Introduction
By the beginning of the second quarter of 2020, the internal operations of many business organizations changed due to the coronavirus pandemic and its consequences. This paper examines how COVID-19 impacted business operations and discusses why some companies, like Zoom, prospered, and others, like Washington Prime Group, had to file for bankruptcy during the pandemic. Operating techniques are a considerable element of any company and may impact other business functions, but they were not the primary reasons for Zoom’s success and Washington Prime Group’s bankruptcy during the pandemic.
Pandemic Operations
Operational functionality includes operations related to manufacturing, supply chain, and procurement and often appears as a core element of any business organization. Companies rely on their operations for many purposes: for example, to maintain daily operations and position themselves for growth in the world market (Busellato et al., 2021). However, the outbreak of the coronavirus pandemic significantly impacted the way organizations operated, accelerating changes within many business industries. For instance, the just-in-time systems of the firms that work closely with many suppliers were altered due to the regionalization forced by the COVID-19 (Busellato et al., 2021). Many countries had to close their borders during the virus outbreak, which severely affected international supply chains. The corresponding changes were even more significant due to the automation trend: the importance of speed grows in the world market nowadays, increasing the role of just-in-time systems (Busellato et al., 2021). Thereby, operational changes caused by the coronavirus pandemic also impacted the marketing business functions of many companies.
Following the necessary alterations within supply chains, companies also had to improve their capacity planning to satisfy rapidly changing demand. Limitations in supply chains caused by the closing of the borders made many organizations seek alternative suppliers that could provide critical components, reducing their dependence on a single source (Busellato et al., 2021). The primary purpose of such decisions is to build resilience within a firm, which requires reconfiguration of both the supply chain and base. For example, Busellato et al. (2021) report that one manufacturer identified that an entire class of their products significantly depended on one critical component, and they made a series of decisions to improve capacity. The related alterations helped the company mitigate the risks and optimize its inventory, helping it maintain stability during the pandemic. Therefore, capacity-related operational changes could potentially influence other business functions such as accounting since organizations had to reallocate their resources to integrate into newly formed supply chains.
Furthermore, changes in capacity planning are always correlated with the corresponding alterations in inventory management and control. In the case discussed in the previous paragraph, one of the outcomes of the determination of the critical component in the supply chain was adding safety inventory (Busellato et al., 2021). Changes in the supply chains due to the coronavirus outbreak led to the immediate rethinking of the strategies related to distribution networks in many companies. Demand hotspots changed, which caused the necessity to reconsider trade-off routes and relocate inventories (Busellato et al., 2021). Optimizing inventories and transportation costs of goods, materials, and resources became one of the top priorities for many companies. Thus, operational changes in the field of inventory control and management also affected the accounting component of businesses since the costs of many operations had to be reconsidered.
Case Studies
Pandemic Success Company
Although most companies had to change their operating techniques due to the coronavirus pandemic, the outcomes still varied for different companies. The following section of the paper analyzes one organization that was successful during the outbreak and another that had to file for bankruptcy. Firstly, the organization that managed to prosper in the COVID-19 period is Zoom, a well-known platform for video conferencing. The firm’s success is partially evident: newly applied rules of social distancing and rapidly increasing demand for various online communication methods led Zoom to become one of the most popular companies in the market. However, the same reasons immediately made the company seek ways to improve their operations to match the market demand and be able to satisfy their customers (Salonga-Teng et al., 2020). Zoom had to significantly expand its staff and collaborate with other organizations in order to control the company’s meteoric growth and take advantage of that.
The primary operating change Zoom had to make to adjust to new conditions established by the pandemic was associated with creating a new flexible infrastructure. According to Salonga-Teng et al. (2020), the company had to implement the Hub and Spoke work model – in other words, the satellite office system. The model implies that many small offices are spread across several locations within a city instead of single headquarters, allowing employees to reduce their travel time to work. In addition, the company made significant changes to its hiring system: Zoom implemented spotting potential employees on social platforms, remote onboarding of staff members, and primary screening of candidates before setting meetings with HR managers (Salonga-Teng et al., 2020). These hiring innovations allowed the company to improve its hiring process and expand fast, meeting the increasing demand for Zoom’s services. Thereby, the operation that was influenced the most was scheduling: the firm was able to control and optimize its workloads with the help of additional employees, significantly enhancing internal business processes.
Company that Filed for Bankruptcy
Washington Prime Group is an example of a company that did not manage to prosper during the coronavirus pandemic and had to file bankruptcy eventually. The company owned more than a hundred shopping malls across the United States, and Washington Prime Group was forced to close most of them due to COVID-19 (Summerfield, 2021). The primary reason for the company’s challenges was its financial issues. The sector of electronic commerce in modern marketing became more and more popular even prior to the pandemic, and the outbreak made even more people prefer purchasing goods online (Summerfield, 2021). Eventually, shopping centers, including those in possession of Washington Prime Group, started losing customers, leading to a significant decrease in revenues. The company under discussion tried to take some actions to improve the situation and achieve positive outcomes, but those attempts were not successful.
Since Washington Prime Group’s issues were associated with its financial condition, the company decided to alter its operating techniques in this field. The firm’s main goal after the pandemic outbreak was financial restructuring: the company’s operations were in dire necessity of monetary aid to deal with debts and maintain the business simultaneously (Summerfield, 2021). Eventually, Washington Prime Group and its creditors were able to come to a restructuring support agreement with each other. The company hoped to maximize its assets’ value and enhance its operational infrastructure (Summerfield, 2021). However, it was not enough to deal with the overall debt, control the business, and adjust to the pandemic conditions at the same time. Washington Prime Group had to file for bankruptcy and leave the business for an uncertain period.
Overall Analysis
Although it is apparent that operational functions of business organizations have crucial importance, it seems they are not the reason Zoom and Washington Prime Group had differing results during the pandemic. The answer is most likely in the nature of the companies’ businesses: the demand for online communication increased sharply, why the industry of shopping centers suffered a severe decrease in demand (Salonga-Teng et al., 2020; Summerfield, 2021). In Zoom’s case, the company reacted to its incredible growth immediately and was able to adjust its internal operations to meet customers’ requirements and become successful. Nevertheless, the primary reason for the organization’s success is associated with uncontrollable circumstances. Washington Prime Group, in turn, could not do anything to save the business: rules of social distancing and unwillingness to use shopping centers instead of online marketplaces pushed people from the company’s facilities. Both companies had to make significant changes to their internal operations, but they were not the main reason for Zoom’s prosperity and Washington Prime Group’s bankruptcy.
Conclusion
Overall, internal operations are highly significant in business and correlated with other business functions, but in the case of Zoom’s success and Washington Prime Group’s failure operating techniques were not the determinative factor. Zoom, however, managed to adjust its operations to support the growth that came with the pandemic, while Washington Prime Group attempted to restructure its finances to deal with the challenges of COVID-19. Still, operating techniques can often help position the organization in its respective field, impacting the internal business functions of the company.
References
Busellato, M., Drentin, R., Kishore, S., Nair, S., Schlichter, M., & Singh, A. (2021). Rethinking operations in the next normal. McKinsey & Company. Web.
Salonga-Teng, L., Cragg, T., & Chess, J. (2020). Significant growth in a pandemic: How Zoom’s shared services team in Manila adapted to the company’s meteoric rise [Webinar]. SSON. Web.
Summerfield, R. (2021). Washington Prime Group files for Chapter 11 bankruptcy protection.Financier Worldwide Magazine. Web.