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Paving the way for your own business recovery strategy

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Paving the way for your own business recovery strategy 1

By Rupert Morrison CEO of Orgvue 

The economic impact of C ovid-19 is understood to be triggering the largest global recession since World War II. This is a harsh reminder that the worst of the pandemic is not behind us and the onus is on businesses to shape their own destinies so they can build their way back to profit and prosperity in these turbulent times.

Leaders that wait around for a silver bullet solution to fall into their laps will have a rough road to recovery ahead. Businesses must find ways to adapt and return to a new way of working, and fast. How? By developing their own recovery strategies via continuous analysis, modelling, planning and execution. Here are the most important factors to bear in mind:

Continuing to monitor staff health

Focusing on your staff is always a good place to start. At a time where we are all trying to navigate this deadly virus while continuing to remain productive, monitoring the health and wellbeing of your workforce is going to be key.

For specific businesses or roles where working from home hasn’t been possible, this begins with tracking all cases of Covid-19 within the business across locations and identifying where points of contact between locations exist. Look to automate the data collection and reporting for this so that the health status of your workforce is always up to date and can be referenced at any moment.

Even when the pandemic begins to subside, 48% of workers are likely to continue working from home, at least some of the time, according to research from Gartner. Virtual working environments are part and parcel of the future of work and ignoring the accelerated rate at which the workforce are embracing this way of working is nothing short of naive.

Business leaders must recognise this shift and model how it impacts their business, as well as how the future of the way work is done will take shape in the organisation. Technological advancements are now allowing business leaders to view and monitor their organisations through a variety of lenses. This goes beyond the structure of the workforce by analysing and understanding the work itself. A good starting point is identifying what work can be done remotely versus what cannot and how changing traditional ways of working will impact productivity.

Additionally, the duty of care to protect employees’ health and wellbeing cannot be ignored when they are working remotely. This involves identifying mental health challenges alongside physical health and supporting a healthy at-home-working environment wherever possible.

Confident leadership is the basis of an agile business

For many businesses, accomplishing critical tasks in the way they did before is no longer possible. Perhaps they have fewer employees, their supply chains have been impacted or their product is no longer in demand.

Change can be a scary thing, especially for business leaders that have been operating in the same way for years. This is a reminder that the ability to be flexible and agile has never been as important as it is now. So cut the delusions and the ‘burying your head in the sand’, it’s time to limber up and plan around what’s happening on the ground.

One way to do this is by spotting opportunities for process change in order to achieve the same ends. Where multiple meetings, extensive planning and piloting may have been involved in changing established ways of working before, the pandemic has created the need for these processes to be accelerated.

Whether it’s adapting to social distancing measures or repurposing elements of your organisation to bring in new revenue streams, thinking creatively and acting swiftly will be the difference between success and failure for many businesses.

During lockdown, for instance, UK-based home improvement retailer B&Q, utilised the unused customer car parks and offered a drive-through style ‘click and collect’ to respect social distancing guidelines. When this proved popular, they responded to large queues by introducing a two-step control system using email and phone to manage customer visits.

Just because decisions may need to be made and implemented on the fly, doesn’t mean they should be made with less confidence or clarity. Making effective changes like this in a timely manner, relies on two things: readily accessible integrated organisational data, and effective scenario planning.

Perpetual planning to boost productivity

Irrespective of Covid-19, transformation and disruption continues to gather pace and the world is becoming more unpredictable, with even the best business forecasters unable to reliably plan more than 400 days in advance.

Of course, in the current climate, circumstances are continually evolving with organisations tackling change on a daily basis. Keeping the workforce healthy, safe and productive while being able to incrementally adjust your planning on a continual basis, will allow you to be agile in the face of change.

It’s time to move away from theories and forecasts, as they are no longer providing us with the most reliable data. Instead, it’s time for business to learn from experience in real-time. Want to always be on the front foot? The concept of continuous analysis, modelling, planning and execution is the answer.

Business

Euro zone business activity shrank in January as lockdowns hit services

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Euro zone business activity shrank in January as lockdowns hit services 2

By Jonathan Cable

LONDON (Reuters) – Economic activity in the euro zone shrank markedly in January as lockdown restrictions to contain the coronavirus pandemic hit the bloc’s dominant service industry hard, a survey showed.

With hospitality and entertainment venues forced to remain closed across much of the continent the survey highlighted a sharp contraction in the services industry but also showed manufacturing remained strong as factories largely remained open.

IHS Markit’s flash composite PMI, seen as a good guide to economic health, fell further below the 50 mark separating growth from contraction to 47.5 in January from December’s 49.1. A Reuters poll had predicted a fall to 47.6.

“A double-dip recession for the euro zone economy is looking increasingly inevitable as tighter COVID-19 restrictions took a further toll on businesses in January,” said Chris Williamson, chief business economist at IHS Markit.

“Some encouragement comes from the downturn being less severe than in the spring of last year, reflecting the ongoing relative resilience of manufacturing, rising demand for exported goods and the lockdown measures having been less stringent on average than last year.”

The bloc’s economy was expected to grow 0.6% this quarter, a Reuters poll showed earlier this week, and will return to its pre-COVID-19 level within two years on hopes the rollout of vaccines will allow a return to some form of normality. [ECILT/EU]

A PMI covering the bloc’s dominant service industry dropped to 45.0 from 46.4, exceeding expectations in a Reuters poll that had predicted a steeper fall to 44.5 and still a long way from historic lows at the start of the pandemic.

With activity still in decline and restrictions likely to be in place for some time yet, services firms were forced to chop their charges. The output price index fell to 46.9 from 48.4, its lowest reading since June.

That will be disappointing for policymakers at the European Central Bank – who on Thursday left policy unchanged – as uncomfortably low inflation has been a thorn in the ECB’s side for years.

Factory activity remained strong and the manufacturing PMI held well above breakeven at 54.7, albeit weaker than December’s 55.2. The Reuters poll had predicted a drop to 54.5.

An index measuring output which feeds into the composite PMI fell to 54.5 from 56.3.

But despite strong demand factories again cut headcount, as they have every month since May 2019. The employment index fell to 48.9 from 49.2.

As immunisation programmes are being ramped up after a slow start in Europe optimism about the coming year remained strong. The composite future output index dipped to 63.6 from December’s near three-year high of 64.5.

“The roll out of vaccines has meanwhile helped sustain a strong degree of confidence about prospects for the year ahead, though the recent rise in virus case numbers has caused some pull-back in optimism,” Williamson said.

(Reporting by Jonathan Cable; Editing by Toby Chopra)

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Volkswagen’s profit halves, but deliveries recovering

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Volkswagen's profit halves, but deliveries recovering 3

BERLIN (Reuters) – Volkswagen reported a nearly 50% drop in its 2020 adjusted operating profit on Friday but said car deliveries had recovered strongly in the fourth quarter, lifting its shares.

The world’s largest carmaker said full-year operating profit, excluding costs related to its diesel emissions scandal, came in at 10 billion euros ($12.2 billion), compared with 19.3 billion in 2019.

Net cash flow at its automotive division was around 6 billion euros and car deliveries picked up towards the end of the year, the German group said in a statement.

“The deliveries to customers of the Volkswagen Group continued to recover strongly in the fourth quarter and even exceeded the deliveries of the third quarter 2020,” it said.

Volkswagen’s shares, which had been down as much as 2%, turned positive and were up 1.5% at 164.32 euros by 1158 GMT.

Sales at the automaker rose 1.7% in December, at a time when new car registrations in Europe dropped nearly 4%, data from the European Automobile Manufacturers’ Association showed.

Like its rivals, Volkswagen is facing several challenges due to the coronavirus pandemic as well as a global shortage of chips needed for production.

It also sees tough competition in developing electrified and self-driving cars. The merger of Fiat Chrysler and Peugeot-owner PSA to create the world’s fourth-biggest automaker Stellantis adds to the pressure.

Volkswagen said on Thursday it missed EU targets on carbon dioxide (CO2) emissions from its passenger car fleet last year and faces a fine of more than 100 million euros.

The group is expected to release detailed 2020 figures on March 16.

($1 = 0.8215 euros)

(Reporting by Kirsti Knolle; Editing by Maria Sheahan and Mark Potter)

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Global chip shortage hits China’s bitcoin mining sector

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Global chip shortage hits China's bitcoin mining sector 4

By Samuel Shen and Alun John

SHANGHAI/HONG KONG (Reuters) – A global chip shortage is choking the production of machines used to “mine” bitcoin, a sector dominated by China, sending prices of the computer equipment soaring as a surge in the cryptocurrency drives demand.

The scramble is pricing out smaller miners and accelerating an industry consolidation that could see deep-pocketed players, many outside China, profit from the bitcoin bull run.

Bitcoin mining is closely watched by traders and users of the world’s largest cryptocurrency, as the amount of bitcoin they make and sell into the market affects its supply and price.

Trading around $32,000 on Friday, bitcoin is down 20% from the record highs it struck two weeks ago but still up some 700% from its March low of $3,850.

“There are not enough chips to support the production of mining rigs,” said Alex Ao, vice president of Innosilicon, a chip designer and major provider of mining equipment.

Bitcoin miners use increasingly powerful, specially-designed computer equipment, or rigs, to verify bitcoin transactions in a process which produces newly minted bitcoins.

Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co, the main producers of specially designed chips used in mining rigs, would also prioritise supplies to sectors such as consumer electronics, whose chip demand is seen as more stable, Ao said.

The global chip shortage is disrupting production across a global array of products, including automobiles, laptops and mobile phones. [L1N2JP2MY]

Mining’s profitability depends on bitcoin’s price, the cost of the electricity used to power the rig, the rig’s efficiency, and how much computing power is needed to mine a bitcoin.

Demand for rigs has boomed as bitcoin prices soared, said Gordon Chen, co-founder of cryptocurrency asset manager and miner GMR.

“When gold prices jump, you need more shovels. When milk prices rise, you want more cows.”

CONSOLIDATION

Lei Tong, managing director of financial services at Babel Finance, which lends to miners, said that “almost all major miners are scouring the market for rigs, and they are willing to pay high prices for second-hand machines.”

“Purchase volumes from North America have been huge, squeezing supply in China,” he said, adding that many miners are placing orders for products that can only be delivered in August and September.

Most of the products of Bitmain, one of the biggest rig makers in China, are sold out, according the company’s website.

A sales manager at Jiangsu Haifanxin Technology, a rig merchant, said prices on the second-hand market have jumped 50% to 60% over the past year, while prices of new equipment more than doubled. High-end, second-hand mining machines were quoted around $5,000.

“It’s natural if you look at how much bitcoin has risen,” said the manager, who identified himself on by his surname Li.

The cryptocurrency surge is affecting who is able to mine.

The increasing cost of investment is eliminating smaller players, said Raymond Yuan, founder of Atlas Mining, which owns one of China’s biggest mining business.

“Institutional investors benefit from both large scale and proficiency in management whereas retail investors who couldn’t keep up will be weeded out,” said Yuan, whose company has invested over $500 million in cryptocurrency mining and plans to keep investing heavily.

Many of the larger players growing their mining operations are based outside of China, often in North America and the Middle East, said Wayne Zhao, chief operating officer of crypto research company TokenInsight.

“China used to have low electricity costs as one core advantage, but as the bitcoin price rises now, that has gone,” he said.

Zhao said that while previously bitcoin mining in China used to account for as much as 80% of the world’s total, it now accounted for around 50%.

(Reporting by Samuel Shen and Alun John; Editing by Vidya Ranganathan and William Mallard)

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