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Social-economic environment

Discuss about the Ease of Doing Business in the United Kingdom.

The aim of the report is to analyze the socio-economic, political and business environment of United Kingdom and China as an export designation for pet food by Queen’s pet food. The company is based in Queensland, Australia and knows the fact that they have the potential for increased production. AusMax has engaged data demons for assessing the potential export markets and out of which they determined that UK and China are a possible market. The report will include the recommendation related to the appropriate country with the help of the weighted index.

The company is based in Queensland where they found a good market for the pet food. The company offers different types of the product according to the pet needs. They offer the products for both dog and cat. The company offers dry, wet, chilled, treats and fresh food for a pet that include a wide range of ingredients, good nutrients, and textures.

The socio-economic environment includes the details related to the strength and weakness of the economy, GDP change in the country and the inflations and unemployment rate that can affect the working of the company in the country (Kotler, 2015).

GDP is counted among the primary indicators for the business who is looking to expand the business as it reflects the total value of the complete goods and services that is produced in a country. In the coming year, the GDP of UK is expected to rise till the year 2022. Moreover, the GDP of the country in the year 2018 is expected to last at 2661.23 which is higher than 2017. The below graphical representation of the GDP reflects the same (Statista, 2018).

 

(Source: Statista, 2018)

This is the fact that, currently the United Kingdom is facing the decline in the GDP of the country from the previous year 2014 and 2015 (Statista, 2018).

On the other hand, GDP of the china has reflects that it is expected to grow fact in the coming years which will be beneficial for the business.

 

(Source: Statista, 2018)

The above image reflects, that GDP of the country in the year 2017 was 12,263.43 and expected to rise in 2018 and will reach till 13,338.23. This reflects that GDP of the country is growing faster due to which the company will perform dealing will get profit (Statista, 2018).

Current social-economic environment

The unemployment rate in China reduced to 3.98% in the first quarter of the year 2018 from 3.90% in the 4th quarter of 2017 (Trading Economics, 2018). This reflects that more of the people in the country are employed. Therefore, the Queen’s Petfood might find the issue while hiring the employees for them in the market. Moreover, they have to pay a huge amount to the labors.

 

(Source: Trading Economics, 2018)

On the other hand, the unemployment rate in the UK is also fell down in the first 3 months but later there was a rise in the unemployment then again in the next quarter there was decline. This reflects the market of UK is every fluctuating in terms of employment (Trading Economics, 2018).

 

(Source: Trading Economics, 2018)

The overall analysis and comparison of the country reflect that China is developing rapidly than UK. The GDP of China is growing rapidly due to which the Queen’s Petfood has a vast opportunity for the export. On the other hand, the regulations related to the export of the products might leads to hurdles for the companies.

Political environment factors include the government policies priorities and challenges of the country that can affect the company export in the countries. The political risk factors that might be faced by the company include levels of corruption and instability (Chernev, 2018).

The UK is the constitutional monarchy that is governed and influenced by the parliamentary system. The country has vast opportunities for the business and due to the stability of the government maximum numbers of people are performing business tie-ups with the country. Moreover, because of the stability, there is no frequent change in policies and regulations. In addition, the government is proactive in taking the steps for the betterment of the society and citizen.

On the other hand, China government include both formal and informal rules. Therefore, many people claimed that the political forces in China are an unsettling force. This might leads to the frequent changes in the policy and procedure of the government for the Pet industry. Though, the government of the country is focused towards the betterment of people and due to which they are developing e-commerce in country. The legal aspect of the country is on the basic stage under which the government doesn’t support the privacy, recognition of the digital signatures and consumer rights which are essential to be followed.

GDP

Instability in China: - Government of China is instable due to which there might be the risk of change in the policies of the government in the Pet industry.

Export regulations in UK and China: - Queen’s pet food is willing to perform the function of export in these countries but the company has the risk of change in the export regulations by the government for the pet industry.

Overall analysis of the political environment reflects that the political structure of UK is more promising than that of China because of the stability in the fluctuations in the UK.

The analysis of business environment includes the analysis related to the ease of doing business, quality of infrastructure of country and the presence of online business opportunity and many others (Wilson & Gilligan, 2012).

According to latest World Bank Annual ratings, China ranked 78 among the economies while talking about the ease of doing business. The rank of China remained unchanged in the year 2017 and 2016 (Trading Economics, 2018).

Talking about the ease of doing business in the UK, the country ranked 7 among 190 economies in the ease of doing the business considering the World Bank annual ratings (Trading Economics, 2018).

Pet care witnessed the rapid growth in China. The rapid rise in the income of the people because of the GDP makes the people to encourage the Pet care due to which they make use of premium products for the pet food. The domestic player of the country like Mars Food, Pet food, and others are leading the market and trying to offer the best food (Euromonitor international, 2017). The rise in the internet retailing in China is providing an advantage to list the pet food on websites which helps the customers in identifying the best pet food at the best price.

On the other hand, the market for the pet care products is continuously rising in the UK because people are spending on pet care products. According to Mintel 2015, In UK people spent approx. £10 billion a year on their dogs and approx. £8 billion on cats. The pet food is available on the internet which allows them to buy the products easily. In UK approx. 88% of the people admitted they spend up to £50 on extravagant presents for their pets (Groom Arts, 2018).

The overall analysis reflects that Queen’s petfood can find the UK more convenient while talking about the ease of doing business than in China. Moreover, talking about the market and their infrastructure for the company, both the countries are suitable for the company.  Therefore, it reflects that the company has good market potential in the UK.

The below given is the weighted index method that has been used to analyze. The weighting has been allocated for each element considering the importance of element from the perspective of company.

Variable

Weighting

UK

China

Score

Adjusted Score

Score

Adjusted Score

Potential Market

25%

8

2.00

7

1.75

GDP

15%

5

0.75

8

1.20

Unemployment rate

25%

5

1.25

6

1.50

Political Stability

15%

8

1.20

6

0.90

Ease of doing business

20%

9

1.80

5

1.00

Total

100%

7.00

6.35


The country that has been selected according to the weighted index is United Kingdom because the country has the potential market where the Queen’s Petfood can perform the activity of export of the products. The weighted index reflects that there is a slight difference between the two countries.

Conclusion

In the end, it can be concluded that both the countries have a good potential market due to which they can easily perform the activity of export of pet food in the market. The analysis reflects that there are some points that are good in China and other are good in the UK. Therefore, the company made use of the weighted average index method through which they can decide the best market for export.

References 

Chernev, A. (2018). Strategic marketing management. Chicago: Cerebellum Press.

Euromonitor international. (2017). Pet Care in China. Retrieved from: https://www.euromonitor.com/pet-care-in-china/report

Groom Arts. (2018). Market Insights. Retrieved from: https://groomarts.com/student-advice/marketing-insights

Kotler, P. (2015). Framework for marketing management. India: Pearson Education.

Statista. (2018). China: gross domestic product (GDP) at current prices from 2010 to 2021 (in billion U.S. dollars). Retrieved from: https://www.statista.com/statistics/263770/gross-domestic-product-gdp-of-china/

Statista. (2018). Gross domestic product (GDP) in current prices of the United Kingdom (UK) from 2012 to 2022 (in billion U.S. dollars). Retrieved from: https://www.statista.com/statistics/263590/gross-domestic-product-gdp-of-the-united-kingdom/

Trading Economics. (2018). China Unemployment Rate. Retrieved from:  https://tradingeconomics.com/china/unemployment-rate

Trading Economics. (2018). Ease of Doing Business in China. Retrieved from: https://tradingeconomics.com/china/ease-of-doing-business

Trading Economics. (2018). Ease of Doing Business in the United Kingdom. Retrieved from: https://tradingeconomics.com/united-kingdom/ease-of-doing-business

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