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Country Study Project : United Kingdom Add in library

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Question:

Describe about the political, economic, social environment of United Kingdom?
 
 

Answer:

Introduction

Market evaluation and market research has become very important for an organization so as to expand its business to the target market. Market research reveals adequate information to the management and hence will support them to take appropriate decision about the market selection. Generally a market research will identify the research related to buying behavior of the customers, potential of the market, political situation of the market, economic and social concerns, government rules and regulations etc. The government policies and regulations of the target country are also taken into consideration for the research. From the information obtained through such market researches the management can relate that information with the product lines of their organization (Dey, Bhattacharya and Ho, 2014). If the information suits the organizations requirement then they will go forward. Appropriate market entry strategies will be adopted and various strategies will be formulated to become successful. Through this report a specific country “United kingdom” is taken into consideration and has be conducted a study based on its, political, economical, social, situations. A statistical record of the economic situation of the country is prepared and given in the report. With the support of this data decision related to market selection is performed. Some market entry modes which are suitable for the country “United Kingdom” is also suggested with justification.

Market evaluation

The United Kingdom is taken into consideration for the purpose of market analysis. The political, economic, social environment of UK is analyzed here. Through this analysis the organizations will be able to identify that UK is an appropriate target market so as to enhance their business. This analysis will also help the management to eliminate risks associated with international trading.

 

Political Environment

As the United Kingdom has a democratic government, the political situation of the country is generally very stable. Such political situations will be very favorable for a business organization to establish their business in this market. The chances of the introduction of controversial regulations and policies are less in such political situation. This will provide an organization of any industry a strong base for performing business operations. The political events like elections are held once on four years which reduces the risks associated with change in the existing policies and procedures. The business organization can prepare for a change when the next election comes. This can avoid uncertainty about the political issues and can enter into contracts without any risk feeling (Hegbrant and Hellberg, 2014).

Since it is a democratic country the ultimate power is in the hand of the population. The chances of public rivalries are very high in democratic markets. At any time the strikes and other public provocations can break up which can hinder the business operations of the international organizations. Nothing can be done under such situations. The competitors with political influence can always be threat to the international organizations. They can also put the organizations into political issues deliberately.

Economic Environment

The flexibility in the interest rate of the UK economy can affect the business operations of an organization in UK. The deviation of the interest rate is from 3.7% to 4.5% in the recent years. These steep deviations can affect the planning and budgeting of the organizations. Inflation can also reduce the buying potential of the consumers which makes them to spend less. If they buying power of the customer reduces then the market will be of no hope for the organizations. To survive in such markets the organizations will have to adopt competitive pricing strategies (Parutis, 2014).

The UK government also imposes various tariffs and quotas on the organizations who want to perform business operations there. Apart from this they also impose tax while exporting goods to UK they impose VAT and other taxes. Hence it will be practical to open up a factory in UK so as to avoid the quotas and other taxes. If the organizations are from a home country with higher labor costs then this market is a good opportunity for them as they can reduce the cost of production, transportation, tax, etc. But organizations from the home country like china where cost of labor is relatively very low then it will be difficult for them to establish in this market. Such organizations will have to sacrifice any one (Schmuecker, 2014).

Some of the economic conditions like unemployment can certainly hinder the success of the organizations in UK market. Unemployment can certainly affect the buying potential of the customers. Unemployment and situations like global economic saturations can certainly affect the international business organizations operating in any market including UK. If the personal disposable income of the customers is hindered through the factors like high interest rates, taxation and inflation then the purchasing power get decreases. The occurrence of such cases is unpredictable in the case of the UK market (Cole and Lucchesi, 2014).

 

Social environments

The social environment of UK is enriched with various social backgrounds like religion, race, culture, education levels, population, gender, age distribution, buying habits and lifestyle. Hence the organizations have the opportunity to identify their own target customers. The population of the UK is relatively highly savvy and relies on the internet and online shopping facilities. The people out there have less time to spend on shopping as their life is busy scheduled. Almost all families are having double income and they have the potential to spend on luxury products. Hence the opportunities for the fast food restaurants are very high in this market. The organizations which provide online services, free home delivery and other services are welcomed here (Parutis, 2014).

The population of this market is generally educated and is having the tendency to get adapted to new products and services. This attitude of the population provides a chance for the new entrants into the market. They mainly look for high quality and good service. There is also a diverse religious practice in UK which can be utilized for the promotional activities.  The population of UK is also relatively high which is around 64.1 million which a promising customer base for business operations (Conklin, Forouhi, Surtees, Khaw, Wareham and Monsivais, 2014).

Markets position in trade and foreign investment

Since 2004 the UK retains a long standing top most position in Foreign Direct Investment rankings. Although the country had to face many declines which are about 7% in the FDI investment projects it maintained to retain its topmost position. In Europe, UK has been identified as one among five countries where risk free investments can be made. Recently for the first time Germany obtained a highest share of manufacturing investments than that of UK. But still the dominance of the UK market is largely flourished. Some of the major investors of UK are US, Germany, France etc.  Some of the industries like IT, automobiles, equipments which includes production are the prime industries which are gaining more FDI. The FDI in financial services sector is declining.

Government’s policies and regulations

The government of the nation is very supportive for business organization and motivates the organization to set up their production process in the areas of UK where there is high degree of unemployment. They also provide subsidies for the same. But in some cases it may affect the organization as it may become costly for the organizations to set up factories in rural areas. When the manufacturing cost increases the cost of the product also increases which can dissatisfy the customers out there. The government regulations of minimum wage to the employees can also harm the business operations of the organizations. Due to the equal opportunity act proposed by the government the organizations are supposed to provide priority to all individuals who apply for the opening (Gulbrandsen, 2014).

Decision Making in choosing the target market based on the economic data

In a recent research conducted on UK economy it is identified that the economy has faced a growth by 2.6%. Since 2007 the UK economy hasn’t faced such a dramatic growth. In 2014 the economy has grown up to 0.5% which shows this economy is very appropriate economy for making investments. Although there is a sudden decline in the economy of about 0.7% economist says that it is temporary. The growth of the service sector has enhanced by 0.8%, but that of the construction declined by 1.8%. The manufacturing sector remained the worst performance sector in 2013 which is by 0.1% (UK economy records fastest growth since 2007, 2015)

Some of the other attributes which makes the UK market attractive for investment and business enhancement is the quality of life cycle of the society, their culture of fast adaptation , highly savvy population etc. Apart from that the political situation of the UK is very stable. The infrastructure of the country is maintained in such a way that it supports foreign investment and international businesses. Hence it can be recommended that the organizations can move forward into the UK market to flourish their business.

 

Market Entry Mode

Once the target market is decided it is the turn of the management to identify the market entering strategies.  The strategies adopted should be reliable such that it doesn’t harm or risk the business operations. A risk free and cost effective method of market entry strategy is direct and indirect exporting. When the UK market is considered the exporting charges and other taxes are high. Hence the market entry methods which will be appropriate for this market will be licensing and franchising. Through licensing the organization can get into agreement with the government to perform manufacturing and sales in UK for a specific period of time. Through licensing the organization will have to take the responsibility of risks associated with international business. The political and legal interventions may harm the business if the management has not taken adequate measures (Karajz and Gubik, 2014).

Through franchising the risks associated with business can be avoided or eliminated. The full responsibility of the business operations will be for the franchiser. The profit will be shared with the franchise based on the agreement. But the chances of information sharing is high therough this market entry mode (IšoraitÄ—, 2014).

Hence the organization can first try for direct exporting so as to identify the success of the product in UK market. Then based on the feedback of the customers the organization can either get into the licensing or franchising market entry mode. Each market entry mode has its own advantages and disadvantages. It is the efficiency of the management to reduce the risks and to enhance the benefits.

Implementation Plan

An implementation plan can be formulated based on the data collected from market analysis for the purpose of enhancing the business operations to the UK market.

  • The target market is identified which is UK for enhancing the business operations.
  • Market analysis is conducted on the UK and various aspects like political, social, economical, government rules and regulations, FDI etc of UK market is identified.
  • Based on the data obtained the benefits and risks associated with the business operations in UK are identified.
  • Proper budgeting plan is formulated by considering the market entry modes and the charges associated with it.
  • The sources of finance are arranged for meeting the expansion requirements.
  • Recruitment and staffing for the purpose of expansion and for the host country office are arranged appropriately.
  • Training and development is given to the employees who are considered as expatriates.
 

Conclusion

A report has been prepared which highlights a country study project. A country United Kingdom is taken into consideration and market analysis is conducted on it to identify whether the market is appropriate for business enhancement. The political, social, economical status of the country is researched and is highlighted. Form the study it is evident that the country has a stable economic and political condition which is favorable business operations. Some of the statistical data ate provided in the report. The government rules and regulations are also discussed. From the research it is identified that the country is suitable for business operations. The market entry modes like licensing and franchising are suggested for the organizations. The risks and benefits associated with those market entry modes are also discussed. An implementation plan is developed at the end of the report. The implementation plan is prepared by keeping the information collected through research.

 

References

Conklin, A. I., Forouhi, N. G., Surtees, P., Khaw, K. T., Wareham, N. J and Monsivais, P. (2014), Social relationships and healthful dietary behaviour: Evidence from over-50s in the EPIC cohort, UK. Social Science & Medicine, 100, 167-175.

Cole, M. A and Lucchesi, A. (2014), 16 Economic growth and the environment. Handbook of Sustainable Development, 252

Dey, P. K., Bhattacharya, A and Ho, W. (2014), Strategic supplier performance evaluation: A case-based action research of a UK manufacturing organisation. International Journal of Production Economics

Gulbrandsen, L. H. (2014). Dynamic governance interactions: Evolutionary effects of state responses to non‐state certification programs. Regulation & Governance, 8(1), 74-92.

Hegbrant, J., & Hellberg, F. (2014), Macroeconomic Factors Influencing Cross-Border Merger & Acquisitions Value-An empirical study of UK acquirers on foreign targets

IšoraitÄ—, M, (2014), Importance of strategic alliances in company’s activity

Karajz, S and Gubik, A. S. (2014), The Choice of Foreign Market Entry Modes: The Role of Resources and Industrial Driving Forces. Entrepreneurial Business and Economics Review, (Vol. 2 No. 1), 49-63.

Parutis, V, (2014), “Economic Migrants” or “Middling Transnationals”?, East European Migrants’ Experiences of Work in the UK, International Migration, 52(1), 36-55.

Schmuecker, K. (2014). Future of the UK labour market, York: Joseph Rowntree Foundation,

UK economy records fastest growth since 2007, (2015), <https://www.bbc.com/news/business-30999206>

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