Question

The President, Nana Addo Dankwa Akufo-Addo on 19th May 2020 launched a GH¢600
million Coronavirus Alleviation Programme (CAP) business support scheme intended to
support small and medium-scale enterprises (SMEs) impacted by the novel coronavirus
(COVID-19). The fund is intended to provide relief to SMEs across the country that has
been negatively affected by the disease. In not more than two pages, critically evaluate
the strength and weakness associated with small and medium-scale enterprises (SMEs)
in your locality citing a relevant exampl

Answer 1

Small and medium scale enterprises are most exposed to any fluctuation in the interest rate and the financial market as well as economic cycle downcycle and upcycle because they will be operating on a very thin margin and on a large base, so they will be trying to maximize their profits through proper management of their debt capital.

Strength related to the medium and small scale enterprises are as follows-

A. These medium and small scale enterprises are often growing very fast so they are able to capitalise upon the upward cycles in the economy and they are also able to maximize their profits and increase their market base in such prosperous economy.

B. These small and medium scale enterprises have a potential of becoming the large company and the smaller scale medium enterprises will also be having a large number of venture capital is providing them with enough capital in order to help them grow and take higher amount of risk..

C. These medium and small enterprises are mostly taking high amount of risk and they are into the disruptive the business of other larger companiesso they have a potential of gaining a higher amount of market share.

D . They have access to a market where they can eat of the shares of the large company and maximize their own share in the market and they can also have a lot of growth potential and they have also a lot of profitability potential.

Weaknesses related to medium and small scale enterprises are as follows-

A. These small sand medium enterprises are having a higher amount of debt in their overall capital so they are most prone to the economic downturn.

B. These small and medium scale enterprises are often having a risk of higher insolvency and higher illiquidity so they need to manage their debt capital properly.

C .Their profits and are not sustainable in nature so they will have to to manage their profits adequately in order to maintain uniformity.

D. These medium and small scale enterprises are often highly exposed to the monetary policy which is designed by policy makers and the central bank.

E. These medium and small scale enterprises are highly exposed to any change in the policies of Government so they will be making a lot of changes in their business structure if there is change in the policy of the government.