POSITIVE AND NEGATIVE UNCERTAINTY
Business uncertainty refers to situations in which businesses face risks that cannot be foreseen or measured. The COVID-19 pandemic is one such example. The unpredictable nature of health risks and the effects caused by the microscopic organisms has hurt approximately 95% of firms in the year 2020. The uncertainty factor of business was prevalent since the advent of commercial activity, the barter system for instance. During those times, seasonal changes and issues in storage and transportation were the uncertainty faced, whereas, during the past two years, the ‘uncertainty’ quotient has multiplied manifold. As there are two sides to a coin, this uncertainty factor in business provides both positive and negative impacts according to the industry. Based on research and strategy, any business can change the course of uncertain events to its advantage. For instance, when business organizations realized that the pandemic immensely contributed to healthcare products and services in the country, many companies entered into the health and hygiene sector to an extent that India's sanitiser production capacity went up by a staggering 1,000 times and over 30 lakh liters were produced per day.
The concept of negative uncertainty, on the other hand, could make businesses cut back on production, investment and employment. The tourism industry for instance witnessed losses ranging from Rs 200 to Rs 500 crore throughout India during the pandemic. The tourism sector covers an umbrella of fields such as travel services, accommodation services, conference and event management, attractions and other amenities. While positive uncertainty was beneficial for services like e-learning, e-entertainment, video conferencing, e-wallets and products like pharmaceuticals, essentials, computer and related accessories, medical devices, negative uncertainty took a toll on services such as aviation, automobile, transportation, real estate and products falling out of the “essentials’ radar.
NAVIGATING THROUGH UNCERTAINTY- AMUL CASE STUDY
Amul navigated through this uncertainty strategically and managed to increase its revenue by 698 crores. Since restaurant, catering and hotel businesses contributed only up to 20% of Amul’s revenue, the pandemic led to an increase in household consumption of milk products and this was efficiently forecasted by Amul. While other dairy industries began drastically cutting down production and supply, Amul operated at 115% capacity. As forecasted, the demand for Amul’s cheese and cottage cheese increased by 80% and 40% respectively. Since there was a shortage of labor and lockdown restrictions in road logistics, this business used railways to transport products quickly throughout the country. Labour, storage and trucks in the ice cream and frozen food sector that were idle, were effectively deployed in the milk and related products supply chain.
This efficient planning and strategy of end-to-end digitalisation of the supply chain by a strategic partnership with IBM enabled Amul to provide accommodation, food stay and an additional incentive of Rs.100-125 to the workers preventing them from contacting the coronavirus. 3.5 liters of extra milk was procured every day and an additional 800 crores were provided to farmers. Amul used third-party e-commerce sites like Big Basket, Flipkart, Dunzo and made deals with Swiggy and Zomato to sell its milk products. During May, Amul got up to 60,000 delivery orders from Zomato and sold over 3 crores worth of products in more than 200 cities. The pandemic witnessed Amul’s humongous investments in marketing using nostalgic and emotional advertising, as the ad volume increased by 316% compared to 2019.
CONCLUSION
Thus for any commercial activity or business to survive the uncertainty of varying degrees, the importance of business acumen, planning, strategising, and effective implementation serves as a game-changer. While it might be hard for businesses to predict future risks due to the dynamic business environment, thorough market research and knowledge of the current business environment are crucial factors in commerce and business.
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