Samjung KPMG presents 'Ligilance' strategy to overcome Corona19

While the new coronavirus infection (CORONA19) is affecting the overall business, including corporate finance, customer demand, and supply chain, it has been argued that companies facing crisis should start checking their resiliency capabilities.

In a report titled "Ligilance Strategy to Overcome Corona 19," published on the 28th, Samjung KPMG pointed out that Korona 19 could lead to unpredictable "Black Swan" situations such as the global economic crisis and shutdown of workplaces. In order for companies to overcome and recover from the crisis, they need to secure the capacity of Regilance.

Resilience refers to the nature of trying to return to what it saw when the shock was struck, and it means the core capabilities of companies that overcome crises and prepare for the future.

According to a survey of KPMG experts from 28 countries by the Global KPMG Strategy Group, it is predicted that the global economy will resume normally after the fourth quarter of this year, and that economic recovery will take four to six quarters, assuming that Corona 19 is controlled without re-proliferation.

The report pointed out that the spread of Corona 19 has led to demand and supply shocks affecting the global supply chain and the real economy, raising anxiety over the global economic crisis, reducing trade volume and changing the direction of currency and fiscal policy operations.

In addition, the number of newly confirmed cases of Corona 19 in Korea has been on the decline, but with the company's earnings expected to deteriorate in earnest from the second quarter, there is a possibility that Corona 19 may spread to the economic crisis amid heightened sense of crisis among companies.

The report suggested a strategy for companies to overcome Corona 19 and take a leap forward again in terms of finance, operation, and market aspects.

On the financial side, it saw the need for a defensive cash-guaranteed strategy, such as revising the cash flow model and entering into austerity management. Short-term forecast utilization is important to adjust maturity with creditors and fund providers and to receive financial support. It advised that funding and capital expansion measures should be prepared considering mid- to long-term business strategies, and that financial management and related risks should be considered considering expanding production bases, R&D and M&A.

On the operational side, a strategy should be established to prioritize the products and services to be provided to customers and to develop a viable business model. It suggested that risk assessment and emergency supply chain establishment are needed for suppliers, and that digital technology-based business support should be expanded, including building remote work support solutions, remote monitoring of data centers and technology facilities, and cyber security should be strengthened.

On the market side, strategies should be established to analyze changing consumption patterns and customer experiences, optimize product lines accordingly, and strengthen digital transformation, such as building automation systems and analyzing data related to customer behavior changes.

In particular, it called for developing new business models through analysis of changing pan-industrial value chains and pan-social stakeholders in order to preemptively respond to the "post-corona" era, and for analyzing feasibility of new projects and establishing risk management.

Lee Dong-seok, a partner of Samjeong KPMG Strategy Consulting, said, "Corona 19 is affecting not only corporate management performance but also survival itself, and it can lead to a chain of crises for the nation and companies," stressing that "it is an important time to secure a new concept of 'liberalism' strategy that takes into account the value of employees, customers, government, shareholders and social stakeholders in order to overcome the difficult-to-to-to-to-to-to-to-market crisis situation surrounding companies."

Meanwhile, Samjung KPMG posts various reports on its website analyzing the impact of Corona 19 on the economy, management and industry and potential issues of companies.