Global factors that are shaping UK business activity assignment 2 task 2
1. Unit 1- BusinessEnvironment/Assignment2- Task 2 JohnBrianLee
Global factors that are shaping UK business activity1
In this articlewe are going to
explore several main areas or
global factors thatareshaping
UK business activity today.
We aregoing to look
at international trade
and its significanceto
UK business.
What impactthe BRIC
economies have on
UK businesses.
Finally wewill look at
what impact EU
policies haveon UK
businesses.
nternational Trade
So what is meant by
international trade?
International tradeis the
exchange of goods and
services between countries.
Recent changes and strong
performance of the UK
economy has sustained output
growth, however this has not
encouraged a strongpick up in
exports and investment.
(British Chambers of
Commerce, 2014)
Expandingnot only provides
additional revenue,it can also
diversify risk.Businesses that
are not expandingare
dependent on a singlemarket
as well as a strong economy.
o whatare the
barriersto UK
businesses?
Competition in the market and
lack of confidence in the
economy are the two biggest
barriers to UK businesses that
want to expand.
This also pushes businesses
towards international and
global expansion with a
greater potential consumer
base. Subsequently,
businesses or organisations
benefit from larger growth
potential and a larger market
to trade within.
Accordingto a survey taken
from the (2014 BCC business
trade survey) over six in ten
(68%) of UK businesses feel
they do not have the right
product or serviceto expand
overseas.
It is poor awareness and
perception with gaps in
knowledge that repress the
expansion of UK businesses
into exporting internationally
or globally.
Financial issues makeit
difficultfor smaller businesses
or organisations to break into-
International and global
markets, as well as newer
emerging markets such as;
Brazil,India and China.This is
usually dueto the lack of
resources availableto them in
comparison to larger
organisations.
In some instances businesses
will berequired to modify
their product or serviceto
either satisfy buyer tastes,
meet the needs in a foreign
market, and to meet legal
requirements for individual
destinations.
hat are trade
barriers?
Not all trade
markets in the world are
entirely open to UK business
organisations.Some countries
set import restrictions or
impose conditions which make
it difficultfor UK businesses.
Trade barriers can bebecause
of discriminatory rules and
practices of other countries;or
alternatively misinterpretation
of rules by administrative
authorities.
Countries can also imposean
unfair increasein duty or
import levy on UK businesses.
These includeTariffs and non-
tariffs;Tariff is the amount of
import duty charged on a
particulartype of goods. Non-
Tariff trade barriers are
measures intended to favour
local industry such astrade
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Global factors that are shaping UK business activity
2. Unit 1- BusinessEnvironment/Assignment2- Task 2 JohnBrianLee
Global factors that are shaping UK business activity2
regulations,labellingrules and
unfair government subsidies.
oware we
tacklingtrade
barriers?
In late 2012 the overseas
business initiative was
launched. It aims to
transform the support
available for British SMEs
seeking to do business in
high-growth markets across
the world.
The (BCC 2014) refer to the
“Overseas Business
Networks Initiative” as a
vital part of the drive to
double the UK’s annual
exports. It responds to this
challenge, by strengthening
the capability of the UK’s own
global business-to-business
support network.
The (2014, International Trade
Survey) said
“Whistthe recent strong
performance of the UK
economy has continued,
sustained output growth has
not been accompanied by a
strong pick up in exports and
investment. Given the
continued need to rebalance
the UK economy towards
exports to secure the recovery
and long-term prosperity”
We deal with trade barriers by
talkingdirectly to the country
or alternatively through the
EU.
The UK is takingpartin
negotiations of international
trade agreements such as;the
TransatlanticTradeand
Investment Partnership (TTIP).
Between the EU and the US,
and the EU has signed a free
trade agreement with South
Korea, which will make it
easier for British businesses or
organisationsto trade their.
hat is TTIPand
what doesit mean
to UK businesses?
TTIP is a free trade agreement
being negotiated between the
EU and the USA. The
negotiations started in July
2013.This has the potential to
reduce tariffs on cross-border
trade between EU and US
countries consequently,
reducingother barriers of
trade.
An example of this is itmay
reduce unnecessary regulatory
requirements without
loweringprotection.
The UK government work with
European commission on the
negotiations to make surethe
interests of UK consumers and
businesses arereflected.
hat are the
BRICsand
howdo they
impact onthe UK?
What are the BRICs? The
BRICs label refers to a select
group of developing countries;
Brazil,Russia,Indiaand China.
They are distinguished by their
demographic and economical
potential.
Together they comprisemore
than 2.8 billion peopleor 40%
of the worlds population.It
covers more than a quarter of
the worlds land area over
three continents.
The BRIC counties accountfor
much of the dramatic increase
in scienceresearch
investments and scientific
publicationssince2002.Global
spendingon scienceresearch
and development increased by
48% from 2002-2007.
China,India and Brazil more
than doubled their spending
on scienceresearch raising
their collectiveshareof global
research and development
from 17% to 24%. Chinas
development planninghas
concentrated on several
specific fieldsand related
industries including;clean
energy, green transports and
rareearths.
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3. Unit 1- BusinessEnvironment/Assignment2- Task 2 JohnBrianLee
Global factors that are shaping UK business activity3
U policiesandevents
changingglobal
businessforUKbusiness
organisations.
What was the aim of joining
the EU?
The overall aimof joiningthe
EU is to create a greater
market of trade with fewer
barriers to trade thus creating
a stronger market for UK
businesses.
Accordingto the (2010 to 2015
government policy;Business
regulation)
Some regulations are
ineffective and unnecessary,
complyingwith them cost
businesses and organisations
time and money. This can
restrictbusiness growth.
Compared with large
companies,small or micro-
businesses havefewer
resources to help them to
comply with EU regulations
and rules.This makes
compliancemuch more
difficultand attempting to
comply marginally more
expensive.
hat is the UK
governmentdoing
to alleviatepressureof
EU policyonUK
businessesor
organisations?
The government want to
ensure regulations arefair and
effective. They aimto ensure
that policies reflectand
protect employees and
employers rights,whilst
freeing business organisations
from unnecessary
bureaucracy.
Businesses say theamount of
new regulations is oneof the
major problems preventing
complianceand growth. To
battle this problem, the UK
government aim to simplify or
clarify existingregulations and
in some cases,to encourage
and support an alternativelike
voluntary codes and codes of
conduct.
owdo the
governmentexpect
to achievethis?
(2010 to 2015 government
policy;Business regulation)
The government wish to
create a ‘one-in, two-out’
policy.This is to build on the
‘one-in, one-out’ rule which
was applied from January 2011
to December 2012.Over this
period, government was
successful in meeting its
targets and exceeded them
removing around £963 million
more in business burdens.
To help businesses plan ahead,
two dates in the year where
set when new business
legislation comes into force.
These are 6th April and 1st of
October. These dates are now
known as common
commencement dates.
Regulations arepublished
before common
commencement dates. This is
to give businesses noticeof
any regulations that affect
them.
Government wants to
minimisethe burden that new
regulations imposeon small
businesses,especially
companies with fewer than 10
employees (micro-businesses).
hat are co
regulations?
Co- regulation is
similar to self regulation but
government is included.For
example, an industry might
work with the government to
develop a code of conduct or
practice.Rather than practices
being governed or enforced by
government. The code is
usually enforced by the
industry itself or a professional
organisation.
An example of this is the
(GMC).recognised codes such
as the professional codes for
doctors by means of the
general medical council.
Code of conduct for health and
social care,for example, are
enforced by authorities such
as the carequality commission
otherwise known as (CQC).
Another example is statutory
codes, such as the ACAS
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4. Unit 1- BusinessEnvironment/Assignment2- Task 2 JohnBrianLee
Global factors that are shaping UK business activity4
saturator code of practiceon
disciplineand grievances for
employees and employers.
hat other
enforcementsare
there?
In March 2012 the
government launched the
focus on enforcement (FoE)
scheme. It consists of a series
of sector based professionals
who review whether national
and local regulatory
enforcement is planningthe
leastamount of necessary
burden on businesses.
(Gov.UK-Evaluation of
competition policy 2015)
We areengaged in establishing
a newer competition regime
and markets authority (CMA).
With powers and duties, the
UK government has
undertaken this reform
because itwishes to
strengthen the effectiveness of
the competition regime.
A major problem businesses
face is the lack of education or
discussion and trainingin
competition law.
A survey by the (IFF Research,
on UK businesses awareness
and understandingof the
requirements of competition
law,2015) revealed that only
19% of businesses had a senior
level discussion about
competition law.Whileeven
fewer ran trainingsessions6%,
in comparison to 48% trained
and 78% discussed on the
topic of health and safety.
roblemsinthe
market that
governmentare
attempting to address.
The problems of “cheating” or
“findingloopholes”area huge
problem to businesses trying
to compete in the UK. An
example of this is to get
around regulations by moving
into an adjacentmarket such
as a largeretailer moving into
the ‘convenience’ store market
could be seen as a way of
avoidingcompetition policy.
(Gov.UK-Evaluation of
competition policy 2015) gives
a good example of this itsays;
A major criticismis that‘single’
markets are inadequately
defined.
For example;
TESCO, in 2004,was allowed
by the OFT to purchase
Administore (the owners of
Cullen’s,Europe and Marts)
because itwas regarded
‘convenience stores’to be a
separatemarket from the
grocery store market. This
gave TESCO 6% of convince
food market as well as 26% of
the grocery food market.
WhileTESCO argued that the
two markets are quite distinct,
critics,likethe forum for
privatebusiness,argued that
the markets are almost
indistinguishableand that
TESCO should not have been
allowed to enter the
convenience food market.
eferences.
British Chambers of Commerce
(2014) 2014 International
Trade Survey: Market
Opportunities, Availableat:
http://www.britishchambers.o
rg.uk/policy-maker/policy-
reports-and-
publications/2014-
international-trade-survey-
market-opportunities.html
(Accessed: 27th May 2015).
Economics Online(2015)
Evaluation of Competition
Policy, Availableat:
http://www.economicsonline.c
o.uk/Business_economics/Eval
uation_of_competition_policy.
html (Accessed: 27th May
2015).
EY ITEM Club (2015) BRIC by
BRIC, Availableat:
http://www.ey.com/UK/en/Ne
wsroom/News-releases/Item---
11-02-07---BRIC-by-BRIC-value-
of-UK-exports-to-emerging-
markets-set-to-rise (Accessed:
27th May 2015).
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5. Unit 1- BusinessEnvironment/Assignment2- Task 2 JohnBrianLee
Global factors that are shaping UK business activity5
Globalsherpa.org(2015)
Globalization, Sustainable
Development and Social
Impact in World Rankings,
Countries and Cities, Available
at:
http://www.globalsherpa.org/
bric-countries-brics (Accessed:
27th May 2015).
GOV.UK (2015) business
regulation, Availableat:
https://www.gov.uk/governm
ent/publications/2010-to-
2015-government-policy-
business-regulation/2010-to-
2015-government-policy-
business-regulation#appendix-
1-reviewing-the-effectiveness-
of-government-regulations
(Accessed: 27th May 2015).
GOV.UK (2015) Competition
policy and economic growth:
principles and practice,
Availableat:
https://www.gov.uk/governm
ent/speeches/competition-
policy-and-economic-growth-
principles-and-practice
(Accessed: 27th May 2015).
GOV. UK (2015) 2010 to 2015
government policy: free trade,
Availableat:
https://www.gov.uk/governm
ent/publications/2010-to-
2015-government-policy-free-
trade/2010-to-2015-
government-policy-free-trade
(Accessed: 27th May 2015).
John Dudovskiy (2013)
'Significanceof International
Trade to UK Business
Organisations', research-
methodology.net, N/A (N/A),
pp. onlineat: http://research-
methodology.net/significance-
of-international-trade-to-uk-
business-organisations