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Economic Uncertainty Caused By Lockdowns Case Study

Case Study: The Coronavirus (COVID-19) Pandemic and the Global Economy (A)

Problems/Issues

The main problem presented in the case study by Cavallo and Godwin (2022) is the seemingly insurmountable uncertainty plaguing businesses, governments, and the world over. Supply chains were impacted by lockdowns; demand for services (like entertainment) dwindled to zero; and the seeds of inflation were sewn by both fiscal and monetary policies implemented to support the economy during the lockdown and to combat the fallout after lockdowns were lifted. Uncertainty is a persistent challenge going forward because it affects decisions about staffing, stocking, investing, and building. One risk is that by moving forward as though a return to normal were imminent could be premature, leading to substantial losses if cash flow does not arrive to support operation expenditures. Another risk is that conflicts between the East and the West could lead to total supply chain overhauls that impact local communities at both supply and demand fronts.

These are destabilizing risks on multiple fronts. The ongoing geopolitical tensions between the US and China, for instance, as well as between the US and Russia, have led to widespread disruptions in global supply chains, as all countries impose tariffs and other trade restrictions on...

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…lockdown. It can also help to create new opportunities for growth and innovation. Additionally, cutting costs and managing cash flow can help businesses to remain financially stable during the lockdown. It can also help to increase efficiency and productivity, which can benefit the business in the long term. Likewise, stakeholder engagement should help businesses to stay on good terms with stakeholders throughout uncertain times. Overall, businesses that are able to adapt and remain flexible in the post-pandemic, post-lockdown cycle are likely to be more stable in the long term. By adopting these strategies organizations can reduce uncertainty and increase their chances…

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References

Cavallo, A. & Godwin, C. (2022). The Coronavirus (COVID-19) Pandemic and the GlobalEconomy (A). Harvard Business School.

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