The pandemic has disrupted the domestic and foreign economic life cycle. Business consultants pointed out that the outbreak of the epidemic has highlighted the importance of diversified businesses. Recently, there are many listed companies that have diversified their business to healthcare-related products such as face mask, PPE, glove, Covid-19 testing kits and etc.
Chan Siew Mei, Head of Advisory of KPMG in Malaysia said that the diversification of measures to epidemic prevention-related industries does not only occur in our country. Global fashion and beauty companies such as LVMH and Coty have also diversified into products such as face masks and hand sanitizers.
The impact of Covid-19 on business activities have thrown the importance of diversification. However, business owners should hold a long-term plan rather than “ride the tide” when venturing into “hot businesses”.
A diversification strategy may not necessarily mean venturing into a new business. It could be as simple as diversifying your existing sales channel or diversifying your supply chain as opposed to being overly reliant on one particular supplier or region. All these while not being exposed to the “overly diversified” category, as you may end up losing business focus, added Siew Mei.
In conclusion, striking a balance between diversification and preserving cash is key, i.e. business owners should tap onto their reserves to diversify into new opportunities, whilst ensuring sufficient cash flow for existing business operation.
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