Question

Months into the COVID-19 pandemic, which continues to affect a growing number of countries and people, ¹ the responses to our newest McKinsey Global Survey on economic sentiment confirm the extent of the damage so far. ² Respondents are much likelier now than in March (52 percent, up from 10 percent) to say their countries’ economies have declined substantially in recent months, and more than twice as likely to report substantially worse conditions in the global economy. Across geographies, vast majorities of executives everywhere but Greater China report economic declines in the past six months. ³

The survey also asked about changes companies have made in response to COVID-19—or plan to make, if they are not yet fully operational. Among the few executives whose businesses are fully operational or weren’t affected by COVID-19, the workplace changes they report are similar to the ones all other respondents expect to see once operations resume. When asked about the economy’s future, respondents in most regions are increasingly optimistic about economic conditions at home. Of course, new economic threats have emerged. Since the March survey, social unrest has become a greater risk to both global growth and domestic growth, while the coronavirus outbreak is still cited most often. Unemployment is also a growing concern, with much larger shares than in March expecting their countries’ unemployment rates to rise further in the coming months.

COVID-19’s effects to date on the economy

As economies around the world have been struggling to respond to and then recover from the COVID-19 pandemic, the survey results paint a grim picture of its effects. Nearly nine in ten executives say conditions in their home economies are worse now than six months ago, which is the largest share to say so since April 2009, several months after the 2008 financial crisis began. ⁴ Of them, 52 percent report substantially worse conditions, up from 10 percent who said so in March.

Outside of Greater China, where 45 percent of respondents say the economy is worse now—and a nearly equal share say conditions have improved in recent months—between 88 and 98 percent of respondents in every other region say conditions have worsened (Exhibit 1).

Exhibit 1

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When asked about the global economy, the results are equally gloomy (Exhibit 2). Eighty-eight percent of respondents say the global economy is worse now than it was six months ago, compared with 53 percent in December and 59 percent one year ago.

Exhibit 2

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How companies are responding, and their future prospects

With respect to companies, the results confirm that the pandemic’s effects have, of course, been far-reaching. Only 12 percent of respondents say their operations have not been affected by COVID-19, and as of the survey, an additional 11 percent say their companies are fully operational again. What’s more, a shrinking workforce seems increasingly likely: 39 percent expect their workforce size to decline over the next six months (up from 24 percent in March), which is the highest share to say so since April 2009.

At all other companies, respondents are fairly divided on the timeline to a next normal and views vary greatly by industry (Exhibit 3). On average, about one-third say their companies will be fully operational before the end of the year, while an additional 36 percent expect it will take until 2021. Executives in automotive and assembly are the most likely to report some effect on their business, while those in travel, transport, and logistics expect the longest return; over half say it will take until 2021 to be fully operational again. On the other end are respondents in electric power and natural gas, who are the most likely to say they’re already operational or that business activities haven’t decreased since the COVID-19 crisis began.

Exhibit 3

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We also asked about the biggest changes—to date, or expected—once companies are fully operational, and respondents cite the same changes whether or not their businesses are already at that point (Exhibit 4). The most commonly cited changes are a larger share of virtual or remote work, accelerating adoption of business technologies, and the likelihood that digital channels will serve a larger share of customers. But depending on where the company is based, some changes seem likelier than others. For businesses headquartered in developed economies, respondents most often expect virtual or remote work (63 percent, compared with 41 percent at emerging-economy companies) once their businesses are operational again, while those at emerging-economy firms more often cite different M&A and divestment strategies (27 percent, versus 16 percent) and reconfiguring their geographic footprint (24 percent, versus 14 percent).

Exhibit 4

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Unsurprisingly, then, technology and related disruptions figure significantly as risks to as well as opportunities for company growth. ⁵ Weak consumer demand remains the most common risk to company growth. But the share citing business-model disruptions in their industries has increased since the April and May surveys, as has the share citing the fast pace of technological changes. ⁶ With respect to opportunities for growth, the shift to new technologies is cited most often, by 35 percent of respondents, up from 26 percent in March.

And after reporting record pessimism on expected demand and profits two months ago, executives’ outlook on both fronts is tempering (Exhibit 5). Respondents are more likely to expect demand will increase than decrease, while two months ago, the opposite was true. Views on company profits are still more negative than positive, but the share expecting higher profitability continues to grow.

Exhibit 5

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A cautiously optimistic outlook

While executives’ views on the economy’s current state are decidedly downbeat, their outlook for the future continues to improve. Fifty-two percent believe the world economy will be better six months from now, a share that has continued to climb all year and is the highest it’s been since June 2014. One-half of respondents say the same for their home economies; in May, 43 percent said so, up from 36 percent in April and 26 percent in March. Outside of Greater China, Latin America, and India—where respondents’ outlooks have held steady—executives in every other region are more likely than one month ago to expect improvements (Exhibit 6).

Exhibit 6

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When asked about COVID-19’s effects on global GDP, respondents continue to choose two of the more optimistic scenarios, as they did in April and May. Out of nine scenarios, they most often pick A1 (in which public-health and economic-policy interventions are partially effective, and the return to precrisis levels of GDP, income, and corporate earnings will take time) and A3 (a stronger scenario, in which the virus is contained and growth returns slowly to precrisis levels). When asked how these scenarios might play out in their own countries, executives are more positive. The largest share (23 percent) rank A3 as the likeliest outcome for their home economies (Exhibit 7).

Despite the relative optimism, new risks to growth continue to emerge amid COVID-19. The coronavirus outbreak remains the top threat to both global and domestic growth, as it was in March. ⁷ But social unrest has risen in the ranks. As a global risk, it is cited third most often (31 percent, up from 11 percent three months ago) and at the country level it is a top-five risk, cited by 23 percent of all respondents—up from 10 percent previously.

Unemployment is a growing concern as well. Fifty-five percent of executives expect an increase in their home countries in the next six months, up from 44 percent in March and 35 percent in December 2019. In fact, in every region except for North America, a majority of respondents expect their countries’ unemployment rates will increase (Exhibit 8). Worries are especially acute in Latin America and in Europe, where 79 percent and 74 percent, respectively, expect increasing unemployment.

QUESTION: Based on the reading , what opportunities should a current company be looking into in the near future and in which market?

Answer 1

Answer: The Definition and Importance of Potential Markets

Your potential market incorporates the segment bunches that are not as of now your clients however could become clients later on. They may turn into your clients since you grow your accessible items or administrations, or because you start marketing your present items and administrations in another manner and to new gatherings of purchasers.

The Importance of Potential Markets

Potential markets are a significant piece of a business's future growth. Every business has a lot of target clients that make up a lot of the accessible market. While you can keep offering to these clients later on, probably the most ideal approach to develop your business is to distinguish potential markets that you can start focusing on. By distinguishing and seeking after expected markets, you are not expanding your market share for now; you are guaranteeing your market offer will increment for what's to come. ​ Potential markets permit you to:

• Guarantee the eventual fate of your business by distinguishing new clients.
• Contemplate ways for your business to develop and change.
• Show the capability of your business to financial specialists or partners.
• Increment your income.
• Make an arrangement B that will climate changes in the economy or market.

Analysis Types to Identify Market Opportunities

• Buyer division: To comprehend your interest, you should distinguish shopper portions that share basic attributes. These qualities can be "hard" factors, for example, age, sex, a spot of the home, instructive level, occupation, and level of pay or "delicate" factors, for example, way of life, demeanor, values ​​, and buying inspirations.
• Buy circumstance examination: Purchase circumstances should likewise be analyzed to reveal extension openings. Seeing circulation channels, installment strategies and every single other condition that include buying choices can show you how purchasers purchase and how you can situate your item fittingly. Offering new shopping choices may bring new clients. For instance, candy machines offering snacks like yogurt and individual juices have been presented in the passages of the tram of Santiago de Chile, advancing in a hurry utilization.
• Direct rivalry investigation: notwithstanding examining request and buying circumstances, it is essential to break down gracefully. Knowing the current players in the market where you are contending or going to contend is significant while assessing openings. For instance, SKY aircraft, contending in the Chilean market against an eminently situated brand, for example, LAN, discovered there was a chance to separate itself with an ease model, which up to that point had not existed in Chile.
• Backhanded rivalry examination: Opportunities can likewise be found by investigating substitute enterprises. For instance, on account of the abatement in airfares, carriers may search for circumstances in purchaser sections at present provided by different methods for transport. Air bearers should investigate what number of individuals travel on significant distance transports and prepares, which courses are the most popular, how much voyagers pay for their tickets, what the occupation pace of significant distance transports and prepares is and what is important to convince a current traveler of transports or prepares to decide to go via plane. This kind of investigation builds up upper hands against circuitous contenders and gives knowledge on extra chances to develop.
• Examination of reciprocal items and administrations: Companies should screen the exhibition of other organizations' items, which are corresponding to their own. For example, a bundling organization should screen deals of items that it might bundle, while an organization creating espresso machines should accumulate bits of knowledge on the development of various sorts of espresso deals. Patterns in corresponding markets ought to be considered when settling on venture choices.
• Investigation of different enterprises: now and again, the target of organizations isn't to keep working inside a modern area however to grow a specific plan of action or reasoning. For instance, a British holding of organizations, Easy Group, began augmenting the inhabitance pace of trips with the carrier Easy Jet. Simple Group comprehended that it was desirable to oversell a seat at a lower cost than not selling it by any means. Simple Jet selected a rate the board model that relied upon the inhabitance pace of flights and the time staying until the day of the flight. With this plan of action, it figured out how to build inhabitance rates.
• Remote markets investigation: When an organization works in a development or soaked market, investigating different nations may prompt extra chances. Markets in various nations develop at various paces for a few reasons, remembering differences for the degree of monetary turn of events and nearby propensities. Knowing the advancement of per capita utilization of a given item in a given nation can fill in as a pointer of the development of the item's life cycle. Having data on the size of the market and rivals in different nations will assist with evaluating the business potential.
• Condition examination: Market openings can likewise be distinguished by breaking down changes in the earth with mechanical and logical advancements producing new business openings. For instance, the development of the Internet and cell phones' entrance has empowered the appearance of organizations with new plans of action, for example, Airbnb and Uber. Different changes in the earth, for example, environmental change, international developments, and changes in money related markets likewise impact market openings. It is basic to consider utilizing market exploration to pick up knowledge on the neighborhood business condition; guaranteeing that your system will thrive in another or creating marketplace.

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