As debate continues among business leaders as to what Covid-19 means for their exports and international supply chains, a leading audit and accountancy firm is advising against knee-jerk decision-making.
Grant Thornton is stressing the importance of considering multiple factors when thinking about supply chains and the need for scenario planning to help businesses work out the best way of dealing with immediate challenges.
Dennis McGurgan, Managing Director at Grant Thornton Isle of Man, believes companies that are more agile and resilient will be best positioned to take advantage of opportunities.
He says factors such as the political and economic stability of the markets, taxation and business models, will inevitably influence the importance that firms attach to international sales and supply chains.
‘There is no question that businesses will need to keep re-evaluating their international footprints and, as the impact of Covid-19 dissipates, factors like flexibility, reliability, cost and the market opportunity will continue to be important considerations for those seeking growth. The limitations of a purely domestically-focused strategy will simply not be sustainable for some,’ Dennis explained.
Recent research conducted by Grant Thornton into companies’ prioritisation of international markets and supply chains in the next 12 months led to conflicting opinions as to whether to increase or decrease their international focus with plenty of variation across geographies and sectors.
‘Some firms have a more domestic focus and consider overseas markets an unnecessary risk, others feel it’s a smart hedge,’ added Dennis. ‘What our research highlights is that, in every downturn, there are opportunities and you need to be growth-ready in order to take advantage of them.’
It shows the more developed regions of Asia Pacific, Western Europe and, to some degree, North America are currently shifting their sales and supply attention back towards domestic markets, while emerging regions remain more internationally focused.
The research also recommends adopting strategic partnerships which may prove a more fruitful supply chain, allowing business to better meet shifting situations and needs.
According to the findings, the top three sectors appearing to concentrate more on domestic markets were: education, social services and personal services; transport; and travel, tourism and leisure.
Unsurprisingly, the sectors keen to look more closely on international markets were: technology, media and telecoms; financial services; construction and real estate.
Dennis continued: ‘The pandemic has clearly forced a dramatic shift in the global social, business and economic climate so this research is a valuable snapshot amid an ever-evolving situation.
‘In the face of global uncertainty, it’s easy to see why some businesses might rein in their growth plans and concentrate on the markets they know best, but many of our experts think this shift will be fairly short-lived.’
Grant Thornton advisers are well placed to discuss COVID-19 and what it means for international sales and supply chains.
Find out more about how Grant Thornton helps professional services companies by calling them on 01624 639494 or visiting grantthornton.co.im