COVID-19
Facts, scenarios, and actions for business leaders
Version: 13 April 2020

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

BCG Perspectives

COVID-19

BCG Perspectives

COVID-19 is a global
societal crisis

Leaders need to drive an integrated
response to navigate the crisis

We at BCG believe that the COVID-19 outbreak isfirst and foremost a societal crisis, threatening lives
and the wellbeing of our global community. Society
now, more than ever, needs to collaborate to protect
people's lives and health, manage mid-term
implications and search for lasting solutions.

It is the duty of health, political, societal, and businessleaders to navigate through this crisis. A complex
interplay of epidemic progression, medical response,
government action, sector impact, and company actionis playing out jointly. This document intends to help
leaders find answers and shape opinions to navigate
the crisis in their own environments. It encourages
thinking across the multiple time horizons over which
we see the crisis manifesting itself.

Source: BCG

1

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Objectives of this document

Executive Summary | COVID-19 BCG Perspectives

The evolution of the crisis shapes different economic scenarios that already imply significant impact on business sectors and the public• From past crises, we find economies recover in one of three shapes: rapid recovery (V-shape), slow comeback (U-shape), or protracted challenge (L-shape)• Countries which took swift, strong action and ensured adherence, such as China, seem to be on a recovery path
• Business impact is determined by demand shocks (e.g. consumer confidence) and supply shocks (e.g. shutdowns) as well as supply chain disruptions• Consumer behavior changes towards increased savings and wellness as opposed to travel or discretionary spend, putting pressure on certain sectors• Sectors such as health care, food, or household products see limited impact whereas sectors such as fashion retail, auto, or energy struggle
Business leaders globally therefore need to respond differently to this crisis and find tailored actions to urgent and important issues:• Leaders will have to plan for scenarios across the Flatten, Fight, and Future horizons and take into consideration global footprints• With a clear logic on demand curves, the period of disruption due to social distancing, and consumer confidence, leaders will need to take bold actions

We believe to navigate this crisis, leaders need to be able to think along two dimensions:(1) Taking an integrated perspective on health/medical progression, governmental responses, societal
reactions, and economic implications to understand business/sector impacts and(2) thinking multi-timescale (the now, near and long-term future); i.e., in a flatten-fight-future logic
Source: BCG

2

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

The COVID-19 disease progression is a global societal crisis which needs to be addressed collaboratively by leaders worldwide• Medical response is ramping up according to health system preparedness; many countries have reached hospitalization and treatment capacity limits• Government action includes a set of measures like social distancing, and financial stimulus and restart plans based on country-specific trade-offs• Public engagement and response to these measures varies by country and will co-determine if, when, and how societies relax restrictions• Countries will likely go through three principle phases of the outbreak: (1) FLATTEN the spread curve, (2) collectively FIGHT the virus, preserve publichealth and progressively reopen sectors of economy and society, and (3) prepare for the FUTURE

COVID-19 will be a journey with three distinct phases requiring an
integrated perspective
Fight

FutureTypically, the initial phase after pandemic
outbreak – goal is to urgently limit numberof confirmed cases, especially critical care

Finding paths to collectively fight the virus,
restart the economy, and support society inbalancing lives and livelihood

Disease controlled through vaccine/cure/herd immunity, and treatment withinsustainable medical capacities possible

Social distancing (e.g., lockdown) and also partial
business closures outside a few, lead to economic
recession with large employment impact

Moderate economic activity with recovering
GDP, some business reopenings and social
distancing on sustainable level

Reactivated economy with strong businessrebound and job growth, social restrictions
limited or completely suspended

1. Disease progression, health care system capacity, and response
2. Government policies and economic stimulus

3. Economic scenarios
4. Business engagement and response
5. Public engagement and response

Source: BCG

All of the above five factors result in specific economic and social outcomes in each phase3

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Flatten

1

COVID-19 Context and Development
Disease progression, health care system capacity, and response

2

Economic, Business, and Societal
Impact and Scenarios
Economic scenarios
Business engagement and response
Public engagement and response

3

Guide for Leaders
Principles for leadership in crisis
Frame to navigate the crisis
4

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Government policies and economic stimulus

1

COVID-19 Context and Development
Disease progression, health care system capacity, and response

2

Economic, Business, and Societal
Impact and Scenarios
Economic scenarios
Business engagement and response
Public engagement and response

3

Guide for Leaders
Principles for leadership in crisis
Frame to navigate the crisis
5

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Government policies and economic stimulus

COVID-19 pandemic spread - cases doubling every ~10 days1 globally

DISEASE PROGRESSION,HEALTH CARE SYSTEMCAPACITY, ANDRESPONSE

As of 09 April 2020

UK

USA

Italy

China
Iran

1st Mar'20

31st Mar'20

9th Apr 20

49
days

7
days

10
days

Japan
South
Korea

India

# of days for doubling1 the cases globally

3k

42k

95k

Days of doubling cases:
0-3 days

3-6 days

181
Countries with cases2

6-14 days

1.6M[∆7%]1

Confirmed cases globally

14-30 days

95k

# of fatality cases>30 days[∆9%]1

Fatality cases globally

Note: Continued cases and fatalities are subject to different testing, propensity, reporting standards and hence imperfect measures
1. No. of doubling days based on 7 day CAGR 2. Basis Johns Hopkins CSSE
Sources: Johns Hopkins CSSE, Our world in data, WHO situation reports, BCG analysis

20

150

164

# of countries with local transmission

6

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FranceSpain

The week that was…

DISEASE PROGRESSION,HEALTH CARE SYSTEMCAPACITY, ANDRESPONSE

7

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

From 03 to 09 April 2020

DISEASE PROGRESSION,HEALTH CARE SYSTEMCAPACITY, ANDRESPONSE

Different progression scenarios have emerged across countries
As of 07 April 2020
Recovering

Max/ South Korea
day:
851
# of
new
cases

# of
new
cases

Max/ Beijing, China
day:
29

Recovering

# of
new
cases

Days since first 100 infections

Max/
day:
120

Singapore

Increasing

# of
new
cases

Recovering

# of
new
cases

Japan

Increasing

# of
new
cases
Days since first 100 infections

Source: Johns Hopkins CSSE

Days since first 100 infections

Max/ Germany
day:
6,933

Days since first 100 infections

Max/
day:
522

StableStable

# of
new
cases

Days since first 100 infections

Shanghai, China

Max/ Italy
day:
6,557
# of
new
cases

Days since first 100 infections

Max/
day:
34

StableDays since first 100 infections

Max/
day:
33,264

US

Increasing

# of
new
cases
Days since first 100 infections

Days since first 100 infections

Recovering

StableIncreasing

8

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Max/ Hubei, China
day:
14,840Doubling days is a good early indicator of the phase a country is in

DISEASE PROGRESSION,HEALTH CARE SYSTEMCAPACITY, ANDRESPONSE

As of 08 April 2020

Daily growth rate of total cases (seven-day average)

India

Brazil10%Singapore

AfricaSwedenIcelandCentral & South America

Netherlands
Switzerland

Norway10,000US

Cases doubling: 8 days

Germany
Iran

Spain

Cases doubling: 14 days

Italy

AustriaSouth Korea

0%
1,000

FranceBelgium
Portugal

5%

UK

CanadaJapan

Rates improving from top to bottom

15%

Greater China

100,000

1,000,000

Fight

Cumulative number of confirmed cases
AfricaAsia1

Central & South America

EuropeFlattening of the curve• Germany and Spain areapproaching a doubling rate of
14 days• US and Europe are current
epicenters• India currently has a highinfection growth rate but a low
base
Nations approaching fightstage• China and South Korea in Fight
stage, have loosened lockdown
measures. Key focus now on'imported' cases

North America

1. Includes Middle-east .
Source: National Health Commission China (China-specific data), Johns Hopkins CSSE(Non-China Data), BCG Henderson Institute analysis

9

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Flatten20%

As of 07 April 2020

COVID-19: Stillmany
unknowns

Property

Beliefs/unknowns in literature

Means of transmission

Respiratory droplets produced when infected person
coughs or sneezes

Observedtransmission rate1 (R0)~2.0-2.6

Incubation period~3-9 days

Average time from symptom
onset until death~14-20 days

Case fatality rate

~0.5 – 2.5% estimated, but depends on level of
undetected cases% of asymptomatic cases~15-30% estimated, but difficult to measure

Reinfection/immunity

No demonstrated cases of reinfection yet but immunity
period not known

Likely time to vaccine

Unclear, but estimated at ~12-18 months

Infection fatality rate

Not yet known

Seasonality

Not yet known

1. Av. number of infections by one case in a population where everyone is susceptible and highly dependent oninterventions e.g. social distancing, population density, and cultural norms
Note: Ranges based on 25-75th percentile range of estimates in literature where available
Source: John Hopkins Institute, scientific literature, press research, NIH

10

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DISEASE PROGRESSION,HEALTH CARE SYSTEMCAPACITY, ANDRESPONSE

DISEASE PROGRESSION,HEALTH CARE SYSTEMCAPACITY, ANDRESPONSE

As testing ramps up, it will become clearer
how disease progression is moving
As of 07 April 2020
# of tests performed per million people
100,000
United Arab Emirates

10,000Countries with high GDP
per capita are testing more
and have higher # of cases

Italy

RussiaSpain
US

FranceSouth Africa

GDP/Capita1

<$35k

>$35k

# Tests/M*

1,873

14,707# Cases/M*

54

707

1.GDP per capita is expressed in PPP (current, international dollars) based on 2018 2. Includes Middle-east * Data corresponds to the set of 56 countries represented in the chart
Source: World Bank, Worldometers.info, Our World in Data, Johns Hopkins

11

1,000

Japan

100

India

# of confirmed COVID-19 cases per million people
10

Africa

0.1

1.0
ANZ

Asia2

10.0
Central & South America

100.0Europe1,000.0

10,000.0

North America

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

IcelandGermanyDISEASE PROGRESSION,HEALTH CARE SYSTEMCAPACITY, ANDRESPONSE

Launch of new testing methods critical for better understanding- scaling and quality of tests likely to be the next challenge
As of 07 April 2020

Not exhaustive

Test purpose

Available for last 2+ weeks

Becoming available now

In development

ExamplesPresence ofviral genome

Immuneresponse tovirus

Near-patient/
Point-of-Care

Rapid, on-site
portable test

Panel with Flu
A/B

Handheld digital PCR

Lab-based
Near-patient/
Point-of-CareAmount of virus

Many players announced
development plans1

Currently none

Presence of viral particle

1. More that 70 serology test makers have notified FDA that they have serology tests available for use as of April 7, 2020
Source: CDC website, FDA website, company websites

Biosensor, 1 min result(early stage of development)

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Lab-basedDISEASE PROGRESSION,HEALTH CARE SYSTEMCAPACITY, ANDRESPONSE

Lack of seasonality, recurrence, and mutation –three elements to watch out forIs there a seasonal impact?

Is the virus recurrent?

What is the mutation rate?

Australia and Ecuador cases rising, indicating
warmer weather may not slow outbreak

Hong Kong experienced second wave,
though new containment measures seem tohave slowed it down

Research indicates mutation
rate of SARS-CoV-2 is likely low

Cumulative # of confirmed cases# of new cases per day

6,000

80
Hong Kong

60
4,000

"The mutation rate would
suggest that the vaccine
would be a single vaccine,rather than a new vaccine
every year."

Australia
40

2,000
20

— Peter Thielen, JHU1

Ecuador
023-Feb

8-Mar

22-Mar5-Apr

023-Feb

1. Johns Hopkins University
Source: Johns Hopkins CSSE, Press research, BCG Henderson Institute analysis

8-Mar

22-Mar5-Apr

13

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As of 06 April 2020

Governments across countries have applied several measures
which already show a positive effect

GOVERNMENTPOLICIES ANDECONOMIC STIMULUS

As of 30 March 2020

Daily growth rate of infections(correlations between individual effects of measures not taken into account)

110%

70%
60%
50%
40%
30%
20%

-37pp.

-25pp.

-18pp.

-25pp.

-15pp.

10%
0%

Day 0

Day 14

Schoolclosing# of countries
that implemented 12
measures

Day 0

Day 14

Day 0

Day 14-11pp.

-11pp.
Day 0

Day 14

Day 0

Day 14

Day 0

Day 14

Workplaceclosing

Cancel public
eventsClose public
transportation

Public info
campaigns

Restrict internal
movement

13

6

8

5

9
75th Percentile

Day 14 Days
sincemeasureInternational
travel controls

Day 0

6
MedianNote: Daily growth rate of infections based on compounded growth in 3-day window prior to date; only countries with above 100 cases at start of measure considered;
Chinese province of Hubei considered as separate country for purpose of presentation; correlations between effects of measures not taken into accountSource: Oxford COVID-19 Government Response Tracker; Johns Hopkins University CSSE data; BCG analysis

25th Percentile
14

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100%

Many governments passed fiscal stimulus packages with
unseen scale and some are suggesting more will be needed

GOVERNMENTPOLICIES ANDECONOMIC STIMULUS

As of 7 April 2020

Value of COVID-19 fiscal stimulus packagesin G20 countries as a share of GDP
Japan
United States
Australia
CanadaGermany
BrazilSaudi Arabia
FranceTurkeyItaly
China
Argentina
South Korea
India
European Union
RussiaIndonesia
South Africa

19.2%
11.0%
9.7%
8.4%
4.9%
3.5%
2.7%
2.0%
1.5%
1.4%
1.2%
1.0%
0.8%
0.8%
0.3%
0.2%
0.2%
0.2%

Stimulus packages being announced
progressively by countries;
overall picture likely to change rapidly

1 As announced on April 07 2020, based on following sources: IMF (2 April 2020) except Japan: Reuters (7 April 2020);
Russia: BusinessLine (22 March 2020); South Africa: ABC (26 March 2020)
2. $814B stimulus package across fiscal, monetary, etc.

Examples ofstimulus packages
25 Mar: German lower house approved a$814B stimulus package2 including:• Direct payments to distressed small
businesses and self-employed• Loan guarantees to secure corporate debt
at risk of defaulting• Loans to struggling businesses
27 Mar: U.S. approved a $2.2T stimulus
package including:• Direct payments to individuals• Loans to small businesses and distressed
firms• Expanded unemployment insurance
benefits

15

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Support especially for small businesses, hard hit sectors, and lower wage earners

Few governments are starting to prepare for theend of 'Flatten' phase

GOVERNMENTPOLICIES ANDECONOMIC STIMULUS

As of 06 April 2020

Some countries announce wave of projected measures to ease lockdown but at the same time urge the public to avoid social contacts"Austria set to be first European country to ease lockdown" Financial Times, 6 April 2020
Currently planned: Beginning of May

Limited retail reopenings

Complete retail reopenings

Small non-essential, and DIY
stores allowed to reopen withrestrictions (e.g., minimum
distance and face masks)

All shops, malls, and salons willbe allowed to reopen underrestrictions (minimum distanceand face masks)

Currently planned: Mid-May

Reopening of schools
All schools, as well as
restaurants and hotels might
potentially be reopened(specifics not yet confirmed)

Currently planned: Beginning of July

Events potentially allowed
Permission for events to takeplace – no decision yet on a
threshold for the allowed
number of participants

Today
Currently planned: Mid-April

Denmark

Currently planned: Mid-May

Reopening of some schools

Reopening of all schools

All nursery schools,
kindergartens, and primaryschools are confirmed to reopen

Middle and high schools are
confirmed to reopen"Denmark to ease restrictions next week after coronavirus lockdown" Reuters, 6 April 2020
Source: Financial Times; Reuters; Tagesschau; The Brussels Times; Time; BCG

16

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Austria

Currently planned: Mid-April

1

COVID-19 Context and Development
Disease progression, health care system capacity, and response

2

Economic, Business, and Societal
Impact and Scenarios
Economic scenarios
Business engagement and response
Public engagement and response

3

Guide for Leaders
Principles for leadership in crisis
Frame to navigate the crisis
17

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Government policies and economic stimulus

ECONOMICSCENARIOSKey economic indicators point to a downturn

Global equity markets alreadystarted to price-in risks of COVID-19

Highest level of seasonally adjusted
unemployment claims in history

Cumulative returns until 7tApril (%)

Initial US unemployment insurance claims (millions)

7

5
0

6

-5

5

-10

U.S. (S&P 500)

-15

Germany (DAX)
UK (FTSE 100)

-20

Total of 16.8M initial
unemployment insurance
claims for last three weeks(3.3M week ending March 21,
6.9M week ending March 28,
and 6.6M week of April 4)

43Japan (Nikkei 225)

-25

Korea (KOSPI)-30

China (MSCI)

-35
1-Jan

1-Mar

1-May

2
1
0
1970

1980

1990

2000

2010

2020

Steeper sell-off than in 1929
More critical sell-off than 30% in 20081
Higher volatility than '08 credit crisis peak2
1. Financial Crisis S&P sell-off at comparable time frame: 26/09/2008 – 27/10/2008 and 19/02/2020 - 23/03/2020 2. Peak VIX recorded 16/03/2020
Source: OECD, Impact of the COVID-19 pandemic on global FDI and GVCs, UNCTAD, US Bureau of Labor Statistics, BCG

18

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As of 09 April 2020

ECONOMICSCENARIOSThis has led to economic forecasts become increasingly negative
As of 07 April 2020

EuropeForecast GDP growth vs. baseline before COVID-19

Forecast GDP growth vs. baseline before COVID-19

6.0% (03.4.) HSBC Holdings
5.3% (03.4.) Morgan Stanley
3.8% (31.3.) Deutsche Bank
3.4% (07.4.) ING Group
3.0% (25.3.) Swedbank
2.9% (04.4.) Danske Bank
2.4% (03.4.) Barclays

Baseline: 2.0%

1.6% (06.4.) Visa

Danske Bank (04.4.): -2.0%

5.5% Morgan Stanley (03.4.)
4.7% JP Morgan Chase (03.4.)
3.5% Standard Chartered (03.4)

Baseline: 1.3%
Fitch Solutions (26.3.): -1.3%

Swedbank (25.3.): -3.0%

ABN Amro (20.3.): -2.7%

Deutsche Bank (31.3.): -4.2%

JP Morgan Chase (03.4.): -3.4%
Standard Chartered (03.4.): --4.0%

Barclays (03.4.): -4.5%
BAML (02.4.): -6.0%

Morgan Stanley (03.4.): -5.0%

HSBC Holdings (03.4.): -6.5%

DZ Bank (27.3.): -5.6%
Natixis (01.4.): -5.9%
HSBC Holdings (07.4.): -6.4%

ING Group (07.4.): -7.0%

2020

2021

Note: As of reports dated 2 March 2020 to 07 April 2020
1. Estimated since GDP growth mentioned for second half of 2020 as average
Source: Bloomberg, BCG analysis

Baseline: 6.0%

1.9% ABN Amro (20.03.)
1.8% UBS (03.4.)

Caixa Bank (27.3.): 5.5%
Danske Bank (03.4.): 5.2%

1.4% Baseline

Action Economics (27.3.): 5.0%

9.2% (03.4.) Morgan Stanley
9.2% (03.4.) JP Morgan Chase
8.8% (03.4.) Nomura Securities
6.5% (07.4.) ABM Amro
6.3% (03.4.) Dankse Bank

5.8% Baseline
5.8% (07.4.) ING Group
5.7% (27.3.) Caixa BankING Group (07.4.): 4.0%
Credit Suisse (02.4.): 3.3%
ABN Amro (07.4.): 3.0%
Morgan Stanley (03.4.): 2.0%

UBS (03.4.): -4.5%)

Morgan Stanley (03.4): -5.5%`

2.7% DZ Bank (27.3.)

1.4% Fitch Solutions(26.3.)

1.1% (26.3.) Wells Fargo

Wells Fargo (26.3.): -2.4%

Forecast GDP growth vs. baseline before COVID-19

6.1% HSBC Holding (07.4.)

1.7% Baseline

Citi Group (31.3.): -0.5%
Visa (06.4.): -1.1%

China

JP Morgan Chase(03.4.): 1.1%
Nomura Securities (03.4.): 1.0%

2020

2021

2020

2021

19

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US

1

2 Slow comeback (U)3 Protracted challenge (L)Large and perpetual loss of present
value of future output

Ever-growing loss in future output andinfinite loss of future value

Sharp-rapid recovery (V)De minimis impact on the present valueof future output

No lost output

Same perpetually
lost output

Lost output

Lost output

Source: BCG

Lost output

Time periods

Time periods

Multiple factors
will determine
scenarios

Perpetually growing
lost output

Evolving
properties ofthe virus

Cure/vaccine
development
lead-time

Time periods

Containment
and mitigation
efforts

Development ofpolicies andfiscal response

Business andsocietal actions
and adherence

20

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Three economic recovery scenarios could emerge under COVID-19

ECONOMICSCENARIOSECONOMICSCENARIOS

China's path is indicative of what a strong response can deliver
As of 08 April 2020

Coal consumption moving higher

2.0

2019

1.7
1.6
1.5
1.4
1.3

2020

1.2

Daily coal consumption (10K tons)

60

1.8

2019

55
50
45
40
35
30

2020

25

1.1

20
-18
-15
-12
-9
-6
-3
0
3
6
9
12
15
18
21
24
27
30
33
36
39
42

1.0
17/11

12/2

12/3

10/4

-18
-14 -10 -6 -212/2
2 6 10 14 18 22
26 30 34 38 10/4
42
17/1
12/3

Traded area of buildings in 30 cities (10K sq.m.)

65

1.9

Average Congestion Delay Index

Property transactions arerestarting

70
60

2019

50
40
30
20

2020

10
0
-18
-14 -10 -6 -2 12/2
2 6 10 14 18 2212/3
26 30 34 38
42
17/1
10/4

1 In DD/MM format

Note: As of 07 April 2020; China data re-based for weekdays excl. weekends relative to start of Chinese New Year. Congestion delay index average include Beijing,
Shanghai, Guangzhou, Shenzhen, and Wuhan; Daily coal consumption of major power plants = sum of daily average coal consumption of Jerdin Electric, Guangdon
Yudean Group, Datang International Power Generation, and Huaneng Power International, Inc. Source: Wind, www.cqcoal.com, and BCG Center for Macroeconomics

21

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People and goods arestarting to move again

BUSINESS ENGAGEMENT
AND RESPONSE

Consumer pessimism grows as infections spread
As of 30 March 2020

I have changed my daily
lifestyle due to the virus

I believe the world isin serious danger

China is significantly more
confident that the worst has past.
Italy is beginning to follow

71

77

79

85

84 86

France

90 91

75

35

US

89

87

84

83

UK

Italy

59

62

US

France

87

88

81

79

86

76

86

86 88

Italy

China

80

66
57

53

40

China

Agreement with each statement as of 13-16 March 2020 (%)

UK

Italy

China

US

FranceUK

Agreement with each statement as of 27–30 March 2020 (%)

Note: Question text: “How much do you agree with each of the following statements about the coronavirus?”
Source: BCG COVID-19 Consumer Sentiment Survey, 13–16 March 2020 (N = 1,831 China; 2,521 France; 2,206 Italy; 2,787 UK; 2,345 US), and 27–30 March 2020 (N = 2,916 China; 2,985
France; 2,150 Italy; 2,984 UK; 2,944 US) unweighted; representative within ±3% of census/national demographics

22

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I believe the worst
impacts are ahead

Consumers prioritize savings and wellness overtravel and discretionary spend
UK Germany US

Canada Italy

In-home entertainment
Fresh and organic foods
Packaged food and beverages
Preventive health careHousehold care products
Savings
Medical procedures
Vitamins/supplements
Out-of-home entertainment
Utilities
Restaurant pickup/delivery
Education

Healthier categories1
More than 20% of respondents
plan to spend more

Pressured categories1
More than 20% of respondents
plan to spend lessFranceUK

Germany

US

CanadaItaly

FranceTravelLuxury/fashion
Public transportation
Home décor
Women’s clothing
Outerwear
Athletic equipment & clothing
Home electronics & appliances
Shoes/footwear
Toys and games
Men’s clothing
Mobile electronics
Restaurants
Gambling
Cars/automobiles
Tobacco/smoking
Out-of-home entertainment
Restaurant pickup/delivery
Cosmetics/perfume
Alcohol
Savings
Medical procedures
Education
Hair and body care
Rent/mortgage
In-home entertainment
Utilities
Insurance
Vitamins/supplements

Note: Question text: “How do you expect your spend to change in the next 6 months across the following areas?” Categories listed exclude baby/child food, childcare, and children's clothing23
1. Countries can have categories in both columns - signaling volatility / shift in consumer preferences
Source: BCG COVID-19 Consumer Sentiment Survey, 27–30 March 2020 (N = 2,928 CAN; 2,985 FRA; 3,085 GER; 2,150 ITA; 2,984 UK; 2,944 US), unweighted; representative ±3% of census dem.

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

As of 30 March 2020

BUSINESS ENGAGEMENT
AND RESPONSEA large share of global sectors are seeing
total shareholder returns (TSR) decline

BUSINESS ENGAGEMENT
AND RESPONSE

As of 21 February 2020 to 04 April 2020

Decline reflects economic scenario and consumer sentiment
Americas

Food/staples RetailHousehold Products
PharmaTelecom
Food & Beverage
Semiconductors
Utilities
Health Equipment
SoftwareProf. Services
Capital Goods
Transport
Financials
Tech Hardware
Materials
Media
Retailing
Insurance
Banks
Real Estate
Auto
Hospitality
Durable Goods
EnergyEuropeAsia

Observations

-9%
-8%
-10%
Non-discretionary/essential service sectors performing better
-11%
-13%
-2%
in current climate – food and staples retail best positioned
-13%
-13%
-12%
Healthier sectors
Some evidence of more advanced recovery in Asia
-14%
-15%
-10%
-17%
-23%
-8%
-21%
-34%
-21%
-22%
-27%
-4%
-22%
-23%
-4%
Broad set of industries experiencing pressure, with some
-25%
-27%
-23%
regions particularly affected for certain sectors (e.g. transport
-26%
-26%
-24%
in Europe)
Pressured sectors
-28%
-32%
-25%
-28%
-43%
-14%
Utilities and health equipment generally better off in Asia
-28%
-31%
-24%
-28%
-17%
-20%
-28%
-25%
-24%
-31%
-42%
-6%
-35%
-35%
-16%
-36%
-33%
-21%
-39%
-48%
-23%
With exception of media, sectors down >20% across
-41%
-30%
-20%
Vulnerable sectors
geographies
-45%
-42%
-30%
-47%
-43%
-25%
-47%
-32%
-17%
-47%
-26%
-28%
Note: As of 02 April 2020; Based on top S&P Global 1200 companies; Industries are based on GICS definitions
1 Performance is tracked for the period 21 February 2020 (before international acceleration of outbreak), through 02 April 2020
Source: S&P Capital IQ; BCG Henderson Institute; BCG
24

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

TSR performance (21 February – 04 April 2020)1

Current climate implies increase in credit risk for
majority of sectors
Median 5-year CDS1
implied probabilityof default1

Healthier sectors

Pressured sectors

Vulnerable sectors

Food/Staples RetailHousehold Products
PharmaTelecom
Food & Beverage
Semiconductors
Utilities
Health Equipment
SoftwareProf. Services
Capital Goods
Transport
Financials
Tech Hardware
Materials
Media
Retailing
Insurance
Banks
Real Estate
Auto
Hospitality
Durable Goods
Energy

7%
5%
4%
7%
5%
7%
5%
6%
5%
5%
6%
4%
8%
6%
8%
11%
13%
7%
9%
10%
15%
18%
8%
17%

Number ofcompanies with
5-year CDS
probability ofdefault >15%
0
0
3
6
1
1
0
0
0
0
7
8
0
1
11
3
8
0
2
4
10
8
3
19

Companies in
distress (%)
0%
0%
17%
23%
4%
17%
0%
0%
0%
0%
12%
32%
0%
8%
24%
21%
47%
0%
4%
18%
53%
62%
17%
59%

Note: As of 02 April 2020; Based on top S&P Global 1200 companies; Industries are based on GICS definitions
1 Credit Default Swap; 2 Performance is tracked for the period 21 February 2020 (before international acceleration of outbreak), through 02 April 2020
Source: S&P Capital IQ; BCG Henderson Institute; BCG

Observations

Hospitality and energy
industries facing greatest
risk of default based on
current credit profile
Less discretionary sectors
are largely at lower risk ofdefault in current climate
Other sectors may
have individualcompanies in specificdefault risk as well25

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

As of 21 February 2020 to 02 April 2020

BUSINESS ENGAGEMENT
AND RESPONSE

~60%
of companies
have started
preparing forrecession

Forecast cash-flows and make liquidity
assessments under potential stressed scenarios

60%

31%

8%

Assess viability of current investment plan

56%

38%

6%

Put in place a cost-discipline plan

56%

40%

4%

Modify dividend policies or share buy-back plans

23%

Assess investment/M&A opportunities
that may arise from a potential downturn

25%

23%

Have Taken
Note: As of 01 April 2020
Source: BCG COVID-19 Company Survey; BCG Henderson Institute Analysis

53%

35%

Plan to Take40%

Not Planned
26

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

BUSINESS ENGAGEMENT
AND RESPONSE

Survey as of 01 April 2020

Past pandemics have resulted in societal shifts,
COVID-19 is doing the same

PUBLIC ENGAGEMENT
AND RESPONSE

As of 09 April 2020Societal
Shifts~25 million

Total deaths

Facts andfiguresKey
considerations

Covid-19

Fatality rate

10%

Total deaths>95 thousand

Fatality rate

~0.5-2.5% (est.)•

Flu struck in three waves across the globe•

Social and economic impacts across the globe•

WWI played a crucial role in the outbreak•

Outbreak in midst of rising climate awareness•Particularly deadly for young and healthy•

Globalization is at its peak•

Isolation efforts were not immediately
implemented due to soldiers returning home•

Regional lockdowns with shifts in behavior
witnessed, such as hoarding•

Precautionary behaviors like wearing masks,
staying indoors, and avoiding public places•

Alternative means of societal interactions
gaining prevalence, such as online medicines•

Efforts intensified to protect societies from theinfluenza through vaccines, and more awareness•Changing mindsets likely altering societal
view on speed of globalization

1. Average of estimated fatality rates, 2. Avg. # of people infected by each sick person at the peak of transmission (when the susceptible population is at its largest)
Source: Bridgewater Associates, National Health Commission China, American Journal of Epidemiology, US National Library of Medicine, BCG Henderson Institute analysis

27

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Spanish flu

Society dramatically embracing digitization anddemanding contactless operations
Likely changes in society

Employment

Launch of strong unemployment program: Holistic
communication about benefit programs, provision of individual
assistance
Remote trainings: At-home trainings in collaboration with
community colleges and headhunters

Dailyessentials

Governmental logistics relief response: Removal of logistics
obstacles by government for essential supplies
Relaunch of online order platforms: Relaunch of necessities
shopping through e-commerce and contactless delivery

Boom for digitization of essentials: Increased demand for
digital/distanced health care and grocery delivery

Internet access aid program: Paid internet access forunderprivileged students
Switch to online education format: Online education companies
providing courses for impacted schools

More virtual learning opportunities: Significant expansion ofdigital learning offering for all academic institutions

Three-level transportation strategies: From maintaining only
essential transportation to resuming daily transportation
Inbound passenger management: Direct transfer of inboundpassengers to centralized quarantine hotels

Less demand for public transportation: Selective use of public
transportation in short-term – long-term dependent on alternatives

Education

Transportation

Source: World Bank; BCG

Higher preference for virtual meetings: Virtual meetings likely
to increase– remote work no exception
Impact on employment situation: Potential shift toward more
flexible and 'shared' workforce

Demand for contactless operations: Potential increased usageof robots and pick-up shelves

New online caregiving programs: Launch of new online
programs, including childcare, mental healthCentralized essentials supply: Governmental coordination ofliving and medical supply
28

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Government measures taken in
historic crises and right now

PUBLIC ENGAGEMENT
AND RESPONSE

1

COVID-19 Context and Development
Disease progression, health care system capacity, and response

2

Economic, Business, and Societal
Impact and Scenarios
Economic scenarios
Business engagement and response
Public engagement and response

3

Guide for Leaders
Principles for leadership in crisis
Frame to navigate the crisis
29

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Government policies and economic stimuluscan we learn from leaders who have successfully
1 Whatmanaged past crises?

7

key questions(and when) do we restart and bring back the organization
2 How
safely including operations and supply chain?
are the big shifts/fundamental changes in consumer
3 Whatbehavior and how do we move quickly to seize these shifts?
do we manage profitability and cash/liquidity through the
4 How
bear case scenario?
there some big moves (M&A, diversification, new segments),
5 Are
we can drive to create competitive advantage as business rebounds?
do we enable our workforce with “new ways of working,”
6 How
accelerate digital, and build robust cyber architecture?
can we work together across industries, society, and7 How
government to be part of the solution?

Source: BCG

30

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Businessleaders haveasked us

Be visible, purposeful,and authentic

Leverage the principleof “commander’s intent"Communicate in ways that engage andincrease the relevance of your teams
and clarify the reasons underlying yourcommunications

Share only key objectives and rationaleof required actions to allow theorganization to be flexible andadaptive, and allow a focus on
execution“THESE are the times that try
men's souls. The summer soldier
and the sunshine patriot will, in
this crisis, shrink from the serviceof their country; but he thatstands by it now, deserves the loveand thanks of man and woman.
Tyranny, like hell, is not easilyconquered; yet we have thisconsolation with us, that theharder the conflict, the moreglorious the triumph."

Use multiple clock-speeds

Engage externallyThink on multiple timescales byconsidering the now, the next, and thelater. Ensure that leadership teams lookahead and prepare for the future

Communicate with customers andstakeholders to gather frequent, fresh,
firsthand information to adapt andrespond effectively

Cut through bureaucracy

Keep imagination alive

Assemble a multi-functional task force
that is empowered to make decisions
and suspend normal decision protocols

Look out for new needs and opportunities
to serve clients now and beyond the crisis.
We will not be reverting to a 2019 reality

Thomas Paine, The Crisis

Source: When Leadership Matters Most, BCG Henderson Institute31

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Guiding principles
for leadershipin crisis

Extended 'Fight' likely after 'Flatten' phase; leaders need to focus on both now
Illustrative

Current focus for most public and business leadersFight

FutureHealth caresystem capacity
Interventions

GDP
Interventions
Critical-carepatients

Cure/vaccine/
treatment/
herd immunity

Lockdown
lifted61% of world GDP and 41% of world population
G-20
countries

TurkeySpain

Germany

ItalySouth Africa

BrazilRussiaIndonesia

Saudi Arabia

Australia

FranceUK

India

CanadaMexicoArgentina

USA

Japan

Time

18% of world GDP and 19% of world population
China

South Korea

Lockdown
Note: As of 08 April 2020
Source: World Bank, United Nations; BCG

32

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Flatten

NAVIGATING BUSINESSESTHROUGH THE CRISIS

9

action areas
for businessleaders

Establish crisis
management

Navigatethrough
Flatten, Fight,
and Future

Scenario-Based
1 Develop
Planning Approach to
manage uncertainty

Fight

Futurea Rapid Response
2 Createand Transformation(RR&T) team

Organization and
3 Revamp
People for the new normal

Cost, Cash, and
6 Manage
Liquidity

Topline Security
4 Driveand Customer trust

Stronger; drive
7 Emerge
advantage in adversity

and restart Supply
5 Stabilize
Chain, Manufacturing

Digital and8 Accelerate
Technology transformation

Society during
9 Help
COVID-19

Note: RR&T = Rapid Response and Transformation Team
Source: BCG

33

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13
17 April 2020 Version 1.1.
2.1.

FlattenDetailed measures across priority action
areas (1/3)
Establish crisis
management

12

Develop Scenario-Based
Planning Approach to
manage uncertainty

Create a Rapid Response
and Transformation(RR&T) teamNavigate throughFlatten, Fight, and Future

3

Revamp Organization
and People for the newnormalFight• Deep-dive into possible outcomes of disease spread, demand
shifts, supply/ops issues, regulatory requirements, andpotential operations restart; adjust for sector-specific issues• Perform scenario stress tests around cash-flow• Establish preconditions for what it will take to get workforce
back to offices, factories, etc.
• Set up teams to work on different time horizons (flatten, fight,
future) to avoid reverting to crisis management across all• Frequently run scenarios and update plan; focus
on understanding the de-averaged impact bygeography and line of business, depth of demand
drop, duration of Fight phase• Develop recommendations for daily planning,
resources, supply chain, workforce, and otherstakeholder management as per modeled
scenarios• Establish nimble cross-functional Rapid Response &Transformation team (RR&T)• Refine processes to manage the crisis situation, remote
working, disruption in supply• Ensure smooth transition of operations and workforce tothe 'new reality'• Shift to digital/remote customer interactions• To manage the massive complexity of "restarting",enhance Rapid Response & Transformation teamstructures• Develop approach for how to bring people back towork, how/when to engage customers• Establish governance and standardization toeffectively coordinate other areas from the RR&T

• Define policies to keep employees safe with high morale• Engage across levels to retain talent• Move to online/remote working; redefine rosters and train
for efficiency/effectiveness• Establish preconditions for coming back to the working
environment; clearly communicate• Build SWAT teams to address critical business areas,such as product launch, digital channel redesign, retaildelivery models• Get ahead of the curve on team to manage policies
to get teams back to work safely• Take a clear view of forward demand and the newnormal: manage/restructure organization to fit
capacity needs• Create dedicated focus to accelerate digital,
process automation, new ways of working

Source: BCG

Future34

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13
17 April 2020 Version 1.1.
2.1.

Flatten

NAVIGATING BUSINESSESTHROUGH THE CRISISDetailed measures across priority action
areas (2/3)
Flatten

NAVIGATING
BUSINESSESTHROUGH THE CRISISFight

Future4

5

6

Drive Topline Security &Customer Trust

Stabilize & restart Supply
Chain, Manufacturing

Manage Cost, Cash, &Liquidity• Reach out to customers for their situation and needs,• Drive actions to inspire confidence and ensure ability todeliver (e.g., multichannel, people-light approaches)• Manage volatility in demand, and refine sales motions(e.g. to virtual) and objectives• Assess changes in customers' behaviors• Adapt and transform channels(e-commerce), sales, marketing spend, pricing,and support• Ramp up commercial efforts significantly to
seize market shifts; leverage learnings toaccelerate digital capabilities• Take measures to ensure operations continuity:
Workforce safety and management, stop-gap measures
for supply chain, site readiness (access, maintenance,services, suppliers)• Ensure open and direct communication with employees• Explore solutions to retain key talent• Ensure quick and safe restart of facilities; drive
centrally driven efficiency measures• Set up capabilities (org, control tower) tomanage unstable supply chain; explore alternate
networks, dual/multiple suppliers for criticalgoods and services, delivery methods, etc.
• Accelerate production as demand rebounds;
account for product shifts• Build forecasts for COVID-19 impact on P&L, balance
sheet, investor base
• Review capital sufficiency scenarios and possible effects
on credit risk
• Manage credit and debt commitment for short term
• Create agile FY20-21 business plans and budgets to deal
with uncertainty• Build central team to simulate financials as per
evolving scenarios; drive agile working ways
• Decisively take structural actions: TURN PMO,
zero-based budgets, delayering/restructuring,
re-base tech portfolio, etc.; deploy rapidly as
speed is predictive of success in downturns

Source: BCG

35

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Navigate throughFlatten, Fight and FutureDetailed measures across priority action
areas (3/3)

7Emerge stronger; drive
advantage in adversity

8

Accelerate Digital &Technology transformation

9

Help Society during
COVID-19

FlattenFight• Stress-test current value proposition and business
offerings, and scan crisis impact on key
customer/market trends• Plan for new projects to shift the portfolio andleverage the 'new normal'; plug capability gaps
• Identify white spaces in own industry andecosystem• Selectively invest in areas where opportunistic
M&A can be conducted• Develop and implement strategy to exploit
greater talent availability• Address and serve immediate workforce needs forremote working• Leverage tools for conducting key processes online• Adapt traditional processes to become digitally viable• Identify and implement key digital use cases andadapt to agile way of working• Accelerate use cases to meet demand shifts• Redesign key customer journeys with emphasison digital interventions• Ensure immediate support to employees, suppliers,
communities, etc.
• Team with government/local communities/acrossindustries to address crisis• Leverage assets, supplier relationships, logistics
networks, and employees to help adjacent communities• Work across industry boundaries to identify crosssectoral synergies to deploy solutions• Determine how to contribute in the crisis toemployees, customers, through medical response,
supply of essential items for society, or by playing a
positive economic/employment role
• Allocate innovation resources where possible tofocus on solutions to COVID-19 crisis• Leverage expertise developed to support
government policies and responses, rebuild
business for local customers, suppliers, etc.

Source: BCG

Future36

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Navigate throughFlatten, Fight and Future

NAVIGATING
BUSINESSESTHROUGH THE CRISIS

Additional perspectives on leading through the crisis

Selected sector publications

People & Organizations

Strategy

Crisis Response Checklist

Transportation & Logistics

Airlines

Public Sector

How to protect yourworkforce during the
COVID-19 pandemic

Sensing and shaping thepost-COVID era

Checklist

Transportation and logistics
companies must adapt to keepsupplies moving

The post-COVID-19 flightplan for airlines

Governing in the timeof coronavirus

Economic Impact

Strategy

Health Care

Consumer

Understanding the
economic shock ofcoronavirus

Anticipating the spread of
COVID-19

How ready is the US to
diagnose COVID-19?

Delivering essential products
to consumers, uninterrupted

Source: BCG

37

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 13 April 2020 Version 1.1.

Selected overarching publications

Disclaimer

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The situation surrounding COVID-19 is dynamic and rapidly evolving, on a daily basis. Although we have taken great careprior to producing this presentation, it represents BCG’s view at a particular point in time. This presentation is not intended
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BCG does not provide legal, accounting, or tax advice. The Client is responsible for obtaining independent advice concerningthese matters. This advice may affect the guidance given by BCG. Further, BCG has made no undertaking
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