COVID-19 pandemic has fetched about significant challenges that have ruined each firm’s business strategy (BS). The present study examines the COVID-19 situation and its impact on BS in manufacturing industries in Saudi Arabia. The study employs the quantitative approach and targets the managers of the SMEs sector of Saudi Arabia. The study distributed 450 samples and got 280 valid samples with a response rate of 62%. The values of the structural equation model (SEM) demonstrates a negative significant effect of the perceptions of COVID19 (CP19), firms’ innovation capability (IC), environmental concerns (EC) and fear of COVID19 (F19) on BS. In view of the waves of COVID-19, this study's findings provide policymakers and planners with opportunities to improve BS. In addition, this study's findings provide further indications to face the dangerous waves of COVID-19 responsible for the destruction of businesses and the environment. This study's results contribute to business and COVID-19 literature. This study empirically confirms and provides a better understanding of the effect of the COVID-19 situation on firms’ BS in Saudi Arabia.