Challenges Faced by SMEs in the UK Business Environment During Covid-19 Pandemic

This essay discusses the challenges faced by SMEs in the UK business environment during the Covid-19 pandemic. It examines the role of the UK government in supporting SMEs and evaluates the internal and external factors affecting SMEs in the UK market.

Contemporary Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Contemporary business environment is referred as the environment which consists of
different internal and external factors that has a significant impact on the overall productivity of
the organizations that are operating in it. It is dynamic and competitive which highlights the
different issues that are faced by the businesses in order to manage their work environment in the
current business scenario. The following essay will be based on the key challenges that have an
impact on internal and external environment of SMEs in the UK, It will also examine the role of
UK government in supporting SMEs during the Covid-19 pandemic.
MAIN BODY
UK market is suitable for small and medium sized businesses to establish their
organizations and work effectively in the competitive business environment. It has a many
companies which are operating from a long period and have achieved success in the industry
significantly. The Covid-19 pandemic not been appropriate for these businesses to manage their
overall stability and has imposed immense pressure in order to make changes in the strategies
and business activities (Nikitina and Lapiņa, 2019). This has lead towards the fall of various
organizations in the business environment and created issues in their ability to perform the tasks
appropriately. The internal environment of UK market will be depicted with the help of SWOT
analysis which is an effective strategic management tool used to evaluate the crucial internal
factors which have a significant impact on the businesses. The elements of the analysis are as
follows:
Strengths
UK has high educational standards which helps in recruiting better staff which is highly
competent and has the required skills which are crucial for enhancing the productivity of these
businesses. There is a significant amount of FDI which is received by the UK market on a
regular basis which increases its stability in the industry.
Weaknesses
The instability of the business environment in UK due to Covid-19 has created
difficulties for SMEs to survive and remain profitable in the industry. It has a major impact on
the condition of these businesses in the industry as they are unable to manage the pressure which
is created in the work environment (Barr and et.al., 2018). The pandemic has created barriers for
the business to trade in the global business environment freely which has become a barrier for

various industries to grow and find a significant solutions for achieving sustainability. It is
known for poor transportation which hinders the supply chain management of these SMEs in the
UK and cause a severe impact on their overall productivity. Covid-19 has brought challenges for
these small businesses to carry out their business practices as several people have been infected
with the disease.
Opportunities
Business can work towards the development of online working culture in their
organizations and enhance their overall profitability in the crisis. With the help of continuous
efforts towards the development of the digital business environment the negative impact of
Covid-19 can be neglected. The businesses may focus towards giving more focus towards work
from home environment which is beneficial to ensure the physical and financial security of the
employees and the business.
Threats
The competitive environment of UK is not suitable for the SMEs to gain better advantage
and enhance the overall economic development of the region. There are several companies which
might be facing issues to operate successfully in the business environment and remain profitable
in the competitive industry (Namvar and et.al., 2018). The financial crisis in the country has led
towards the downfall of the economic stability of the marketplace and increased problems to
manage the work effectively.
The external environment of the UK market will be evaluated with the help of an external
market analysis tool which is referred as PESTLE analysis which is an effective strategic
management tool used to get an idea of the impact of external factors on the business
environment. The factors under this analysis are as follows:
Political Factors
The political instability has increased due the pandemic which has increased issues in the
UK marketplace significantly in the pat two years. The decisions of the governments to take
measures for the pandemic have had a negative impact on the profitability of many SMEs in the
business environment.
Economical Factors
The economy of UK has hit badly due to Covid-19 and the country is facing difficulties
in investing in the business sector as the medical sector needs the highest consideration in the

contemporary situation. This economic situation may have a negative influence over the business
environment and create issues for the SMEs to remain profitable.
Social Factors
Covid-19 pandemic has had a significant impact on the buying behaviour of customers
which has changed their preferences and have caused a serious impact on their likes and dislikes.
This had been beneficial as well as not appropriate for different types of organization. Most of
the businesses have been affected by these activities and found themselves to be nearly irrelevant
in the industry.
Technological Factors
The technological advancements in the field of business management and practice has
been one of the most important factor which has facilitated the business processes for many
organizations. It has been helpful for them to connect with their customers and provide them
with their products and services even in the difficult times (Gardašević, Ćirić and Stanisavljević,
2021).
Legal Factors
The laws and procedures that are imposed by the government on these businesses had a
severe impact on their operating abilities. It created barriers for these SMEs to achieve better
success in the competitive business environment which was facing issues due to Covid-19
pandemic.
Environmental Factors
The environmental factors had the maximum negative impact on the SMEs as the virus
was spreading very fast and people were getting infected severely. It increased the vulnerability
of the business environment and caused losses for different companies which were unable to
save themselves from this phenomenon.
These internal and external analysis show that the pandemic has hit the UK market
significantly and have decreased the capability of the SMEs to carry out their business practices.
It was difficult to manage the work appropriately as people were getting infected and the overall
economic stability was disturbed. The buying behaviour of people changed which led towards
the downfall of the overall environment. UK's government had a major role in providing aid to
these businesses in the difficult times and increasing their overall economic stability in the
business environment.

It has played a vital role in the management of the overall business scenario which was
being affected due to the Covid-19 pandemic severely. Different schemes and policies have been
introduced by the UK government to facilitate the business organizations and increasing their
stability in the business environment. The government of UK put in various efforts towards the
overall development of the working conditions in the country and provided better assistance to
the small and medium sized businesses which were highly affected by these aspects in the
industry (Support for SMEs during the covid-19 pandemic, 2022).
The Coronavirus Business Interruption Loan Scheme was launched by the UK
government in order to facilitate the stability of various SMEs in the industry. This scheme
aimed at providing loans upto £5m for supporting small and medium sized businesses and
increasing their overall efficiency to produce better results and gain benefit (Raghupathi and
Raghupathi, 2021). The banks in UK were guided by the government to help these businesses
and enhance the overall effectiveness of their stability in the industry. The government covered
the costs of interest of these loans for a time period of six months which helped the banks to
provide better services to the organizations. This step from the government was beneficial for the
benefit of the SMEs as they were affected badly by the Covid-19 pandemic.
With the help of this financial aid, these businesses were able to stabilize their losses and
gain better advantage than the previous pandemic situation (Jabłoński and Jabłoński, 2020). It
has been crucial for them to increase the overall sustainability of these organizations in the
dynamic business environment. It was a crucial step which was taken by the government to
facilitate the overall success of the businesses in the overall industry and enhance the quality of
output which is crucial for growth. The SMEs were able to seek help from financial institutions
which had a major role in increasing the stability of these organizations in the pandemic times.
The UK government also provided Statuary Sick Pay (SSP) costs for the SMEs in order
to pay for the employees who fell sick due to the pandemic. It was a suitable step which was
helpful for these businesses to manage the health facilities and benefits of their employees. These
services were beneficial for the employees of these businesses to manage their expenses and
improve the overall health conditions (Amankwah-Amoah, Khan and Wood, 2021). It had a
major impact on the overall success of the business in the industry. It is useful for the business
to enhance their services and improve the overall health of their employees with the help of these
policies and procedures which are introduced by the government.

With the help of these efforts buy the government towards the overall development of
these SMEs, the business environment of UK was able to sustain in the difficult pandemic times.
The businesses were facing trouble in managing their profitability due to these extra expenses for
the treatment of their employees. The dissatisfaction of their employees had a major impact on
the overall success of businesses and was a negative factor in the woerking of these business ein
the pandemic times. This scheme which was introduced by the UK government aimed at
releasing the burden of employee care from these businesses and increase their productivity in
the industry.
Cash grants were provided by the government to these businesses which were useful in
order to reduce the negative impact of the pandemic on these businesses significantly. Small and
medium business enterprises were able to gain better advantage in the industry with the help of
the grants which were helpful for the overall development of these sectors in the competitive
industry. These grants benefited these businesses to manage their extra expenses due to Covid-19
pandemic that were aimed at increasing the overall sustainability of the business in the difficult
times (Mölle, Nenonen and Storbacka, 2020). The decision of the government to provide this
financial aid to the business was crucial in order to establish better business practices for these
organizations in the industry. They were aimed at increasing the financial stability of the
business in order to face the challenges which were faced by them in the pandemic scenario. The
UK government had a major contribution in handling the situation and improving the business
positions of various organizations in the industry. By using these benefits the SMEs were able to
gain better advantage in running their businesses properly and handling the pressure which is
created by Covid-19 pandemic in the business environment of UK.
These aspects were crucial for managing the negative impact of the pandemic effectively
and increasing the economic stability of the business environment (Gregor and Gotwald-Feja,
2018). These decisions were taken in the benefit of the organization which were helpful in order
to create better facilities to SMEs and increasing their ability to grow. With the help of these
aspects, the businesses are able to enhance their services and help their employees with financial
and medical support. These efforts of the government had a positive impact on the critical
situation which is created by the pandemic in the UK industry.

CONCLUSION
According to the above essay, it has been concluded that the Covid-19 pandemic has
created various difficulties for the SMEs of UK to operate in the business environment
successfully. Due to the negative impact of pandemic, there are certain issues which are faced by
the businesses that had been shown with the help of strategic analysis tools. UK's government
had put in various efforts in order to provide better assistance to these businesses to face the
pandemic. There are different policies and schemes which were introduced by the UK
government in order to enhance the stability of businesses in the industry.

REFERENCES
Books and journals
Amankwah-Amoah, J., Khan, Z. and Wood, G., 2021. COVID-19 and business failures: The
paradoxes of experience, scale, and scope for theory and practice. European
Management Journal. 39(2). pp.179-184.
Barr, T. L. and et.al., 2018. Development of indigenous enterprise in a contemporary business
environment–the Ngāi Tahu Ahikā approach. Journal of Enterprising Communities:
People and Places in the Global Economy.
Gardašević, J., Ćirić, M. and Stanisavljević, I., 2021. The relations between contemporary
leadership styles and the dimensions of national culture in modern business
environment. Ekonomika. 67(1). pp.77-89.
Gregor, B. and Gotwald-Feja, B., 2018. Chances and Challenges for Contemporary Business–
from Human-Centred Design Philosophy to Omnichannel Environment. Handel
Wewnętrzny, (5 (376)), pp.73-80.
Jabłoński, A. and Jabłoński, M., 2020. Social Issues and Sustainability in Contemporary
Business. In Social Business Models in the Digital Economy (pp. 1-24). Palgrave
Macmillan, Cham.
Möller, K., Nenonen, S. and Storbacka, K., 2020. Networks, ecosystems, fields, market systems?
Making sense of the business environment. Industrial Marketing Management. 90.
pp.380-399.
Namvar, M. and et.al., 2018. Simplifying sensemaking: Concept, process, strengths,
shortcomings, and ways forward for information systems in contemporary business
environments.
Nikitina, T. and Lapiņa, I., 2019. Creating and managing knowledge towards managerial
competence development in contemporary business environment. Knowledge
Management Research & Practice. 17(1). pp.96-107.
Raghupathi, W. and Raghupathi, V., 2021. Contemporary Business Analytics: An
Overview. Data. 6(8). p.86.
Online
Support for SMEs during the covid-19 pandemic. 2022. [Online]. Available Through:
<https://commonslibrary.parliament.uk/research-briefings/cdp-2020-0130/>