Impact of Covid-19 on SMEs and Role of UK Government in Supporting Them

This report discusses the impact of Covid-19 on SMEs, including challenges faced by the internal environment and strategies for interacting with the external environment. It also explores the role played by the UK government in supporting SMEs during the pandemic, including various schemes and policies introduced to help small and medium-sized businesses. The report concludes with a discussion on the future of SMEs in the current business environment.

CONTEMPORARY
BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Role of the UK government in supporting the SMEs during the Covid-19:...............................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
SME- small to medium-sized business, works as a principle driving force in development. Small
and medium-sized businesses are the non subsidiary bodies or independent firm that employ less
number of employees as per the stated numbers (Koirala, 2019). The relevant numbers in such
firms are 250. In the further report based on the SME'S discuss what are the key challenges faced
by the internal environment. This report also discuss the strategies of the interaction with
external environment in the last two years and also the role-played by UK government in
supporting the small and medium-sized business in the crucial times of Covid-19.
MAIN BODY
Let's talk about the key challenges faced by the internal environment of SME'S that interacted
with the external environment:
1. Covid-19: The Covid-19 not only impacted the health of the different nations but also
caused the high level of deficiency to the businesses functioning on large scale and many
of the business functioning in the small-medium sized industries. The impact of Covid-19
raised some major questions a) how the economic disruptions caused by the Covid-19
will be adjusted by the small scale businesses. b) how long the crisis would last and how
much the expectations of the businesses are affected. c) how alternative policies affect the
business and in how much time the employment problems will be cured off. The
pandemic has caused the massive dislocation of the small businesses and many of the
new start-ups just after its onset (Müller, and et.al). COVID-19 as a external factor
affected the internal factors of business:
 Marketing : It affected the marketing policies of the business which affected every
aspect of the marketing as crises challenged the in depth core of the businesses. In this
time many of the businesses suffered from the unattainable commerce and some tackled
too much demand, in the case of the small businesses they left their marketing and the
businesses are turned off by putting it out of the business. The effect of Covid caused
huge losses to the businesses functioning on the lower levels and the businesses have lost
their self-esteem. This put businesses on the condition of the reinvention by leaving the
survival behind to cure the losses caused by the pandemic. The pandemic put the big
brands to adapt the policy of digitalization and online platforms as the mobile phone in

the time of the pandemic worked as a lifeline to the outside world in the conditions of the
lock-down (Xie, et.al). This thing leads some of the SME'S work less and some small
scale business who have the required resources to bring their business online they bought
it on the online platforms and managed the business operations from there.
 Consumer behaviour: The immense impact of the corona virus also put heavy impact on
the consumer's behaviour (Naeem, 2020). The attraction of customers towards the brands
and the way of their interactions towards the brands got highly affected by the pandemic.
This put a large barrier on the day to day functioning of the small scale businesses as the
marketing strategies are not working and the consumer's behaviour towards such
businesses are affected highly as this changed the way consumers views themselves and
this put a shift in the consumers buying habit resulting fall of the sales. The pandemic
caused a high level of impact on the sales of the small and medium-sized businesses. The
Covid effect forced the businesses to go online and this results in a high cause of concern,
as it lays a question how will be the small businesses would be functioning in the near
future. As the businesses preferred out the functioning on the online platforms this led the
decline in the sales of the small-medium sized business. As some business operating on
the small scale industry don't have required resources to go online.
2. Unstable economy: As the effects of Covid led to the discloser of the businesses and this
pandemic affected the economy on high level and let it in the unstable conditions. The
small scale businesses are not generally connected with government on the high levels
and this does not allow them to enjoy the government bailouts, government benefits and
loans.
 Impact on pricing action: The situation of the bankruptcy are seen more in the small
scale businesses a compared to the large scale businesses. This conditions of the
bankruptcy put the opportunities for the large scale businesses to take over the small
businesses by purchasing up the assets of the SME'S or moving into the market of the
small-medium sized businesses. In such cases of instability in the economy, if the supply
of money grows on faster pace than the overall economy, the inflation will occur. The
difference between the growth of the economy and the growth of money supply is huger
than the hyperinflation occurs causing the change in pricing of the products and that led
to the dis-management in the small-medium sized businesses (Schwab, et.al). In the time

of the inflation the quantity theory works mainly by focusing on the link between the
inflation and the money supply. This theory shows the value of money to be exchanged is
determined by supply and demand factor.
 Production department: So when there is inflation in the economy letting it unstable
this will lead to higher pricing of products by lowering the sales as the due to high prices
of the raw materials the small businesses are not able to purchase the raw material and it
affected the production process heavily (Sarkar, et.al). And in the small businesses at the
time of pandemic the pricing are affected heavily and that resulted in the lower output of
sales and declining profits. This also resulted in the dis equilibrium where all the internal
and external factors got affected by preventing the market equilibrium to reach the level
and this caused market to fall and by affecting the products of the small-medium sized
business and their brand image.
3. Labour marketing condiotion: Education and training for the workers and employees puts
the tones of benefits not only for themselves but for the businesses as well. Em ploy's
ability got affected by the market conditions and the economic conditions. As in the same
way Covid affected the labour management and putting the economies in the unstable
conditions. As per repercussions it let the labour management of the small-medium sized
businesses under effects due to lack of proper staffs and management.
 Affects on the staff management: The small scale business in the private sectors
provides the employment opportunities for many of the individuals. But after the Covid-
19 the market are affected on high rates and the job markets are affected on different
levels on the basis of various factors entering into the run including education, culture,
political affiliation, individual IQ and level of training given to them. It pretends that the
people with higher qualifications tend to have confidence in their personal abilities. They
have clear vision to express out their goals and have clear learning attitude in the
changing and diverse societies. But all these factors got affected in the case of small scale
industries as Covid affected the economies and left them unstable which put a level
decrease on the SME'S resulting in the decline of low labour management and lower
level of skilled labours to perform the particular tasks assigned (Wilson, et.al).

 Affects on the HR department: After the pandemic, it has forced HR department to
work and increase the abilities of their teams to out perform in the particular tasks
assigned to them. But in the pandemic the working capabilities of the employees resulted
in the uncharted territories. This held the HR department under the responsibilities to help
organization that functions on the small or medium basis to evolve the changes round the
environment (Dhir, et.al). The HR departments performance to make the SME'S perform
and help in adopting the changes in the outside world to survive in the ring, the HR roles
is considered the most important as it will help the organization by implementing the
policies to regain the strength after the pandemic and the economic in-stability.
Role of the UK government in supporting the SMEs during the Covid-19:
The Government and the Bank of England played an important role in supporting the SME'S
during the pandemic by announcing the various forms of schemes for the help of the SME'S. The
government of UK introduced the SME'S with plenty of beneficial schemes to provide help to
the organizations (Fletcher, and et.al). The government launched the “CORONAVIRUS JOB
RETENTION SCHEME” which provided the workers the minimum wage amount for the last
three months as per month capital. The UK government launched the “SELF-EMPLOYMENT
INCOME SUPPORT SCHEME” that helped the self-employed people in by providing the
minimum percentage amount of their profits to the peoples as per month capital. Banks provided
the loans to the businesses in the UK for which the first six-month tax would be bearded by the
government. This scheme was further extended for the large scale industries too. Then the
government also launched the “Bounce back loan's simplified scheme” too for the help of the
small scale businesses. The government also allowed the individuals to pay taxes on the agreed
period.
The UK government also decided to take over the responsibilities of “Sick pay costs” by
government. Government also provided help by giving the “Business rate relief” for all business
sectors functioning under the small scale industries. The Bank of England also reduced the rates
on cost credits to business, and reduced the UK'S countercyclical buffer rates and given
instructions to the banks to do not put increment in the dividends and bonus. By wanting the
businesses to survive and operate at the time of the pandemic the changes are made in the
governance arrangements and the corporate insolvency by the government. The government also

provided assistance to the small businesses of dine out by giving the “EAT OUT TO HELP
OUT” scheme to support the businesses. The government further make allowances by giving
different policies like:
 Winter economy plan
 Job support scheme
 Self employment income support scheme
These also provided the help to SME'S by giving the different tax arrangements and loans
schemes.
The returns were led on severe basis as restrictions led later on the updating of the policies which
includes the retention of coronavirus jobs, retention schemes and extension arrangements of the
business loans for the self-employed. Later new policy which provide help to the local authority
of England is also introduced by the government.
CONCLUSION
The above report about the contemporary business environment includes the information about
how the external factors impacted the internal factors of small-medium sized businesses in the
time of pandemic Covid-19, And about how the marketing policies are affected of the SME'S
and how the economy got unstable in such times which also resulted in downfall of sales by
striking the prices and caused damage to the product by also transfering the businesses to the
digital platforms (Scuotto, and et.al). This also factors relevantly putted impact on the labour
marketing conditions as in the pandemic times and the time of unstable economy the labour
management became an issue due corona guidelines and the HR department got effected from
this too. Further, in this report it is discussed how government helped the SME'S in the times of
pandemic and how the government provided the benefits to the small-medium sized businesses
by launching the different schemes to help them out in such situations.

REFERENCES
Books and journals
Dhir, S. et.al. Does the perceived efficiency of the HR department matter in influencing
satisfaction and employee performance?. International Journal of Productivity and
Performance Management.
Fletcher, et.al. Trust in UK government and news media COVID-19 information down, concerns
over misinformation from government and politicians up. Reuters Institute for the Study
of Journalism.
Koirala, S., 2019. SMEs: Key drivers of green and inclusive growth.
Müller, J.M., et.al. Fortune favors the prepared: How SMEs approach business model
innovations in Industry 4.0. Technological Forecasting and Social Change. 132. pp.2-
17.
Naeem, M., 2020. The role of social media to generate social proof as engaged society for
stockpiling behaviour of customers during Covid-19 pandemic. Qualitative Market
Research: An International Journal.
Sarkar, B., et.al. Effects of variable production rate on quality of products in a single-vendor
multi-buyer supply chain management.The International Journal of Advanced
Manufacturing Technology. 99(1). pp.567-581.
Schwab, L., et.al. Exploring financial sustainability of SMEs during periods of production
growth: A simulation study. International Journal of Production Economics. 212. pp.8-
18.
Scuotto, V.,et.al. A microfoundational perspective on SMEs’ growth in the digital transformation
era. Journal of Business Research. 129 pp.382-392.
Wilson, T., et.al. Getting back to work: Dealing with the labour market impacts of the Covid-19
recession. Institute for Employment Studies. Contract No.: Report, 54.
Xie, X., et.al. Digital platforms and SMEs’ business model innovation: Exploring the mediating
mechanisms of capability reconfiguration. International Journal of Information
Management. 65, p.102513.
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