that brings the economy into a recession. The Dow
and S&P 500 have both been falling due to uncertainty around the global coronavirus
pandemic, while the Chicago Board of Exchange Volatility Index has been rising steadily
since the middle of February as the virus spread around the world. The coronavirus has
created such uncertainty around the world that two of the largest single day drops in the Dow
Jones Industrial Average have been from March of 2020. The market has reacted to
unpredictability with large drops, triggering a market wide circuit breaker four times in
March. The safeguard pauses trading for 15 minutes in hopes the market will calm. In a
macroeconomic shock like the one that is presented by the coronavirus, corporations may
face a wave of ratings downgrades if their financial positions begin to deteriorate. If the
downgrades are increased, corporate bond buyers may will not play at all in the market, thus
lead to reduction in liquidity. U.S. senators sold off stocks before markets hit hard by
coronavirus impact. Senate Intelligence Committee Chairman sold as much as $1.7 million
in stocks just before the market dropped in February amid fears about
the coronavirus epidemic.
28
29
 Employment
The government has ordered people to remain indoors and self-quarantine to stop the spread
of the coronavirus. Companies have asked their employees to work from home as large
gatherings of people are not allowed. Restrictions on daily life have led to the closure of
many companies and lead to laying off staff either permanently or temporarily. Workers and
businesses are facing devastation, in both developed and developing economies. The
outbreak is expected to remove 6.7% of working hours across the world during the second
quarter of 2020. That is the equivalent of 195 million full-time workers losing their jobs. The
worst-hit region is predicted to be the Arab states with an 8.1% decline in working hours.
The US economy lost 701,000 jobs last month. Due to coronavirus Canada lost a record one
million jobs in March as well as the unemployment rate is 7.8%. 1,011,000 jobs were lost
across the country driving the unemployment rate up from 2.2% to 7.8%. Approximately
3.1million people were affected either by job loss or reduced hours. The jobs rate dropped in
every province such as in Ontario, Alberta, British Columbia, and Quebec. The occupations
which are affected by the coronavirus are discussed as given, among the estimated 13.4
million jobs could be affected in the restaurant industry, 3.6 million involved in food
preparation and serving. Another 2.6 million restaurant servers and 1.3 million restaurant
cooks are also affected. Almost 11 million jobs in customer service and sales could be
affected, including 3.9 million retail salespeople and 3.3 million cashiers. While physical
distancing and shutdowns are freezing some businesses, other businesses are seeing increase
in demand for workers. Some of the nation’s largest retailers are hiring tens of thousands of
workers to meet demand for groceries and other necessities. Grocery stores, pharmacies,
convenience stores, and pizza chains are all hiring. Hospitals and health providers are putting
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medical students immediately to work, and healthcare professionals who are retired or out of
the workforce are coming back. Up to 3 million workers could find short-term employment,
which includes community health workers, warehouse staff, delivery drivers, and other
critical roles. The nation has a serious need for medical supplies and protective equipment to
fight the pandemic and it is presenting an opportunity for manufacturers to restart factories to
keep workers employed. Some are shifting production to produce hand sanitizer; others are
making protective masks, gowns, and scrubs. Multiple companies that are specialized in
advanced manufacturing are gearing up to produce ventilators. Many white-collar
professionals can work from home during shutdowns. Many blue-collar workers must be
physically present to do their work. They are stocking grocery shelves, cleaning hospitals,
caring for the elderly, filling prescriptions, making, and delivering food, delivering mail and
packages, staffing warehouses and production lines, driving trucks, and collecting trash.
 International Relations
Coronavirus is affecting global trade. Many countries have closed airports, imposed travel
restrictions, and shut down factories, which in turn negatively disrupting global trade and
international supply chains. The coronavirus was initiated as a global health crisis but it was
originated in China, which is a central manufacturing hub for many businesses across the
world, the consequences of their halted economy is going to disrupt international trade and
global shipping. Vendors who are relying heavily on goods imported from China, they are
now having to seek alternative sources of production. Crude oil, agriculture and metals are
just some of the many commodity markets impacted by the coronavirus, which is also
threatening to push the global economy into recession. In order to alleviate barriers to
international trade, businesses will be identifying other trading markets. Countries such as
31
Mexico, India and Malaysia have opened competitive markets if businesses need alternative
sources of production. The coronavirus outbreak is already having a damaging economic and
business impact and it is affecting everything from tourism to the supply of parts to the
automotive and technology industries. The South Korean carmaker Hyundai has halted
production lines because of disruption to the supply chain of parts that usually flow between
the two countries that is China and South Korea. The Covid-19 virus is severely affecting
international trade. Some governments are taking action to block the export of items.
Countries such as Kazakhstan, Serbia, and Morocco have acted to secure food supplies and
are limiting exports of critical staples, such as wheat, rice among others. India has banned
the export of key medicines such as paracetamol to face masks and chloroquine to secure the
supplies for domestic use. Demand for many commodities including petroleum has been
falling rapidly, and this will also create balance of payments problems for countries such as
Latin America and Africa who rely on exports of these commodities to finance their imports.
In this way coronavirus is affecting international relations because many countries have
closed their borders, so they are not indulging in trade with each other to prevent the spread
of coronavirus.
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Conclusion
Business is affected by different internal and external factors. Business can take action against
the internal factors as these are inside the business and business has control over it. External
factors are those which are outside the business which includes political, technological, social,
cultural, natural factors etc. In order to succeed business should have eye on all the internal as
well as external factors. Coronavirus are group of viruses that cause disease in mammals and
birds and which can be transmitted from one person to another. It has affected almost every
sector of the whole world. Every sector whether it is education, hotel, entertainment, sports or
banking are affected by it. People in almost all over have lost their jobs due to its widespread. It
has also cause increase in the prices of products. All the public places such as schools, colleges,
parks, public library are closed. Moreover, countries have closed their borders in order to control
the spread. Coronavirus has adversely affected all the businesses.

33
Recommendations
 While formulating business strategy, company should understand or take into account the
business environment as this environment helps the business to face failure or success.
 The knowledge about the business’s external environment is must for a businessperson to
spot the threats and opportunities for the business.
 It is the decision of the businessperson to make technology its best friend or worst friend
to remain competitive in todays competitive digital business market.
 Operational efficiency directly affects the company’s success in the marketplace, a
businessman needs to know his company’s processes and follow them to discover
whether they are performed in the correct manner or not.
 The loss of three months of global travel in 2020 could lead to a corresponding reduction
in jobs of between 12% and 14%, Governments should remove or simplify visas
wherever possible, cut travel taxes and introduce incentives once the epidemic gets under
control.
 The lack of cars on global roadways due to coronavirus is directly responsible for the
cleaner air. This emphasizes the importance of switching to electric cars.
 In case of education due to the importance of assessments for learning, schools should
consider postponing rather than skipping internal assessments.
 In case of banking, banks should support virtual SME relationship managers and
accelerate digital sales and service.
 Short-time work allowance should be provided to the workers that will compensate for
the underemployment of the workforce and it will prevent the losses that would result
from increased real unemployment due to COVID-19.

34
References
 https://www.paypervids.com/factors-influence-business-environment/
 https://www.mageplaza.com/blog/what-are-internal-external-environmental-factors-that-
affect-business.html
 https://www.bbc.com/news/business-51706225
 https://www.bloomberg.com/news/videos/2020-04-03/the-long-term-impact-of-
coronavirus-on-the-global-economy-video
 https://www.eonline.com/ca/news/1128448/how-the-coronavirus-is-impacting-
hollywood-and-entertainment

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Factors Affecting Business& Impact of COVID-19 on Various Sectors

on different sectors as well as recommendations.

Factors affecting Business

related to which type of business to be set up or region in which to be set up to it is very

conditions people decide which business or industry to set up in a particular region.

to have optimum utilization of scarce resources.

 Climate: Climate is an important factor affecting business. According to the climatic

their demand is also high in these areas.

types of risk is to get the insurance.

demands from employees and raise costs of business.

 Customer behaviour: It is one factor among economic factor. It includes willingness to

market of demand and supply and bargaining power of customers.

decreases while price of goods increases.

while increase in supply results in fall in the price level.

 Balance of Payment: It measures all international economic transactions between

more middle-income people so business has to formulate strategy according to the

economy such as roads, railways etc.

disorder disturb the business activity.

4. Social and Cultural Factors:

spending a lot investment on corporate social responsibility. Socio-cultural components

well as customer choice.

expectations of the customers.

religion there is no restriction on the consumption of meat so in that country demand of

Business develops strategies according to the targeted group.

high standard of living.

 Social Responsibility: Social responsibility is the expectations that a business have

towards employees as well as against society. It is the responsibility of the business to

some responsibility towards society.

unfair discrimination at work. It ensures that no employee is discriminated on the basis of

sex, religion, caste or color.

to employees in order to avoid accidents. Safety shoes are necessary.

 Contract law: It is an agreement between the parties which is enforceable by law.

description given by them should be true.

advancements such as computer, internet helps in achieving efficiency as well as

customers and employees. Technological advancement can result in competitive advantage.

requires new production technique. New production technology changes production

means of internet such as social media, advertisements etc.

7. Industry level factors:

power of customers, availability of substitute products and rivalry among existing

bargaining power of suppliers.

 Availability of substitutes: Number of substitutes in the market, buyer switching cost,

innovation. In order to survive or protect the company, technological advancement

high prices and achieve higher profits like apple.

business is facing competition from international businesses. Before formulation of any

in number of countries and providing tough competition of domestic businesses. These

to interact with the suppliers or customers.

environment. Companies are trying to produce eco-friendly as well as recycled products to

prevent from the problem of pollution.

grown which needs cold weather.

located depending upon the availability of minerals.

10. Demographic Factors:

discounts on various products as well as various offers.

buy electronic gadgets such as cellular phones, video games etc.

impact on the business.

Effect of COVID-19 on the following areas

had caused educational institutions to implement several measures, which includes

even if they have a valid visitor visa or electronic travel authorization.

 Hotel / Restaurant / Food industry

pandemic. Number of games affected by the COVID-19 in European football leagues in the

the sports industry as a whole.

many environmental sustainability programs in the United States, smaller municipalities