An endemic economy is plagued by continual challenges, upheavals, and uncertainties, such as technical breakthroughs, shifts in consumer preferences, legislative changes, competitive pressures, and global economic volatility. Change becomes the norm rather than the exception in such an atmosphere.
The global impact of the COVID-19 pandemic has been documented across businesses. COVID-19’s impact on businesses, particularly medium-sized enterprises (SMEs), is unprecedented. Weak economic and financial performance, demand reductions, supply chain disruptions, labor shortages, inflation, and the spillover effects of ailing industries on employment are all posing problems for most countries, including Malaysia.
World Bank report for 2022 has shown that SMEs account for around 90% of firms and more than 50% of jobs globally. Formal SMEs generate up to 40% of the national income (GDP) in emerging economies such as Malaysia.
Malaysia’s economy is supported by SMEs and according to the Malaysia Department of Statistics, small enterprises account for 98.5% of all firms in the country and employ approximately 70% of the workforce. In 2021, around 1.2 million small enterprises contributed RM 500 billion (or around 38% of Malaysia’s GDP) to the Malaysian economy. However, SMEs contribution to GDP fell to 37.4 percent in 2021 with a value-added of RM518.1 billion, down from 38.1 percent in the previous year with a value-added of RM512.9 billion. The weakened ringgit and labor shortages are big hurdles for Malaysia’s SME recovery. Despite being the nation’s backbone, SMEs face many storms in this endemic economy, and business owners must recognize the necessity for a shift in management style and minimize the risks of closing down the business.
Due to the constant and rapid changes that occur in an endemic economy, implementation of change management in SMEs is essential.
Businesses must be agile and adaptable to survive and prosper, as change frequently implies inherent risks and uncertainties. SMEs specifically need to employ an effective change management model to identify potential risks connected with a specific change endeavor and develop mitigation strategies. Businesses can minimize negative consequences and raise the likelihood of success by proactively managing risks.
Furthermore, effective change management will assist SMEs in effectively accepting and responding to these changes by allowing them to assess the effects of change, devise appropriate plans, and execute necessary adjustments in a systematic and coordinated manner. Only then SMEs will be able to successfully navigate and capitalize on developments and gain a competitive advantage. The reforms also enable SMEs to proactively identify and capitalize on opportunities, remain ahead of the competition, and differentiate themselves.
However, change may be unpleasant for SMEs, particularly employees, and maintaining employee engagement becomes critical in an endemic economy where change is continual. As a result, the change management model offers a disciplined strategy for involving and empowering people throughout the change process, generating a sense of ownership and decreasing resistance. Employees that are engaged are more likely to adjust to changes and remain dedicated to the business.
Moreover, in an endemic economy, the most important aspect of SMEs is to innovate and grow, which requires businesses to investigate and venture into new ventures to sustain growth. SMEs should foster an innovative culture by promoting a mindset that embraces change and ongoing development. It contributes to the creation of an atmosphere in which new ideas can be effectively tested, developed, and scaled. With the increased digitalization of SMEs, business owners must ensure efficient communication, collaboration, and coordination with stakeholders, ensuring their needs and concerns are met during times of transition.
To maintain the change embedded within the businesses, business owners must regularly examine their strategic direction and align their operations properly. The change management model makes it easier for SMEs to integrate their goals, objectives, and processes with the changing business landscape. It assists in ensuring that the changes being implemented are compatible with the broader strategic direction of the firm, enhancing the likelihood of long-term success.
In an endemic economy, change is not just a sporadic event but an ongoing reality. By employing change management practices, SMEs may navigate these demanding circumstances more effectively, capture opportunities, mitigate risks, and lay the groundwork for long-term success.
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