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Management and economic theories, 2020 reality

The year 2020 started with fireworks in many parts of the world. There was hardly any clue about the looming anticlimax awaiting nations just a month into the first quarter. Covid 19 has struck the world and the repercussions were not fathomed! As days turn into weeks and eventually into months, even great nations are yet to come to terms with the effects of this pandemic. Experts are yet to determine the course of Covid 19 with precision.

As history recounts, such adversity befall humanity from time to time. Some people are able to flourish when things get difficult, while others seem to struggle. How is it that some people can bounce back and find a way to overcome misfortune and defeat? They don’t allow themselves to become overwhelmed with negative emotions or thoughts, but resume, moving forward.

People have to find ways of survival as governments, medical and other experts struggle to find solutions for this pandemic.

One way to persevere is to revisit some of the management and economic theories e.g. the ‘Theory of Human Motivation’ by Maslow.

A Closer Look at Maslow’s Hierarchy of Needs shows he was interested in learning about what makes people happy and the things that they do to achieve that aim.

Maslow believed that people have an inborn desire to be self-actualized, that is, to be all they can be. In order to achieve these ultimate goals, however, a number of more basic needs must be met such as the need for food, safety (job security, health security), love, and self-esteem (respect, good reputation); often displayed as a pyramid. The lowest levels of the pyramid are made up of the most basic needs, while the most complex needs are at the top of the pyramid.

Needs at the bottom of the pyramid are basic physical requirements including the need for food, water, shelter, sleep. Once these lower-level needs have been met, people can move on to the next level of needs, which are for safety and security.

People are at different levels of the pyramid, many still at physiological level, others midway yet others further up – with the need for personal esteem and feelings of accomplishment taking priority.

In many countries, some of the strategies governments have drawn up to manage the pandemic is social distancing.  People are under lock down, some employees have lost their jobs, salary cuts have been made by several companies whereas other individuals are still waiting for the end of the pandemic to resume work and business.

The lull created of Covid 19 has provided an opportunity to review the pyramid. During normal economic activity, people have incomes to satisfy the basic physiological and safety needs. Currently, savings are getting depleted and if this pandemic does not end quickly, the resources to satisfy basic needs may not be available.

Maslow explains that physiological needs are universal human needs and must be met first. People need to be motivated to become self-reliant in physiological needs, a requirement for human survival. When people are struggling to meet their physiological needs, they are unlikely to intrinsically pursue safety, belonging, esteem, and self-actualization.

How do we solve physiological needs?

By getting back to reality and be somewhat self-reliant i.e. able to provide basic needs for self and family (food). Many countries have arable land that can produce food enough to feed the population. Let’s take a case of Uganda, a country gifted by nature. About 60% of Uganda’s population is engaged in agriculture, forestry and fishing. The climate is conducive for agriculture. If people are be able to grow their own food for consumption and excess for sale (not solely advocating for subsistence), they can be able to meet the basic survival needs as they await the end of the pandemic.

Even urbanites can practice backyard gardening and be able to provide basic necessities for survival. Although there are criticisms of Maslow’s Hierarchy of Needs (that needs do not follow a hierarchy), it gives insight into survival needs, particularly now, under hard times.

Diversify endeavors

Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio, limiting exposure. Diversification strives to smooth out unsystematic risk events in a portfolio, so the positive performance of some investments neutralizes the negative performance of others. During hard times like the pandemic, individuals and companies should not place all their eggs one basket. Diversification can help tough times by providing alternate sources of income. Individuals and entities can draw up a strategy to enter into a new products, new services or new markets. There are several supplies that are currently considered critical.  Those with capacity can try these new products. Imagine what would happen if some businesses are closed for an unspecified period! There is need to rethink the strategy and try to do something different.

‘The Last 1 percent most people keep in reserve is the extra percent champions have the courage to burn.’ Robin Sharma.

Supply and Demand?

A critical economic theory to consider under Covid 19 is the law of supply and demand. This theory explains the interaction between the sellers of a resource and the buyers for that resource. Shifts in the demand and supply in current times is critical to guide business decision making. Demand for some commodities e.g. fuel has declined and the duration when the trends will reverse is unknown. Demand for other products such as food and sanitation products has increased. Knowledge of the dynamics of demand and supply can guide decision making.

Push through Adversity

Life is full of adversity and struggle. It’s through difficult times that we learn the most important lessons in life and build resilience. Presently, with no solutions to Covid 19, there is need to change strategy and apply management and economic theories to guide decisions. Covid 19 could be a chance to gain valuable insights into the future.

Hard times present the chance to change course, reinvent or find an undiscovered bridge to victory. There is light at the end of the tunnel.

“Every adversity has the seed of an equivalent or greater benefit.” The true secret to success is the ability to embrace adversity as a chance to change ourselves and our situation, Napoleon Hill.

By Dativa Nabimanya

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