Circular Flow of Income: Impact of Covid-19 on SMEs in UK

1 CIRCULAR FLOW
OF INCOME

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
Key Challenges that impacted the internal environment of organisations ............................3
Examine the role of the UK government in supporting the SMEs during the Covid-19.......5
Strategies of interaction with the external environment followed by the SMEs of UK.........6
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business term includes several aspect internally and externally which can influence the
entire business significantly. These elements can be either internal or external to the business.
Business is require to control those elements to reduce, control and manage their impact on the
organisations.(Mohan and et.al, 2020) Internal elements can be business environment, strategies,
governing body, workforce etc. It is quite simple and easy for businesses to control and manage
these internal elements in comparison to external elements. External elements can be categorized
as suppliers, government, economy, competitors etc. Small and medium-sized enterprise plays a
crucial role in the UK's economy as the no. of small and medium-sized enterprises in the UK are
in large. It provides higher contribution to boost the country's economy. But the pandemic has
significant impact on these business enterprises. There are several challenges which affect the
internal environment of businesses during the Covid-19. This report includes various challenges
were faced by small and medium-sized enterprises and the strategies of the UK government to
overcome these challenges in the last two year as well.
TASK 1
Key Challenges that impacted the internal environment of organisations
Covid-19 pandemic has severe impact on the functioning of most of the businesses
worldwide. During the pandemic, businesses have to suffer a no. of difficulties. This pandemic
affected the economy of the whole country to an extent that even the continuation of most of the
businesses become hard(Rahmann and et.al, 2020). There are various challenges that impacted
the internal environment of the small and medium-sized enterprises underpinned below which
are as follows:
 Availability of the raw material: During the pandemic, it becomes an concerning question
for the manufacturing businesses to maintain their supply of the raw materials regular and
at a genuine cost . It distorted the whole supply chain from start to end. It became hard
for businesses to fulfil their raw material requirements for production. It resulted
ultimately into increasing their operating cycle period and the waiting time of the
customers for products have increased. Organisations suffered with difficulties in regular
availability of the raw materials to regularise their production as the resources from
where they can avail the materials were either ceased or temporarily closed. Those