Table of Contents
1.2 Aims and objectives.
1.3 Research Questions.
2.0 Literature Review.
2.1 Concept of climate change.
2.2 SMEs in the UK.
2.3 Impact of climate change on the business performance in the UK SME sector
2.4 What can SMEs in the UK do to be more resilient to climate change?.
1.0 Direction of research and expected findings.
3.0 Structure of the final report
4.0 Reflective report
Climate changes, mainly climate extremes like global warming, earthquake, hurricanes and floods have an adverse effect on almost every SME along with its operation and supply chains, financial reporting, regulatory obligations, legal responsibilities and reputations (Luo et al., 2012). Changes in temperature, extreme weather conditions, and scarcity of water affect business performance negatively. Abdullah (2016) said natural changes (like rainfall, hailstone, landslide, soil erosion and flood) and artificial changes (such as pollution) are affecting business. Firoz and Kumar (2018) said that experts’ prediction is that climate will have a more negative impact on businesses. Thus, it is essentials for SMEs to understand the cause and effects of climate change, and this study investigates the causes of climate change and its impact on SMEs in the UK.
1.2 Aims and objectives
The aim of this proposed study is to identify and describe the impact of climate change on the business performance in the UK SMEs sector. Thus, this study will aim to focus on different businesses in UK SME sectors including real estate, hotels, cloth shops, manufacturing, academic institution, tour and travel agencies. Finally, this study will aim to provide recommendations on how the UK SMEs sector can reduce the adverse impact of climate change on their business performance.
- To identify and describe the impact of climate change on the performance of the UK SMEs sector
- To understand the future trend of climate change and its impact on the UK SMEs sector
- To determine the strategies that the UK SMEs are applying to prevent/reduce the adverse impact of climate change
- To find out the challenges faced by UK SMEs in preventing/reducing the adverse impact of climate change
- To suggest the UK SMEs on how they can prevent/reduce the adverse impact of climate change now and in future
1.3 Research Questions
- a) How is climate change affecting the performance of UK SMEs?
- b) What is the future trend of climate change and its impact on the UK SMEs sector?
- c) What are the strategies that the UK SMEs are applying to prevent/reduce the adverse impact of climate change?
- d) What kind of challenges the UK SMEs are facing in preventing/reducing the adverse impact of climate change?
- e) How can UK SMEs prevent/reduce the adverse impact of climate change now and in the future?
2.0 Literature Review
2.1 Concept of climate change
According to UKCIP (2010), climate change is the long-term average changes in sea levels, wetter winters, milder, drier summers, and warmer. Climate changes also refer to changes in extremes like fewer days with frost, more intense downpours of rain, and more hot days. Firoz and Kumar (2018) found that greenhouse gas emissions are the key cause of climate change. However, David (2016) said there are uncertainties in the future rates as well as geographical distribution of climate changes. Begg et al. (2015) stated that a certain amount of climate changes have appeared due to greenhouse gases emitted and temperature changes within 30-40 years. Thus, Firoz and Kumar (2018) said it is needed for SMEs to reduce the emission of greenhouse gases to reduce dangerous climate. Bassi et al. (2013) said SMEs need to adapt to the unavoidable changes. According to Shrestha (2014), businesses operate in global supply networks and the global marketplace. Thus, climate changes outside the UK have an impact on the business performance inside the UK. That is why the inter-governmental panel is taking several initiatives to reduce global climate change. For instance, several governments in Asia are taking initiatives on tropical cyclones, floods, water shortages that in turn will affect the business performance in the UK and other European countries.
2.2 SMEs in the UK
2.2.1 Concept of SME
The term “SME” is defined by experts in different ways. Masum and Fernandez (2018) said SMEs refer to those firms that do not exceed a particular size. Reid (2014) stated that SMEs are defined based on a number of indicators such as revenue and turnover, staff number, market position, total capital, and profit margin. In quantitative criteria, turnover and staff numbers are the main measurement to define the size of SMEs. Steve and Caroline (2014) disclosed that SMEs are made up of enterprises that have less than 250 staff. The organizational structure in SMEs is more organic than bigger companies, where the organic organizations do not maintain standardization and maintain loose and informal relationships in the workplace. These characteristics provide flexibility to the SMEs in terms of environmental and climate changes and are more likely to survive in adverse environmental situations compared to the big companies (Steve and Caroline, 2014). Additionally, Morris (2012) said flat organizational structure and lack of hierarchy provide flexibility to the SMEs in their workplace and help them to build up a stronger relationship with staff. Coulter (2014) identified some other characteristics of SMEs. First, SMEs are very close to the management people of the firm and are easily influenced by actors. Secondly, SMEs survive in a risk-taking and competitive environment and need to take risks in decision-making in the foreign market due to not have enough experience. Thirdly, communication experienced by SMEs and their consumers supports them for reacting faster and to be flexible to the changing needs of consumers.
2.2.3 SMEs in the UK
There are 5.7 million SMEs in the UK that is over 99% of total businesses. There are 5.4 million micro-businesses (that have 0-9 employees) that are 96% of all business. Although 96% of UK businesses are SMEs with less than 10 people, they hold only 33% of total UK employment and 21% of the turnover of total UK businesses (Roland, 2018). The percentage of small businesses (10-49 employees) in the UK is only 4% that hold 15% of total employment and 15% of total turnover in the UK, where the percentage of medium-size business (50-249 employees) is 1% which hold 13% of total employment and 15% of total turnover. The numbers of large companies (over 250 staffs) are 8000 that is 0.1% of total UK businesses but hold 40% of total employment and 48% of total revenue (Rhodes, 2018)……………………………..