UNIVERSITI TENAGA NASIONAL

GROUP ASSIGNMENT

PERSONAL FINANCIAL MANAGEMENT

KPKB111

SECTION 01

TITLE: BUSINESSES DURING THE ERA OF COVID-19

GROUP MEMBERS: KIISHORE RAO A/L RAMANARAO IS01080730

MOHAMED FARITH HAIKAL BIN LOKMAN CS0107282

MUHAMMAD ZARIQ HAFIZIN BIN MD NOR IS0106015

NALESH KIRUBANANTHAN IS01080610

ROKHINI BASKARAN IS0106025

SHARVIND MOGANA RAJA CS0107306

SIEW XUNWAN FREDYWAN SW01080815

SUHASAN A/L KRISHNA SN0107500

1.0 Introduction

Malaysia’s movement control order (MCO) might just have changed the face of e-

commerce within the country permanently. With travel restrictions forcing most of the

people to remain in reception, the corresponding surge in e-commerce because of its value,

choice and convenience has led to some interesting insights.

In a recent online survey conducted by UOW Malaysia KDU School of Business

during the primary three phases of the MCO. The survey showed that 55% of the

respondents had a high perceived value of online purchases and 43% said they were

willing to pay more for online purchases. While 16% of the two,163 respondents didn't

purchase anything online during the MCO, a staggering 50% made a minimum of one

online purchase within the last seven days. As the MCO brought most physical businesses

to a halt, consumers’ online purchasing behaviour – including through websites, mobile

applications, and social media.

‘The surge in purchases of online groceries shows that consumers’ behaviour has

changed as physical shopping may be a hassle thanks to the long queues at supermarkets

and precautionary measures taken to forestall the spread of COVID-19. With the restrictive

conditions on movement, it's understandable that food delivery has been the highest item

purchased online during the MCO period. The other top items purchased during the survey

period include electrical goods, electronics, fashion, health, and wonder items in addition to

home and lifestyle products. Shopee was found to be the highest platform for online

purchases during the MCO, with Grab Food coming in second and Lazada in-depth third.

When it came to purchases on social media platforms, Facebook and Instagram were the

kings.
 The survey’s findings are hardly surprising. Stating that online shopping is now the

“new normal” because the COVID-19 outbreak has resulted in e-commerce businesses

booming globally, the MCO has led Malaysian consumers to accelerate their shift towards

online platforms. We are seeing significant growth in our merchants’ sales across various

product categories. This modification in buying behaviour shows that Malaysians are

adapting to the new living situations. Even without COVID-19, Malaysia’s internet economy

rose at a gradual 21% annualized rate despite economic headwinds, with the e-commerce

industry a very strong driver of this growth. While these numbers are still not up to other

countries within the ASEAN region. The increase of online purchases during the MCO

would further spur the e-commerce industry because the country involves terms with a “new

normal” of wearing face masks, affecting social distancing, and ensuring good hygiene

whenever they leave their homes.

“Thus, it's now not a choice for businesses to adapt to online platforms “.

2.0 Problem Statement

Businesses that require face-to-face with the customers such as barbers,

gymnasiums, customer service, and marketing businesses are affected badly. Since the

implementation of the Movement Control Order (MCO), these businesses were not allowed

to operate during this period. So, these businesses had to be closed to not be able to pay

the utilities and rent of the premises without even carrying out the business.

Businesses incur huge losses since the starting of the COVID-19 pandemic because

they had to halt the production process to curb the spread of the COVID-19 virus among

the employees. This has caused the companies to lose revenue to pay their employees.

Other than that, Small and Medium Enterprises (SME) have been shut down due to lacking
funds to sustain the business. This has caused the employees to lose their job and

employers have huge loans to pay to recover their financial status.

Many consumers have lost their jobs during the pandemic and due to this, they

hardly have enough money to sustain their families. Plus, the price of groceries has

increased badly and caused the consumers to buy less for them to save their money. Some

consumers who do not have any source of income tend to borrow money from loan sharks

without knowing the consequences of doing it or fully depending on the aid given by the

government which is barely enough for them to sustain.

3.0 Findings

3.1 How and why this issue takes place?

Many occupations that require old means of operation rather than current

online consumer habits have ceased operations because of the issuance of the

Movement Control Order (MCO). This is owing to the MCO's regulations, which

forbid normal interaction and social distancing measures to reduce the severity of the

coronavirus. As a result, enterprises requiring human contact, such as barbershops,

are strictly outlawed. Unfortunately, most of the employees in these enterprises are

sacked and forced to switch occupations that have adapted during the pandemic.

The rise of the E-Commerce market is one example of this.

Although a pandemic was thought to be an unlikely event for a long time

before the COVID-19 outbreak, it has now been acknowledged as one of the most

serious hazards to businesses. Businesses have been prone to converting to virtual

workplaces or laying off workers due to this. Managers and contemporary

management research have mostly focused on the digital transformation of

workplaces in response to COVID-19. Most managers prefer to wait and observe

rather than take action to remedy the problem. Managers may believe that once the

pandemic has passed, sales will simply return as consumption increases. However,

the pandemic has left an indelible mark on workplace culture and consumer culture.

The pandemic may have permanently altered the market structure.

Another reason why businesses suffered massive losses during the pandemic

is that consumer adaptations to internet purchasing are unlikely to stop or reduce

once the COVID-19 era has passed. The primary motivations for purchasing in

person rather than online are immediate belongings and social contacts, however,

online shopping is far more efficient and simple. Online shopping is more convenient

in terms of time, location, and product choices. However, some customers may have

opted to shop in physical stores not only for the sake of instant satisfaction but also

because they were unwilling to invest time in learning how to shop online. In this

regard, the pandemic may serve as a catalyst for the late majority, who have been

resistant to the new style of shopping, to eventually shop online.

3.2 Contributing factors

There are a few factors that cause this to happen. One of the factors that

contributed is the lockdown due to a movement control order (MCO) that was

declared by the government. This order forces a lot of non-essential businesses to

be suspended until further notice from the government as the details of the order

stated that everyone should not be in close contact with each other. These

businesses include museums, gyms, cinemas, and a lot more. Besides suspending

the businesses, the order also limits the number of workers that are allowed to work

in an instance. This will lead to a drop in productivity from the company and as a

result, fire off their employees just to stay in business.

 Another factor that contributed is the drop in income. People who are now

unemployed due to the MCO are now suffering from not having enough money to

buy all the essential items to survive in this pandemic. Not only that, but the price of

essential items is also inflating due to the drop of productivity from the essential

company and the demand by the people. This causes them to borrow money from

their friends and family or even take out some loans just to have enough to buy

those inflated products.

3.3 Effects on the consumers

People from various businesses and customers alike are affected the most

by this. Here’s how. Firstly, let's talk due to the limitations that the pandemic has

caused on various industries. business owners that own stores such as barbers,

clubs, karaoke, etc are the ones that got the worst hits. Since MCO has been started

these businesses have been closed for an indefinite amount of time and some shops

have been forced to close.

What about the other businesses that were able to transition to online

dealing? Many employees have been fast to react to the digital revolution as firms

have transitioned to virtual workplaces or laid off personnel. Zoom, an online video

conferencing program, has seen a 78 percent rise in earnings, while Google Meet

has seen a 60 percent increase in user traffic, with individuals spending 2 billion

minutes each day in online meetings. Even after the epidemic has passed,

employees may be hesitant to return to real workplaces. Some of the effects of

COVID-19 on businesses are anticipated to be long-term, with flexible working hours

and digital meetings projected to progressively supplant traditional corporate culture,

according to managers.
 Businesses are experimenting with decentralized decision-making and new

tools to see whether they can make the new digital work culture as successful and

productive as traditional office work. Although companies need to make this

transition as successfully and quickly as possible, several additional implications that

are critical to their survival have been overlooked: COVID-19's effects on customers

and the market.

Finally, let’s talk about the consumers. Consumers who experience a

pandemic may be altered, and these changes may endure long after the epidemic

has passed. According to a recent poll, 46% of respondents want to cut back on

spending during the epidemic. Although demand for particular categories such as

food and home supplies has grown, discretionary expenditure is anticipated to

decline, with nearly 60% of respondents planning to reduce spending on consumer

gadgets or automobiles. Below is a figure that shows the results of the poll.
 Online shopping has also changed the way people have been doing purchases.

After the COVID-19 outbreak, consumers' adjustments to internet purchasing, which

have been hastened by the pandemic, are unlikely to stop or slow down. According

to a recent survey, the top two reasons for buying in physical stores rather than

online are instant possessions and social connections, even though internet

shopping is far more convenient and cost-effective. Online purchasing provides more

convenience in terms of time, location, and product selection. The learning cost is

one major obstacle that many customers face when it comes to adopting internet

purchasing. Consumers may have chosen to buy in physical stores not just because

they wanted quick gratification, but also because they didn't want to spend time

learning how to shop online. In this regard, the pandemic may serve as a catalyst for

the late majority, who had previously been resistant to the new method of

purchasing, to eventually purchase online. The new 10% of the consumer population

that joined online buying because of the pandemic had already paid the price and

experienced the convenience of online shopping, and they understood that a few

days of waiting for delivery may be worth it. Although late adopters are more

suspicious of new experiences, their online shopping experience is likely to be good

since it provides a reasonably secure method to buy during the epidemic. As a

result, they are likely to continue shopping online once the pandemic has passed.

This is a devastating blow to retailers.

3.4 How to benefit businesses and consumers

Essentially, many businesses were not permitted to operate during the Movement

Control Order (MCO). Some of them, such as barbers, gyms, customer service, and

marketing enterprises, must close since they do not allow consumers into their stores/shops

and do not have enough money to pay their rent. In this scenario, e-commerce was

established, which will assist many businesses in avoiding the closure of their stores. Some

of them have already taken the initial step toward shifting into internet enterprises because it

is easier to approach customers without making direct eye contact. At the same time,

consumers profit because they no longer need to drive to a store to buy something. After all,

the product solution in online business already includes postage. While the cost of

consumables continues to rise despite the pandemic, we can save money by putting it

towards vehicle fuels. In addition, as a result of the pandemic, many of us lost our jobs. As a

solution to this, they can also work as delivery drivers for any business.

Then, create a user-friendly website. Customers want straightforward, easy-to-

navigate pages where they can browse your products and locate exactly what they need.

The online store, like a traditional store, should be organized by categories. Everything

should be sorted and organized at the back end, and the search button should be easily

accessible. With a well-designed search feature, all customer types can locate what they

need. Zara's website, for example, is a fantastic pick. The categories are shown in a

carousel format, with the search box prominently displayed at the top. It's simple, with no

complications and few options for the customer.

Finally, gratify the customer. As we all know, the prices of products and commodities

continue to rise, so how about offering promotions and rewards from the business owner in

this economic condition? This may encourage consumers to make additional purchases by

providing incentives such as discounts and promotions. Send customers an email or

message after they purchase with a reward or loyalty point that they may redeem later.
 Implement a reward system that benefits both current and new customers. It will increase

retention rates by about 5% and earnings by at least 20%, creating a win-win situation.

4.0 Conclusion

4.1 Summary

COVID-19 changed the environment manufacturers from the perspective of the

customer, company, and competitor. Due to changes in purchasing behaviour and requests

for suspension of business and the previous balance between supply and demand was

greatly disrupted. This was compounded by the downsizing of the field system due to remote

work and the responsibilities of manufacturers as suppliers. The changes in the external

environment surrounding the retail industry greatly altered conventional wisdom and just

might create a new structure and circumstances which will have a wide range of impacts on

politics, economy, and our lifestyles, including the digital technologies that support them.

After the Malaysian government announced a state of emergency, essential retail

businesses which handle food and daily necessities received a business continuity request

from the government, but many other types of retail businesses were forced to close. The

impacts on the economy have been hard enough that some say it will take about two years

to recover. The retail industry, in particular, has been severely affected since the government

asked people to quarantine themselves, which greatly restricted face-to-face service in

stores. Our lifestyles as consumers have also been forced to change dramatically. Staying at

home and not going out to the store made online purchasing spread widely among those

who had not used it before. And due to the change in workstyles resulting from people being

forced to work remotely from home, life via online channels has become normal. The digital

technology that supports the online lifestyle has been popular for some time, but its spread

has accelerated explosively since the onset of the pandemic.

4.2 Recommendation

      There are various perspectives for reviewing and optimizing a portfolio, including global

and domestic, business, product, area, and channel. First of all, manufacturers should
review the risks involved in their future corporate activities and consider the portfolio they

should aim for from each perspective. At the same time, manufacturers should also consider

building a system that enables it to detect signals and signs of environmental changes in

advance. Manufacturers should be aware of ESG and BCP in addition to conventional

efficiency and quality improvements since manufacturing automation and manpower

conservation will need to be addressed from the perspective of ensuring the safety and

health of employees. Besides, in response to COVID-19, it is necessary to reconsider the

need for communication with stakeholders concerning the company concerning consumers

and employees. In an increasingly uncertain business environment, no static responses will

remain safe indefinitely. In the future, the ability to detect alerts in advance and take

preventive measures, as well as the speed and flexibility to do so, will be the very essence of

global competitiveness. Moreover, digitalization will also be an unavoidable requirement in

realizing these goals.

Having a financial literacy program is good for companies bottom line. It can do more than

improve financial literacy. It can increase productivity, boost job satisfaction, and save on the

costs of health care and turnover. Company which does not have a financial wellness

program, then it's high time to consider adopting one .A lot of vendors in the market can help

employers establish a financial wellness program. It can be coupled with modern digital

solutions and human support. The rise of self-service applications, machine intelligence and

e-learning approaches allows providers to deliver personalized education to employees

when and where they want it. Decision-support tools built into mobile apps help users

analyse develop plans to reduce student loan or credit card debt, and project how health

care costs and taxes will affect their retirement nest eggs. Other platforms emphasize online

learning. Larger organizations use many kinds of vendors to address the topic of financial

wellness credit unions, employee assistance programs, defined-benefits providers, even

personal financial advisors.

 Besides, financial regulators in Malaysia are struggling to deal with the impact of the

COVID-19 pandemic. As consumers’ financial circumstances deteriorate as a result of the

crisis, it is crucial to ensure that financial institutions treat consumers fairly and bad

behaviour does not add to consumer suffering. Consumer over-indebtedness increasing

quickly due to the crisis and fraudsters exploiting fears over the pandemic to target financial

consumers. Regulators are recognizing the heightened risk of significant consumer harms,

and many are implementing rapid measures to mitigate these harms.

As a first step, regulators should assess the main risks and harms that are affecting

consumers in their own jurisdictions. Then, they should determine how to implement

measures quickly to address key risks. Where regulators have existing legal powers with

respect to financial consumer protection, such powers should be leveraged to issue short-

term measures such as those noted above. Effective market conduct supervision will also be

critical but challenging. Immediate suggestions include identifying formal and informal

sources of information that are already available such as consumer complaints data and

using technological tools to identify spikes and trends in consumer harms as well as to track

industry compliance with new measures. Many regulators are also increasing their efforts to

raise consumer awareness regarding fraud and scams and to communicate consumers’

rights. Providing a clear, comprehensive, and trustworthy source of information for

consumers during these challenging times is a critical role that policy makers can play.

In this insight future retail industry trends and the management agenda for the industry

given the impact of an external environment drastically altered by COVID-19. We hope that

this will be an opportunity for the retail industry itself to identify priorities and think about what

actions are needed in a society in which we cannot simply return to the time before the

COVID 19 pandemic.
5.0 Reference

https://ieeexplore.ieee.org/abstract/document/9076858

https://www2.deloitte.com/content/dam/Deloitte/de/Documents/consumer-business/Impact%20of

%20the%20COVID-19%20crisis%20on%20consumer%20behavior.pdf

THE END