Coronavirus: An Entrepreneurial Perspective
Published by Paul Borosky, MBA., Doctoral Candidate: 2/15/2020
The Coronavirus… This nasty little virus has not only been raising havoc in Wuhan City and the Hubei Province but practically throughout China. So much so that the Chinese Communist Government has put the city of Wuhan on lockdown, replete with travel restrictions and such. These draconian measures are deemed necessary because of the virus’s highly contagious nature.
On a global scale, citizens are increasingly taking note of the disease’s exponential expansion within China’s borders and beyond. Their concerns are reflected in world governments’ actions like closing borders to Chinese citizens, utilizing technological advances to identify virus-related symptoms in travelers at airports and train terminals, and even closing ports to cruise ships with possible Coronavirus-inflicted passengers. Kudos to the United States, China, Japanese, and other governments for leadership (no matter how ineffective) and showmanship thus far in containing the virus’s spread.
Granted, the responsibility to treat and stop the spread of the Coronavirus initially lies with government leaders worldwide. Unfortunately, due to incompetent world-wide leadership (which is an epidemic all its own) and inefficient bureaucratic red-tape, a governments’-lead coalition approach to exterminating the virus is a proven, yet comfortable, road to failure.
Exhibit A: global warming initiatives.
Instead, the skillsets needed to handle a potential global catastrophe, such as this, are more aligned with business leaders, a.k.a., entrepreneurs. It is this argument that I intend to support in my writing.
The purpose of this book is not to incite fear about the potential global ramifications and spread of the Coronavirus. Nor is it to malign rigorous and honorable government efforts of impacted countries like China, United States, Japan, South Korea, and a host of other countries.
Rather, the objective of the manuscript is to first examine what the Coronavirus is and its current/short-term impact on global human health and economic implications. Next, a brief discussion about governments’ failure to mitigate the virus's promulgation is offered. Finally, the importance and need for entrepreneurs and business leaders the world-over to step up and modify their business models to be prepared for a Coronavirus outbreak is explored.
It is my argument that Entrepreneurs and business leaders, as a whole, have the skillsets, leadership, funding, creativity, and innovative passion needed to not only help in preventing the spread of the virus but also in helping citizens of the world best cope with the inflection.
In a battle for life or death, my weapon of choice is entrepreneurialism over government leadership… Every time, bar none. Paul Borosky
Coronavirus: What is it?
So what is this nasty little virus that is garnering global headlines? And from such a meager birthplace, a back alley wildlife trading post in central China, no less.
Welp, the Coronavirus is part of a virus collection that includes everything from the common cold to other, more deadly strands like the Middle East Respiratory Syndrome, commonly known as MERS, Severe Acute Respiratory Syndrome (SARS), and the current epidemic virus named Novel Coronavirus (COVID-19)[i].
Usually, this virus strand infects, and is passed between, animals like cattle, cats, and bats. Due to its continuous mutative nature, the disease periodically makes a leap from animal to animal infections, to animal to people contamination, and then, most concerning, people to people transmissions, which is were we are now[ii].
The Coronavirus symptoms include runny nose, sinus infections, throat irritation, fever, and shortness of breath. The severity of the symptoms runs the gamut from mild to severe and, in the worse case, even death. Symptoms usually start between 2 to 14 days after contamination[iii].
The virus spreads from person to person in different ways. A common mode of contamination is through respiratory droplets from a cough or sneeze. The infected liquids may land on another person’s eyes, nose, or in their mouth. Also, the contaminated fluids may land on hard surfaces and lay dormant for up to 14 days. Once these surfaces are touched by another person, then the infection may be transmitted from their hand to the eyes or mouth.
At present, there are approximately 75,300 known cases of the Coronavirus. About 2,014 of the cases resulted in death. The vast majority have been in China.
Figure 1: Statistics from Worldometers.info/Coronavirus
The average weekly growth rate for Coronavirus is approximately 225%. In using this growth rate, by May 2020, Coronavirus may infect up to about 67.5 million people. This number exceeds the population in France.
If you think this potential viral outbreak could not be worse, guess again. The economic impact, granted to a lesser degree as compared to human life, may be just as catastrophic, in a financial sense.
[i] “Coronavirus” (N.D.). Coronavirus. World Health Organization. Retrieved from: https://www.who.int/health-topics/coronavirus.
[ii] “Coronavirus Disease” (2020). Coronavirus disease 2019 (COCID-19). Center for Disease Control and Prevention.
[iii] “Coronarvirus” (2020). Coronavirus. WebMD. Retrieved from: https://www.webmd.com/lung/coronavirus#2.
Economic Impact - Coronavirus
In the short term, the economic brunt from the virus will mostly be felt in China. Financial experts predict that China’s GDP will take a direct hit in several business sectors like commodity prices, manufacturing, and even the service industry[i]. To support this hypothesis, financial experts have been following coal consumption in the country. As compared to the previous year, coal use is down by over 39%[ii]. This shows that Chinese customers are spending less money on necessities like heating and energy as compared to the previous year.
From this, a logical assumption would be that if residents are spending significantly less money on necessities like electricity, then they are spending far less on discretionary items and services like dining out and personal care products. A possible result in the long-term could be an extended financial recession. Worst case, economic depression elements set in throughout China.
As for the US, economic professionals anticipate a low to moderate economic impact in the short-term. A recent Wall Street Journal survey of prominent economists noted that over 80% of survey participants expect the US gross domestic product to be reduced by .5% in the first quarter of 2020iv. However, business leaders could be indicating a direr economic climate.
Apple Inc. executives recently stated that the company does not expect to meet revenue and costs expectations for 2020’s first quarter. A driving factor for the missed expectations is lowered demand for iPhones and possible supply restraints from Chinese factories[iii]. Ramifications from an advisory of this magnitude may be extrapolated from a technology industry leader like Apple and applied to other industries that are reliant upon products from China. The outcome, in the long-term, quite possibly could be recessionary pressures on the overall US economy.
To avoid further human life loss and economic duress on a global scale, managing the spread of the disease as well as caring for citizens’ needs should be of paramount concern for all parties involved, especially national governments.
[i] Torry, H. and DeBarro, A. (2020). Coronavirus likely to hit first-quarter U.S. Growth. The Wall Street Journal.
[ii] Taplin, N. (2020). Peering through the Coronavirus murk into China’s economy. The Wall Street Journal.
[iii] Kharpal, A. (2020). Apple shares slide after coronavirus guidance warning as its global suppliers are hammered. CNBC.
If every government failure related to the Coronavirus were a blueberry in a pie, then world hunger would be a sweet remembrance. No one national government, not even China, holds the lion’s share of the responsibility for the exponential spread of the Coronavirus. There’s plenty of blame to go around.
As previously noted, the epicenter of the Coronavirus is Wuhan City, which is in central, southeast China. Since the outbreak, China has taken specific steps to mitigate the disease spread. Steps have included sealing off transportation into and out of the city of origin. Also, travel restrictions in other cities throughout the country, like Beijing, remain high[i]. These draconian actions have resulted in China’s party leaders chanting positive mantras about the containment of the disease. So much so that businesses are starting to reopen, and travel blockades have lessened throughout the country. Fantastic right? Wrong!
Business-related travel restrictions seem to be lessened throughout China. Yet, personal travel constraints are still in place without abatement. Further, Chinese leaders, in their infinite wisdom, have created stringent tests and other parameters that must be met before a Coronavirus case is confirmedvii. This shows that China’s leadership may be using its public platform to assuage public content. In other words, ignorance is bliss. If a viral case cannot be confirmed, then it cannot be counted. Thus, no problem to report to the public.
This is just one example of many Chinese government Coronavirus-related failures in the country.
The United States, oftentimes, on its high horse, has taken its own actions to stymie the Coronavirus flow into the country. To date, almost 200 US citizens have been mandatorily quarantined. This number pales in comparison with self-quarantined individuals in the country, which number over 5,400 in just California[ii].
To supplement this effort, the CDC has also issued guidance to local governments as well as businesses about responding to a potential Coronavirus epidemic[iii]. The guidance issued offers readers information about the Coronavirus history, defines important topics covered in the manual, and highlights various categories of risk related to a viral outbreak. With this knowledge, a sound foundation is hopefully constructed related to mitigating the spread of the virus.
As with China, a hefty helping of incompetence has been served up for the ingestion of US citizens. Case in point, over 300 cruise ship passengers were recently evacuated from the Diamond Princess Cruiseship off the coast of Yokohama, Japan. The concept of evacuation sprouted from the fertile soil of altruistic desires on behalf of the US government. The execution of the desires was a debacle of epic proportions.
On the cruise ship, passengers were quarantined to their rooms, with no contact with other passengers. In this scenario, a healthy distance between passengers should help mitigate the spread of the disease. During the cruise ship evacuation process, passengers were corralled on buses, as well as a charter flight, with infected passengers[iv]. The results of this mishap, as of right now, are unknown. What is known is that the potential close proximity of uninfected passengers with infected passengers increases the likelihood of infection.
Not a well-thought-out plan, when people’s lives are at stake.
Fear and assumptions are often a popular foundation for governments to make poor decisions. An excellent example of this would be the MS Westerdam. The MS Westerdam cruise ship, owned by Holland America, was recently turned away from four ports, Guam, Taiwan, the Philippines, and Thailand. The reasoning for the rejections was predicated on Coronavirus fears instead of facts[v]. Specifically, the governments of the named countries assumed that some passengers aboard had contracted the Coronavirus. But, after further tests, no passenger was diagnosed with the disease. Fortunately, calmer heads prevailed in Cambodia, which finally allowed disembarkment after a grueling 14 days at sea for passengers.
Birds of a feather do stupid things together – I guess.
Hopefully, I’ve made a solid argument that the Coronavirus is a very real threat not only to citizens of China but on a global scale. Also, as a whole, governments’ reactions to the growing outbreak have been ill-thought-out, poorly executed, and based on received fears instead of solid facts. With this said, allow me to offer a different perspective in a potential future battle with the Coronavirus, or for any other disease. Entrepreneurship and business leadership.
[i] Shih, G. (2020). Live updates: China strikes upbeat note on Coronavirus as businesses reopened; Hong Kong reports second death.
[ii] Abbott, B. (2020). Amid Coronavirus,U.S. city stretched to monitor self-quarantined Americans. The Wall Street Journal.
[iii] Citroner, G. (2020). How the U.S. is preparing for a major Coronavirus outbreak. Healthline.
[iv] Tinker, B., Silverman, H., & Vera, A. (2020). In American evacuated from Japan on a US charter flight says she didn't know people on the plane had tested positive for Coronavirus until it landed. CNN.
[v] Mahbubani, R. (2020). A cruise ship was stranded at sea for two weeks after five courts rejected it over Coronavirus fears - but no one was actually affected. Business Insider.
Entrepreneurial and other Business Leaders are Key
Inefficiency, incompetence, and unreliability are all terms commonly used to describe just about every government, large or small, functioning (for lack of a better term) today. Yet, these are the very entities that global citizens turn to when faced with a life-threatening viral outbreak.
Hell, just look at the fiasco our world leaders have caused, past and present, concerning global warming. It’s almost as if leaders continually go through the five phases of grief when attempting to head off possible imminent disasters or even to make a collective decision for that matter.
Denial. Anger. Bargaining. Depression. Acceptance.
Quite frankly, in my opinion, the citizens of the world don’t have time to sit back and wait for global leaders to finish their grief cycles and attend multiple group therapy sessions (G7 meetings and such) before acting in rational and effective manners. Instead, trained professionals need to step up to the plate, grab the bull by the horns, and take actions.
The professionals that I am alluding to are entrepreneurs and other business leaders.
Before I make my case for why entrepreneurs are a natural choice for global crisis leadership, allow me the opportunity to align well-known entrepreneurial skillsets with the challenges of a viral epidemic, such as the Coronavirus.
At the height of the financial crisis in 2008, established home lenders, like Countrywide, were crumbling, elected officials could not agree upon a coherent strategic plan to traverse the housing crisis, and consumers were hoarding whatever cash they could find out of fear of the unknown.
Warren Buffett, with his pristine reputation and hoard of cash, could have easily stepped away from the stock market and allowed market forces to take their course before risking an additional dime of his money. However, fully NOT understanding the perils that the current market conditions held, he still stepped in to help solidify cornerstone public companies like Goldman Sachs and General Electric, whether it was with his reputation or funding[i]. Warren Buffett, and kindred spirits, are just the type of business leaders that we may need to provide leadership through turbulent times such as those faced through outbreaks.
For the last 100 years or so, the automobile industry has been dominated by three main players, which were Ford, General Motors, and Chrysler. This oligopoly has been maintained, for the most part, because of the substantial capital needed to design and manufacture automobiles. Yet, facing incalculable odds, Tesla Inc., formed in 2003 by Martin Eberhard and Marc Tarpenning, with significant financial backing from Elon Musk, wanted to do just that, enter the mature automobile industry[ii].
In starting this company, all parties involved must have known that following a proven business model from their competitors was just not an option. From this, the company set out to create innovative long-term strategic plans of their own.
Tesla’s first step was to enter the automobile market as a differentiated competitor. Their distinguished product of choice was the Roadster. This electric vehicle was able to reach 60 miles an hour in about four seconds and cost well over $100,000. By targeting a specific niche market, high-end, eco-friendly vehicles, the organization was able to build brand recognition while they optimize their business models for mass production of more affordable vehicles. A risky strategy, but successful none the less.
The strategic actions taken by Tesla show long-term planning, understanding customer needs, and knowing the specific steps and actions that need to be taken to fulfill a vision. It is these precise skills that are directly aligned with mitigating a Coronavirus spread.
We know that our long-term objective is to eradicate the virus. However, until this is done, specific, actionable steps must be strategically planned and implemented to lessen the impact of the virus. It is these strategies, both long-term and short-term, that we need business leaders, like Elon Musk, to create and implement to best traverse the potential coronavirus spread.
The final skillset I wish to cover that aligns directly with business leaders’ and forsaking a coronavirus spread is innovative leadership. Granted, governments around the world probably already have created and vetted various strategies concerning the possible spread of new viruses. Also, we can assume that these processes have been reviewed by numerous people, departments, and even peer groups. Finally, the strategies very well could be already in place for immediate and sustainable execution.
Wherein lies the problem is that, so far, whatever the created plans may be in regards to stemming the spread of a virus, the fact of the matter is that they have failed miserably in just about every country this bug has visited. So, a different perspective and strategies are needed to better deal with this potential issue. Thus, the demand for innovative business leaders.
Any mention of innovative leaders almost always leads to discussions about technology titans like Mark Zuckerberg, Bill Gates, and Jeff Bezos. These individuals, to the person, have not only started and managed their own organizations, but they have also practically invented new industries. Mark Zuckerberg with social media, Jeff and online shopping, and of course, Bill Gates with innovative software products. It is these visionaries, with their unique perspectives, that is needed when attempting to re-design failed strategic actions from governments around the world.
[i] Lohr, S. (2008). Like J.P. Morgan, Warren E. Buffett Braves a Crisis. The New York Times.
[ii] Weinberger, M. & Hartmans, A. (2020). How billionaire Tesla and Space X CEO Elon Musk went from getting bullied as a child to becoming the most successful and provocative men in tech. Business Insider.
Business Opportunities to Mitigate the Coronavirus
At the forefront of any business-related challenge are innovators, business leaders, and entrepreneurs ready to meet the needs and demands of their community and country. It is now that business owners and entrepreneurs should start to consider how they can best be of service if and when a viral outbreak takes hold in our communities. From this, here are some thoughts and ideas regarding how various businesses and industries may help in meeting customers' and governments’ future needs.
Advertising agencies work with startup and established businesses to accomplish specific objectives. Common objectives include helping clients build brand recognition, creating advertising campaigns, and educating the general public about their client's products and services.
Startup organizations focusing on mitigating the spread of the coronavirus will need to educate governments and customers about their products and services as expeditiously as possible. This is reason enough for hiring and exploiting the skills of advertising agency professionals. Thus, I project the need for this type of business to increase in the event of a coronavirus outbreak.
Potential Business Model Improvements:
Advertising agencies should implement their own advertising campaigns based on educating business owners on how their services are of need. Campaigns may include focusing ads on their ability to effectively educate masses efficiently and effectively.
In 2019, this industry reached revenues of approximately $54 billion. Industry experts project that this industry will grow by approximately 2.4% annually over the next five years. At present, there are about 70,000 competitors throughout the US[i].
This industry is an obvious choice. Statistics have shown that the coronavirus is lethal, approximately 2% of the time. However, serious ailments set in with approximately 30% of infected individuals. As you can imagine, an outbreak similar to the one in China will place serious strains on the US healthcare system. As a result, healthcare professionals ranging from physicians to radiologists will be in high demand.
Potential Business Model Improvements:
An important business model for healthcare organizations to implement would be the need for a sanitary environment. From this, personal and area-specific hygiene should be of paramount concern for healthcare facilities. Important business models for improvement would include training employees, or re-training, about the importance of handwashing, sanitizing areas, and other actions that are proven to lessen the spread of viruses.
To take this a step further, business models should also include strategies for educating health care patients about the importance of personal hygiene as well. Patient training should include the importance of personal hygiene as well as proven steps to implement the practice.
The healthcare industry encompasses a multitude of healthcare-related services like physicians, nursing homes, social services, and hospitals. In the last 12 months, industry experts have found that revenues for the industry reached approximately $2.9 trillion. In the next 12 months, industry growth is expected to reach 1.9%. However, in the event of an outbreak, this growth estimate should be considered on the low end[ii].
In China, one of the hardest-hit industries during the coronavirus spread is manufacturing. The main reason for the direct hit is because of the labor needed for taking raw materials and making finished products. However, regardless of an outbreak or not, people will still need critical items like thermometers, medicines, and packaged foods. All items coming from manufacturers.
Potential Business Model Improvements:
To best cope with a possible outbreak, manufacturers need to start relying more upon machines and robots as compared to manual labor. By changing this business model, manufacturers will be able to operate with less staff, if or when, an outbreak sets in.
In the US, manufacturing is still a viable and mature industry. In the last 12 months, the manufacturing industry grossed approximately $6 trillion. In the next 12 months, industry experts project a .5% growth rate. However, in the event of an outbreak, the growth rate is expected to fall significantly[iii]. Because of this, business owners should consider revamping the business model to rely more upon fixed assets as compared to labor.
Retail stores, regardless if it’s brick-and-mortar or online, will still be a necessity through a coronavirus outbreak. Without retail stores, people will not be able to buy groceries, pharmaceutical goods, or other essential items.
Potential Business Model Improvements:
To best cope with an outbreak, retailers should use a brick-and-mortar business model and complement it with an online outlet. By doing this, in the event of an outbreak, business owners will still be able to service customers. Further, retail business owners should also consider creating strategic partners with delivery organizations. Or, even better, have a business strategy ready for starting your own delivery service to avoid reliance on vendors or other operators.
The retail industry exceeded $5.6 trillion in the last year. In the next year, industry experts anticipate a 1.4% growth rate. Currently, there are about 2.7 million competitors in the retail industry[iv]. However, in the event of an outbreak, business owners should expect competition to fall off significantly. This is just one of the many reasons why having a business model ready for an outbreak is a smart business decision.
People are going to need to get to healthcare facilities. Manufactured goods must go from manufacturers to retailers or warehouses. No matter how the economy is impacted by a coronavirus outbreak, transportation is an absolute necessity in our society. Transportation businesses may include over-the-road trucking, local delivery, as well as regional deliveries.
Most people view transportation as delivering products. However, in this day and age, thanks to Uber and GrubHub, transportation could also mean transporting people from their homes to healthcare facilities and delivering food from grocery stores to customers directly.
Potential Business Model Improvements:
Actionable business models should focus on protecting employees as well as products from viral contamination. Employee protection business models should focus on personal hygiene and workspace decontamination.
As for transported product contamination, this could very well be a competitive advantage for an organization. For example, simply spraying down exteriors of boxes or other products with a disinfectant may lessen the chances of a viral spread through contaminated products.
By having a similar business model such as this, transportation business owners could use this information in advertising as well as in operations. The objective here is to not only protect customers and employees from viral dissemination but also show potential customers that safety is of paramount concern for your organization.
The transportation and warehouse industry is a $1.5 trillion industry segment. In the next 12 months, industry experts project a 2% growth rate[v]. In the event of an outbreak, this growth rate may decline significantly. However, business owners may be able to mitigate detrimental revenue decline by creating strategic plans that are outbreak-proof. These plans may include owner-operator transportation or ensuring the safety of truckers through exceptional hygiene and other practices.
In my opinion, delivery drivers and delivery businesses should find the highest demand and growth rate during any viral outbreak. Just recently, a “super-event” happened in South Korea. A super event is when a contaminated person goes to a public gathering, a church in this case, and inadvertently disseminates viruses to a multitude of other individuals. After this event, the third-largest city in South Korea had become a ghost town.
As unfortunate as this event is, the need for delivery drivers cannot be more pronounced. Especially when business models are embraced and employed to protect both the delivery driver as well as customers.
Potential Business Model Improvements:
A potential business model for delivery drivers could be to issue personal protective gear like masks, gloves, and aerial disinfectants (Lysol) to be used continuously. Also, delivery company business owners could create business models focused on keeping their drivers from coming into contact with retail employees or customers. To illustrate, delivery drivers may be instructed to leave products on porches instead of directly handing content to customers.
The construction industry focuses on building or remodeling residential homes, commercial buildings, and community infrastructures like roads and bridges. Certain segments of the construction industry may be detrimentally impacted by a coronavirus outbreak. The segments would include residential home construction as well as remodeling. However, commercial buildings, like hospitals and healthcare facilities, may find elevated demand. With this said, business owners in this industry should create business models focused on meeting these niche demands.
Potential Business Model Improvements:
A wonderful trait about the construction industry is that its competitors are extremely versatile. Yes, some construction companies may focus on a commercial building or residential remodeling. However, with just a little bit of tweaking to a business model, a residential remodeling organization may use its core competencies to focus on healthcare facility remodels. This is just one example of how business owners in the construction industry may start thinking about exploiting opportunities presented by challenging external environmental factors.
The construction industry in the US generates approximately $2.4 trillion a year. In the next 12 months, industry analyst predicts a 1% growth rate[vi]. In the event of an outbreak, this growth rate may fall significantly. However, as noted above, niche industries may find elevated demand, like building healthcare buildings or remodeling existing buildings to accommodate healthcare facilities.
A final important industry for consideration during a coronavirus outbreak would be education. At the height of the outbreak in China, one of the government’s first actions was to close all schools. During this closure, students were required to participate in online classes. Unfortunately, online learning significantly differentiates from in-class instruction. Because of this differentiation, the need for additional assistance cannot be more pronounced. From this, tutoring companies to educational software organizations may find elevated demand during an unfortunate outbreak.
Potential Business Model Improvements:
An important business model improvements for tutoring businesses would be to focus more on online instructions. This may include devising online classrooms or creating generic lesson plans that may be utilized in an online format.
Tutoring and other educational services in the US may include professional tutoring organizations, educational software, testing facilities, and consulting services. Previous annual revenue estimates show that this industry had exceeded $16 billion in the previous 12 months. Going forward, the industry’s annual growth rate is expected to exceed 1%. Currently, about 175,000 businesses are operating in this industry[vii].
[i] “Advertising”. (n.d.). Advertising agencies. IBISWorld.
[ii] “Healthcare”. (n.d.). Healthcare and social assistance. IBISWorld.
[iii] “Manufacturing”. (n.d.). Manufacturing. IBISWorld.
[iv] “Retail”. (n.d.). Retail. IBISWorld.
[v] “Transportation”. (n.d.). Transportation. IBISWorld.
[vi] “Construction”. (n.d.). Construction. IBISWorld.
[vii] “Tutoring”. (n.d.). Tutoring. IBISWorld.
Author: Paul Borosky, MBA., Doctoral Candidate.