Impact of Covid-19: Challenges & Strategies for SMEs in the UK Market

This essay explores the challenges faced by Small and Medium-sized Enterprises (SMEs) in the UK due to the Covid-19 pandemic, focusing on the impact on their internal environment, including supply chain disruptions, HR management issues, and corporate culture shifts. It examines strategies adopted by SMEs to interact with the external environment, such as digitalization, entrepreneurial innovations, resilient strategies, collaborations, and employee training. The essay also analyzes the role of the UK government in supporting SMEs through financial schemes, tax reliefs, and support programs for both businesses and the workforce, including the Coronavirus Job Retention Scheme and loan programs. The report concludes by highlighting the significant role of SMEs in the UK economy and the critical measures taken to help them navigate the challenges posed by the pandemic.

PROJECT 1
INDIVIDUAL ESSAY

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

INTRODUCTION
Small and Medium Sized organizations are those entities who operate their business with
less than 250 employees. The essay is intended to make an intensive study on SMEs in order to
present fully fledged idea that how some key challenges are impacting internal environment of
these organizations (Oluwafemi, Mitchelmore and Nikolopoulos, 2020) Furthermore, some
strategies would also be scrutinized which has been used in last two years to interact with
external environment. At the end of this report the role of UK government has to be analysed
with respect to support to SMEs during Covid-19.
MAIN BODY
In UK there are lacks of small and medium-sized organizations are working in the
market. Who got affected in last two years, due to some unforeseen circumstances. These
organizations are operating their business to a greater extent, so they got affected by number of
challenges.
Internal business environment consists aspects such as Vision, Mission, Objectives of an
organization, the organizational structure, Corporate culture, Human Resources, Value system
they abide with and Physical resources, technological capabilities, Labour unions, quality of
work and operations etc. These internal environmental elements were got befitted in last two
years (Saeed and Ziaulhaq, 2019)
One of the biggest challenge came as supply chain disruption. It affected supply to small
sized organizations. Majority of small sized organizations are now depended on global suppliers
for fulfilment of supply. If heavily affected the operational efficiency of SMEs. Operational
efficiency is the most significant element of internal business environment. Which got affected
due to disrupted supply chain management.
Due to pandemics employees were not able to work at workplace. So in such
predicaments SMEs were also offering them opportunity to work from home, which affected HR
management system. Internal business environment is having great impact of HR management. It
decides the way forward for human resources engaged in operations. Here, it can be summarized
that in last two years one of the biggest challenge came in form of poor human resources
management in small sized organizations.
Disruption of corporate culture became one of such peril. SMEs are known for the culture
they come up with. It helps them to perform better in the market. That's the reason now in UK

these businesses are offering jobs to more than 60% of populations. So the culture of these
business are generally “Clan” in nature but in pandemics it got disturbed. It affected
organizational cultures in drastic sense. Organizations faced the biggest challenge to keep upheld
their prevailing culture in such circumstances (Johnston and Prokop, 2021)
In last two years the market did not perform on its merit, there has been a range of issues
in the economy of UK. Specifically, after Brexit and Covid-19, it came down to 0.8% in
February 2020, even it was not able to keep its growth rate stagnant. In such situations the SMEs
were not able to work on their vision, mission and objectives. They got affected in danger
manner. It became a big challenge for them to keep their-self competitive in such dramatic
market.
These unprecedented challenges also affected ability and skilfulness of organizations too.
SMEs are still not fully technocrat, they are relying on sort of grand mixture of both
conventional and modern technology. It affected their performance ability and also efficiency to
transmit the best value to their customers. The value an organization provides decides its future
and growth in the market but it became horrendous challenge for them and affected their internal
environment.
Approach of customers became a salient demon for SMEs and their internal environment.
In Covid-19 people became less likely to make purchase form small or medium-sized shops.
They were looking for higher cure and facilities which can meet their health related requirements
(Idris and Saridakis, 2018) It was not possible for SMEs to render that type of services to their
customers and even got tough competition from big giant organizations. It affected both their
operational efficiency and physical appearance in the market.
Internal structure such as Organizational Management System, Management Information
system etc. were placed new challenges. It did not remain same for these organizations to keep
going with the same set of OMS and MIS. They had to find new ways to deal with this issue. It
brought some drastic challenges for internal environment, and they got compelled to abide with
new systems to monitor their internal work and efficiency.
With this regard such organizations used some strategies to interact with external
environment during these last tow years. SMEs are having almost 99% of the all businesses,
they are contribution bigger, for instance- In the year 2021 it provided around 61% employment
and 52% of the overall turnover. 5.3 million Micro businesses is a big share of overall economy.

These elements affected the business of SMEs, and they used some strategies to interact with
them (Senaratne and Wang, 2018)
One of the most significant change SMEs brought was Digitalization of business. Earlier
they were fully depended on traditional approach of business, but in last two years it has been
very critical to operate business in same way as they used to do. Since, external environment
factors such as environment, and political regimes were not looking in favour. Various nations
banned mobility of resources so in such predicaments the only way to interact with these external
business environment factor was modification and adaptation.
Entrepreneurial innovations have been some significant methods to interact with
external environment. In last two years technological factors got drastic influence, due to Covid-
19. Technological elements placed a big challenge before SMEs to ensure their survival in
market. It was only possible with some innovative practises (Degryse, Matthews and Zhao,
2018) They started using employee collaboration tools in order to fabricate different
entrepreneurial practices. SMEs were governing their business with these tools in order to emit
impact's of external business environment factors.
Resilient strategy has been one among those smartest strategies used by these
organizations to be competitive and alive in the market. In the circumstances of Covid-19 it has
been almost impossible for them to align with external business environment, so they decided to
bring resilience in their strategies and made some big changes in term of operations and non-
operational activities. These interactions have made them fructified to cope up with market
forces.
Business environment elements such as environment became a severe issue. In the
predicaments of pandemics people got more conscious about their health and nature so it placed
a tough challenge before SMEs to get interacted with these factors. They brought some changes
in their practises and started practising sort of environment friendly practises to overcome this
threat and made external environment favourable (Awwad, Shibani and Ghostin, 2020)
Some SMEs started practising collaborations too. In last two years it had been an issue to
be competitive in such a rigid market where big bulls were able to abide with legal regimes but
legality became quite bigger challenge for small and medium-sized organizations to operate their
business complying with it. So a great trends was seen where these organizations started coming

in collaboration. It not only provided them synergy but also expanded their level and capacity to
perform in the market.
In the last two years, the business environment reflected a big challenge, the
organizations had been compelled to practise and use highly efficiency technology (Rae and
Patel, 2019)To meet this need, small and medium-sized organizations also started rendering
training and education to their employees in order to get them ready to confront with such
unforeseen circumstances. It paved way to cope up with environmental elements which offered
challenges to small and medium-sized organizations.
Economic factors such as slowdown, poor flow of capital, toppled labour market etc.
raised stressful issues before SMEs. To encounter or interact with this external environmental
peril, small sized organizations adapted some new strategies. For instance- They started
practising “Cost leadership model” and used “CRM models” to identify weather the customers
are satisfied or not. Besides profitability, they followed realm to get their customers satisfied in
order to interact with the prevailing market circumstances (Walker and Hurley, 2021)
These last two years made one big shift in the though process of people. Now the most
sensitive element of external business environment which is “Social and Cultural element” is
present in its new form. People are more likely to prefer healthy and fresh items. SMEs took it as
serious challenges and notched up higher quality standards in order to meet this demand of
market in order to interact with social and cultural elements. Approach of making changes in
practise and used process enabled organizations to encounter this external environment and
keeping herself competitive in market.
The British government has played an important role to combat the impact of Covid-19
pandemic to support the SME business. It was a mixture of crucial measures taken by the UK to
advantage the stakeholders from the disruption caused by pandemic. The financial support is
being done by various schemes such as Covid-19 Corporate Financing Facility (CCFF)
Scheme launched by Bank of England that would accommodate the businesses which are
affected by the short-term funding squeeze (Flynn and et.al., 2020. The scheme would operate
for 12 months and is available to the companies who can prove that they were financially sound
prior to the pandemic. Coronavirus Business Interruption Loan Scheme was another financial
aid provided by the banking institutions to avoid security below £250,000 and is optional at the
end of the lender to ask for security. Due to the surge of the pandemic the businesses have

purchased add-on insurance to cover notifiable diseases which was offered by the government
and run on the temporary framework which was adopted by the Brexit transition. The
government further deferred the VAT payments for three months and provide support through
the HMRC Time to Pay service. The retail and hospitality sector would not to pay municipality
taxes and local authorities apply the business rate holiday for the 2020-21 financial year. SME
businesses granted a relief amount of £10,000 considering the eligibility of the business.
The Loan Scheme for new business would be offered by the banks to support the SMEs
of amount up to £5 m. This combination assist the businesses to survive the toughest time and
helps to again boost the companies in the market (Brown, 2020). The pandemic has put
everything on hold resulting in the international and regional restrictions throughout the world.
Due to the lock downs people need to be remained in their houses and all the recreational &
entertainment businesses were closed for a while. The pandemic has badly impacted the
industries like retail, hospitality, tourism, entertainment which resulted in the loss of jobs of
many persons and as well as struggling the many businesses. The government has supported the
industry by introducing the advanced machinery, technologies and inputs. There were many
small loans with low interest rate, special programmes, grants and schemes for the start up
businesses who are one which badly affected during the pandemic time.
UK's government also planned to start free advice, guidance, tax reliefs, workshops,
training, Bounce Back Loan Scheme (BBLS) and Eat Out to Help Out Scheme to encourage
hospitality was the different programmes to be conducted (Belitski and et.al., 2022). They also
announced a series of 'mini-budgets' throughout the crisis which help the SME to survive. Apart
from the schemes and grants for the SME, the government has also framed programmes to
support the workforce through the Coronavirus Job Retention Scheme (CJRS), Self-Employment
Income Support Scheme (SEISS), Universal Credit (UC), Working Tax Credits (WTC), Test &
Trace Support Payment Scheme, Kickstart Scheme, Job Entry Targeted Support (JETS), Land
Tax cut are measures which are taken for the employees and workers.

CONCLUSION
From the report above it can be concluded that small and medium-sized organizations are
having their great prevalence in the market of UK. The report presented those challenges the
small and medium-sized organizations faced in last two years and how it affected internal
business environment factors. Furthermore, it was deeply scrutinized that how organizations got
interacted with some external environmental factors in last two years. At the end of this report
the role of UK government has been analysed in Covid-19 for supporting SMEs.

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