EXPLORING THE STRATEGIES ADOPTED BY SMALL AND MEDIUM ENTERPRISES TO SURVIVE THE CORONA VIRUS PANDEMIC
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EXPLORING THE STRATEGIES ADOPTED BY SMALL AND MEDIUM ENTERPRISES TO SURVIVE THE CORONA VIRUS PANDEMIC
ABSTRACT
Small and Medium Enterprises (SMEs) contribute a massive percentage to Gross Domestic Product (GDP) in most developing nations like Ghana, ensuring economic growth, employment, income stability, and poverty alleviation.
The coronavirus (Covid19) pandemic has caused significant disruptions in the economy and the lives of enterprises globally, regardless of whether they can continue to operate.
The Covid-19 pandemic epidemic has forced numerous businesses to close, causing massive disruptions in trade and commerce in many industrial sectors. Short-term problems for retailers and brands include labour, health and safety, cash flow, supply chain, consumer demand, sales, and marketing.
As a result, the purpose of this study was to discover the measures that SMEs in the Sunyani Municipality used to survive the corona virus epidemic. The study’s precise goals were as follows: to identify the impact of the corona virus pandemic on SMEs,
to investigate the performance of SMEs in the Sunyani municipality before and during the corona virus pandemic, and to assess the tactics SMEs are employing to survive future pandemics. This study incorporated both primary and secondary data.
A conceptual and theoretical framework for the study was developed in order to investigate the techniques used by SMEs. These influenced the design of a data gathering tool that was appropriate for the researchers.
The data collecting and analysis methods used in the study were a combination of exploratory research and case study methods. Questionnaires were created in order to acquire main data from respondents.
The study indicated, among other things, that these SMEs faced a high male and youth domination, a low level of education among entrepreneurs, a lack of access to government support, the age of the enterprises, a low level of sales,
and an inability to execute online marketing. In light of this, important solutions suggested included a proper management system, government support for SMEs, the use of technology in operations, a strong business continuity plan, and so on.
CHAPITRE ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The World Health Organisation (WHO) proclaimed the Coronavirus Diseases 2019 (COVID-19) a global pandemic on March 11, 2020. As of July 21st, 2019, there had been 14,684,741 COVID-19 cases worldwide, with 610,110 deaths.
As the pandemic spread, all governments scrambled to contain it while minimising its social and economic impact, with the most common strategies being increased testing, closing international borders,
closing schools and non-essential services, instituting social distancing protocols, a ban on public gatherings and functions, and mandatory partial or full lockdowns.
Ghana saw its own share of the global epidemic, which lost lives, created economic downturns, and threatened enterprises. The case count for covid-19 was 7,303 as of May 27th, 2020, with 2,412 recovering and 34 fatalities.
The pandemic has affected every sector of the country’s economy. For the time being, schools, churches, mosques, and all other meetings have been halted, while government agencies and businesses have been advised to practise social distance and all other protocols linked with the fight against Covid-19 (Darko, 2020).
The COVID-19 pandemic has had a huge impact on Ghanaian businesses, forcing many to cut expenditures by decreasing working hours, lowering compensation, and even laying off personnel.
This is according to the recent COVID-19 Business Tracker Survey performed by the Ghana Statistical Service (GSS) in collaboration with the United Nations Development Programme (UNDP) and the World Bank.
According to the statistics, around 770,000 jobs (25.7 percent of the total workforce) had their salaries cut and approximately 42,000 people were laid off during the country’s COVID-19 partial lockdown.
The government has already put in place a variety of business measures, including the creation of a Coronavirus Alleviation Programme to preserve jobs, livelihoods, and small enterprises.
Also included in the package is the government’s GH600 million stimulus package for small and medium-sized firms (SMEs). The Business Tracker data “provide specificity on the pathways of effects,
variation in the effects for different categories of businesses, their geographical areas, and the extent of effects,” said Government Statistician Professor Samuel Kobina Annim.
The poll was conducted across the country between May 26 and June 17, 2020, to determine how the new coronavirus affects private businesses. 4,311 establishments were contacted in total.
During Ghana’s partial shutdown, 35.7 percent of business facilities and 24.3 percent of family firms reported being closed. Firms in the partial lockdown areas report the highest numbers of closures during that period, with 51.5 percent of firms in Greater Accra and 55.4 percent of firms in the Ashanti region being closed.
The sectors with the highest levels of closures during the partial shutdown were education (65.4 percent), financial services (47.0 percent), transport and storage (46.4 percent) and manufacturing (39.8 percent). Even after the relaxation of the lockdown measures,
16.2 percent of business facilities and 14.6 percent of home companies were remained shuttered at the time of the survey. The sectors with the highest rates of closures were education (63.0 percent), transport (34.0 percent) and housing and food services (24.0 percent).
According to the data, around 244,000 SMEs began to adapt their business strategies during the lockout by depending increasingly on digital solutions such as mobile money and internet sales.
Firms in the agriculture and other sectors utilised digital solutions at a greater rate (56percent), while those in the accommodation and food industry used digital solutions the least (28 percent).
Nearly 131,000 enterprises reported trouble obtaining finance and expressed anxiety about the economic climate. Based on the present figures, the average drop in income is estimated to be 115.2 million Ghana Cedis, with SMEs in the commerce and manufacturing sectors (including exporting enterprises) being the hardest hit.
More than half of these SMEs had problems procuring inputs due to a lack of availability or a spike in pricing, causing a problem in addressing income shortages. Firms are suffering weaker demand for their products, difficulties obtaining finance and sourcing supplies, and an extended period of uncertainty.
The World Bank is collaborating closely with the Ghanaian government to mitigate these negative effects and assist SMEs in surviving the pandemic and building resilience in the face of changing economic conditions,” said Pierre Laporte, World Bank Country Director for Ghana, Liberia, and Sierra Leone.
To decrease the implications of COVID-19, the survey results imply the necessity for policies to support SMEs in the near and medium term. Measures to boost liquidity, such as subsidised interest rates, cash transfers, and tax deferral, are among the most requested policies, according to the private sector.
In most African nations, SMEs account for more than 90% of private firms and more than 50% of employment and GDP (UNIDO, 1999). Small enterprises are reported to be a distinctive element of the Ghanaian industrial landscape,
accounting for roughly 85 percent of Ghana’s manufacturing employment (Steeland Webster, 1999; Aryeetey, 2001). SMEs are also estimated to contribute over 70% of Ghana’s GDP and account for approximately 92% of all enterprises in Ghana.
The SMEs sector has remained very inventive and adaptive in order to survive the recent economic slump and recession. New enterprises, according to empirical studies,
have an important influence in job creation (Garikai 2011, Baptista et al 2005, Stel and Suddle, 2005). In both established and emerging nations, small and medium-sized firms are viewed as economic growth engines.
These SMEs not only aid in the reduction of unemployment, but also in the creation of new jobs (Mullineur, 1997; Abor & Quartey, 2010). Small and medium-sized enterprises (SMEs) employ 85 percent of the manufacturing workers and contribute 70 percent of the national GDP. This supports the idea that SMEs have a considerable impact on economic development, employment, and income. OECD (1997), Villars (2004).
They help to drive growth, productivity, and job creation. Mensah and Rolland (2004) estimate that it accounts for around 35% of total labour in the country. Small and medium-sized enterprises (SMEs) are vital to the national economy. SMEs are recognised for increased use of local raw materials, job creation,
rural development encouragement, entrepreneurship development, and mobilisation of local savings, linkages with larger industries and provision of regional balance through more evenly distributed investments, avenue for self-employment, and opportunity for training managers and semi-skilled workers.
The vast majority of established and developing countries rely on the energy, resourcefulness, and risk-taking of small and medium-sized firms to kick-start and sustain economic growth. Small and medium-sized firms play a key role in overall economic development.
1.2 STATEMENT OF THE PROBLEM
The coronavirus (Covid19) pandemic has caused significant disruptions in the economy and the lives of enterprises globally, regardless of whether they can continue to operate. The entire direct initial hit to the level of GDP is often between 20-50% in several large industrialised economies (OECD, 2020). Many organisations have had to lay off people, while others have to decrease their working hours (Edgecliffe-Johnson, 2020).
The spread of the virus increased social distance which led to the closing of financial markets, corporate offices, business and events. The velocity at which the virus was spreading and the heightened uncertainty about how terrible the situation could develop led to a flight to safety in consumption and investment among consumers and investors (Ozili and Arun, 2020).
The Covid-19 pandemic epidemic has forced numerous businesses to close, causing massive disruptions in trade and commerce in many industrial sectors. Short-term problems for retailers and brands include labour, health and safety, cash flow, supply chain, consumer demand, sales, and marketing.
A lot of markets, especially in hospitality and tourism, no longer exist, whilst online buying, online communication, and online entertainment, have undergone remarkable expansion (Donthum, and Gustafsson, 2020).
Sustainable income is required for business survival (Alkhuzaie & Asad, 2018), which has become a serious challenge due to the cancellation of sports, religious, and cultural activities.
Specifically, 81% of employment providers and 66% of employees have been significantly impacted, putting 436 million Small and Medium Enterprises (SMEs) at risk (International Labour Organisation, 2020).
The economy is dependent on consumers, and customers are dependent on SMEs; similarly, SMEs’ performance is based on consumers (Asad & Abid, 2018; Amir & Asad, 2018; Asad, Iftikhar, & Jafary, 2019). Given the importance of SMEs in the entire economy, it is critical to do everything necessary to keep the sector alive.
To survive in today’s environment, it is necessary to identify innovative ways of doing business, and managing change and innovation is a significant problem (Abdin, 2020).
It is impossible to exist without introducing change because all firms are embracing new methods nowadays and it is the only way out (Hadi & Supardi, 2020).
As a result of the Covid19 Pandemic, several countries throughout the world are confronting unprecedented challenges (UNDP, 2020). Ghana and its people are no different. For managers,
the Covid-19 issue presents an opportunity to promote transilience and so better cope with the next Pandemic, as Albert Einstein famously stated: “Amid every crisis lies great opportunity” (Craighead, Ketchen, and Darby, 2020).
The study intends to investigate the measures used by SMEs in the Sunyani municipality of Ghana to survive the shocks of the coronavirus epidemic.
1.3 OBJECTIVES OF THE STUDY
The study’s major goal will be to investigate the measures used by SMEs in the Sunyani Municipality to endure the shocks of the coronavirus epidemic.
These individual goals must be met in order to attain the overall goal:
To assess the impact of the corona virus epidemic on SMEs in Sunyani.
To investigate the performance of SMEs in Sunyani before and during the corona virus pandemic.
To evaluate the tactics used by SMEs to survive the present epidemic.
1.4 RESEARCH QUESTIONS
What effects did the coronavirus epidemic have on SMEs in Sunyani Municipality?
How did SMEs fare before and during the Corona virus pandemic?
What tactics are SMEs employing to combat pandemics?
1.5 THE SIGNIFICANCE OF THE STUDY
The findings of this study will assist SMEs in appropriately preparing for future pandemics and in developing better growth criteria. This will also assist SMEs in considering pandemic-specific rules and procedures.
These policies and processes will assist SMEs in determining what steps to take in order to survive and increase output in the event of another pandemic.
Once again, the findings of this study will assist SMEs in incorporating pandemic planning considerations into existing resilience management initiatives. This will give a complete response as well as continuity in the event of future pandemics?
To get a competitive advantage over their opponents. Furthermore, the study’s findings will be used as material by individuals who may conduct similar research. Finally, the findings of this study will assist SMEs recognise that pandemics are a fact of life, necessitating the development of risk management plans.
1.6 SCOPE OF THE STUDY
The study focuses on the solutions used by SMEs in Sunyani Municipality to survive the shocks of the coronavirus epidemic. As such, it quantifies this investigation using SMEs statistics and literature from Sunyani Municipality.
1.7 LIMITATIONS OF THE STUDY
This study has three key limitations that will be addressed.
First and foremost, this research is limited to the study area and will not apply to every SME in the region, let alone the entire country. Again, access to data and information will be limited due to covid 19 restrictions and the return of surveys by some respondents. Furthermore, the time available to analyse and solve this research subject is restricted.
1.8 ORGANISATION OF THE STUDY
The first chapter focuses on the study topic’s introductory characteristics. The chapter provides a broad introduction to the research in which the review will look at the research topic, background of study, construct a problem statement, write the topic’s purpose including general and particular, and explain the research questions and outlines of the study.
The second chapter reviews the literature on the performance of SMEs prior to and during the Corona virus pandemic, as well as current knowledge on global pandemics and their effects on enterprises. A history of covid-19 and a definition of SMEs would also be recorded.
The third chapter examines the research approach. The chapter shall include a detailed overview of the research design, methodologies, and data sources (primary and secondary data).
The fourth chapter examines data analysis and data interpretation. This includes, among other things, data processing, data display, and interpretation in order to make the data processed understandable. The interpretation will be produced in accordance with the aims of the study.
The fifth chapter summarises the findings, draws inferences, and lastly makes recommendations based on the findings.
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