Challenges Faced by Small Scale Organizations and Strategies to Interact with External Environment During Covid-19

Individual Essay

In UK, small and medium sized enterprises are enterprises that consist of less than 250
employees. SMEs are divided into three parts based on number of employees- medium
enterprises having employees up to 250, small enterprises having employees up to 50 and micro
enterprises having employees up to 10. The major earning of UK is from SMEs as it covers 99%
of all businesses in UK. This essay highlights the challenges faced by small scale organizations
which are impacting their internal environment. A detailed discussion about strategies used by
organization to interact with the external environment during last two years will be done. The
major role played by UK Government to support SMEs during covid-19 will be shown.
Internal environment consists of elements that are within the organization that can affect
decisions of organization. There are many challenges faced by SMEs that impact its internal
environment. Leaders play a major role in growth and smooth functioning of organization's
operations. There is a lack of proper leadership in SMEs as there are no academic qualifications
to become a leader (Akpan and et al., 2022). This affects the operations of organization as there
is no proper allocation of work and no one would be accountable for their work. This creates
demotivation among employees which will affect their efficiencies. Technology plays a vital role
in the growth and expansion of business. Most of the organizations face problem in effective
utilization of IT resources as there is no proper IT team. Small scale organizations face many
problems like system are not up to date, network downtime and server failure this impact the
potential of business.
One of the major challenges faced in business is lack of funds. For expansion of business
and making improvements in system there is need of large amount of funds. Generally
organization makes mistakes by making unnecessary expenses which leads to shortage of funds.
This impact the growth and expansion of SMEs (Mustafa and Yaakub, 2018). Corporate culture
acts as a binding agent in success of company's workforce. Company culture gives employees a

sense of belonging which motivates them to work effectively. Small scale organization faces
problems in creating an effective work culture. This has impacted the performance of employees
as there is lack of employee satisfaction and motivation (Eggers, 2020). This is due to lack of
proper leadership in SMEs. For smooth functioning of business it is necessary to make a proper
business strategy. Some organization faces problem in building a proper business planning. If
there is a proper business plan organization needs to make sure that it is well executed.
Marketing is an important function that helps in selling products and earning profit. In
this competitive world every organization needs to promote their products to attract the
customers. SMEs faces challenge to bring their product in knowledge of customers due to lack of
proper marketing. There are many aspects that impact marketing strategy of small scale
organization. As there is limited budget for organization they are unable to properly utilize the
technology for the purpose of marketing (Syntia and Mulya, 2018). Lack of leadership has lead
to lack of proper marketing strategy and its execution. There are solutions by which SMEs can
overcome all these challenges. The main challenge is lack of fund. There are many ways through
which organization can get their required funds. If there is required amount of funds then
organization can overcome other challenges. A good and qualified leader needs to be appointed
so that their may be proper allocation of work, who can create a good work culture among
employees and motivate employees so that they can work as per their potential.
External environments are factors or conditions that are outside the organization but
affect it in some extent. There are many factors that affects business environment. During the
pandemic phase of two years the business of SMEs has been affected because of external factors.
SMEs used many strategies to interact with external environment in last two years. The external
environment includes political, technological, social, economical, legal and environmental
aspects. Government of UK announced lock down in all over the country which impacted the
supply of employees, raw materials, etc (Strategies used to interact with external factors, 2022).
This has also affected the demand for the products. Due to lock down income of consumers were
also affected there was shortage in income. Organization engaged an effective management team
to plan and prepare strategies to interact with external environment. The very first priority of
organization during pandemic was the safety and well-being of their employees. Employees
were not able to concentrate on their work as their well-being was on peril.