The COVID-19 pandemic and the lockdown related to it have created several economic and logistical challenges for many companies. One of them is Choi Fung Hong, which case is the object of this case study analysis. This paper’s objective is to describe the basic facts about the case of Choi Fung Hong, identify the key problem, propose several solutions, and choose the best one so that the organization can effectively manage the issue during the second wave of the COVID-19 pandemic.
Important Facts of the Case of Choi Fung Hong
There are several important facts here that can be identified in the case of Choi Fung Hong. One of them is Choi Fung Hong is a cosmetics company based in Hong Kong, most of whose shops, namely 12 out of 13 stores, are located in Hong Kong. On January 27, Choi Fung Hong posted on social media that they are open, unlike its many Hong Kong pharmaceutical and beauty products competitors. It is important to note such an essential factor that they decided to do it in the state of the growing COVID-19 pandemic. Moreover, they did it because they had “restocked medical face masks and disinfectant hand gel” (Dimsum Daily Hong Kong, 2020, para. 1). These factors have attracted a lot of attention to Choi Fung Hong shops in Hong Kong, leading to long queues outside stores, and that essential medical face masks and disinfectant hand gel were quickly sold out.
Key Issue of the Case of Choi Fung Hong
Before presenting the key problem, it is essential to describe the cause that preceded it. The end of January was the beginning of the COVID-19 pandemic (Dimsum Daily Hong Kong, 2020). Therefore, the source of the problem that Choi Fung Hong had to face was a rapidly changing environment. This factor has affected almost all organizations of all business sectors, not only those based in Hong Kong but also around the world.
It is there where a problem of the organization can be noticed. The author of this analysis believes that Choi Fung Hong’s management underestimated product demand and did not think about how to organize the space inside and outside of their stores to ensure the safety of the customers’ health. It is partially due to in times like these, “consumers are shifting where they shop, what they purchase, and how much they purchase at an unprecedented scale and speed” (Becdach et al., 2020, para. 1). However, the root of this problem is the management factor. Put differently, demand management, namely product demand measurement, was not adapted to the rapidly changing environment resulting in long queues and shortages of medical face masks and disinfectant hand gel. The author of this paper faced a similar workplace situation.
Effect on Strategy and Performance
Although Choi Fung Hong partially satisfied the product demand and made a profit, the company suffered a reputation loss that potentially could lead to lower profits. It is well known that customers do not like long queues and that the goods they need have run out. It is also worth noting that there was a danger to employees’ health, which could also negatively affect the performance of Choi Fung Hong and interfere with the company’s strategic goals. According to Dessler (2017), “poor safety and the injuries and illnesses, it begets drive up costs, including medical expenses workers’ compensation, and lost productivity” (p. 515). This case may show several alternative courses that will help Choi Fung Hong employees and managers correctly measure product demand and organize space during the second wave of the COVID-19 pandemic.
Alternative Course of Action
Proposals for potential alternative courses of action are based on other companies’ measures during the first wave of the COVID-19 pandemic. It is because these measures have proven to be successful. An alternative course of action to adapt and make the product demand measurement more efficient is to create a COVID-19 plan-ahead team (Becdach et al., 2020). The team would make a demand management process not on an annual basis but within the projected period of the second wave of COVID-19. The team could be made up of both internal employees and hired from an analytical company.
There is also an alternative course of action to address the potentially long queues that could emerge during the second wave of the COVID-19 pandemic. Choi Fung Hong may partner with local delivery companies, such as OCS Hong Kong, Skynet Worldwide Express, and Guangzhou Courier Service, or retrain its employees to deliver medical face masks, disinfectant hand gel, and cosmetics to customers’ houses. As the case of Choi Fung Hong shows, there is a high demand for monthly medical face masks packages (Dimsum Daily Hong Kong, 2020). The ordering and delivery system will allow the organization to avoid long queues and a lack of necessary consumables.
Evaluation of Each of the Alternative Courses of Action
There are both advantages and disadvantages to the COVID-19 plan-ahead team. Building a team using internal human resources would entail no financial costs, but it would take some time to train staff in in-crisis planning skills (Becdach et al., 2020). Hiring a team from an analytical company could be costly, and Choi Fung Hong would also have to share confidential information with a third-party entity.
Delivery of goods through employees and the delivery company also has its good and bad points. Organizational human resources as a delivery service would require retraining of employees as well as hiring new ones, which is time-consuming but not costly. Partnerships with delivery companies could expand the company’s reach, which could be profitable even after the COVID-19 pandemic (Kwok, 2020). However, such a decision could be financially costly.
Recommended Course of Action
The author of this work believes that it is better to deal with the cause of the problem, not its consequences. The best alternative course of action would be to create a COVID-19 plan-ahead team. It would allow the organization to know both the number of potential customers in a crisis period and the required amount of necessary medical and cosmetic products. It would solve the shortage of consumables and long queues. Although the expansion of the influence of Choi Fung Hong is impossible in this case, the organization will maintain a positive reputation.
The work analyzes the case of Choi Fung Hong. The key problem is that the Choi Fung Hong product demand measurement was not adapted to the rapidly changing environment resulting in long queues and shortages of medical face masks and disinfectant hand gel. The author suggested such solutions as a COVID-19 plan-ahead team and delivery service. Case study analysis shows that the most favorable resolution would be a COVID-19 plan-ahead team.
Becdach, C. (2020). Rapidly forecasting demand and adapting commercial plans in a pandemic. McKinsey & Company. Web.
Dessler, G. (2017). Human resource management. Pearson Education.
Dimsum Daily Hong Kong. (2020). Medical face masks sold out in minutes at Choi Fung Hong branches, hundreds queue before shops open for business. Dimsum Daily. Web.
Kwok, L. (2020). Delivery services are getting a boost during the COVID-19 recession. Hospitality Net. Web.