Abstract
Since the inception of the modern technologies, the world of business has really evolved. The hi-tech transport and communication facilities have made it possible for countries to import and export goods and services. This has led to the emergence of global and regional business powers. UK has a stake in international business, as shown in the essay below.
UK in International Business
1. UK Government role in international trades & international investment.
Sine time immemorial, the UK has been a key player in businesses around the world. This dates back to the Trans-Saharan trade, the triangular trade and the slave trade. During all these periods, the UK played a key role a major and active participant in the trading affairs. This has continued up to date. Currently, the UK offers entrepreneurial and business studies in its universities. Schools such as the London school of Economics have been famed all over the world for producing high profile business professionals. This helps to boost the international trade by having people who understand the dictates of business and how to manage it.
The UK is also a major export destination for many countries and investors as well. According to the UK Trade and Investment (2011), the UK offers an excellent export hub. Many countries can benefit from the customized services offered by the sector. As it is, there are tailor made export services for people from different countries. Through this arrangement, the UK trade and investment sector ensures that all the potential business and trade partners are not lost. Rather, they find a conducive environment through which they can continue with their trade affairs. This not only benefits the investors alone but it also has an overall positive impact on the UK economy. This goes a long way towards improving the trade relations since it motivates both the investor and the country in which the investment is located.
The developments in the ICT sector have had a major impact on the economy of most countries. As it appears, the business world is tending towards international business. This has been as a result of the advent of the internet and other on-line services. Similarly, there has been an increase in the rate of outsourcing, with the developed countries investing heavily on the import of labor from other countries. This actively promotes the international trade.
The UK has not trailed in this either. In an attempt to boost the international business, there are services providers in the UK who offer communication services between the investors all over the world (Callsure, 2011). This provider gives the telephone contacts for businesses across the UK and all over the world. The services have been of benefit to the UK and the trade personnel as well. This has made it possible to conduct business activities with much ease and comfort.
Besides these services, the UK also serves as an important communications hub. As investors move around the world, they most likely pass through the country. The Heathrow airport is one of the busiest transport hubs in the world, and it is found in London, UK. As such, the country acts as a core business centre, with people, goods and services being shipped to other countries passing through the country. From these explanations, it is quite clear that the UK is an active participant in modern day business activities. This is because the country has invested in business education and technology. This makes it a focal point in international business.
2. MNE s value and how it effect on UK economy.
Multinational enterprises have a key role in the UK economy. As seen above, the UK is a major investment centre. As such, there are various MNEs operating in the country. These have a mutually beneficial impact on the economy of the UK, as explained by the UK Department of Business Enterprise and Regulatory Reform (BERR) (2008).
As BERR puts it, many firms in the UK are taking advantage of the globalization effect. They therefore reap from the beneficial business environment created from the interaction of various factors such as the technological forces, social and economic changes around the globe. These factors have led to the wind of revival in the people, capital and business enterprises. This has facilitated the emergence of jobs and industries everywhere, creation and transformation of markets. This happens in an increased rate, therefore vigorous economies such as that of the UK can reap maximum benefits from this development. The UK firms benefit in terms of increased and transformed markets as well as the increased demand for investors and producers. Furthermore, there is the possibility of hiring cheap labor as provided for by the outsourcing facility. Technology ensures that the firms can produce high quality goods at a reduced cost, therefore maximizing the profit margins. On the same note, technological advancement has led to the emergence of highly skilled labor. Obviously, these developments have had a positive and significant effect on the economy of the UK (BERR, 2008).
A deeper analysis reveals exactly how the UK economic sector benefits from these MNEs. The major form of trade within the MNEs involves the export-import trade (BERR, 2008). From this perspective, it is evident that the UK not only imports from the business associates, but it also exports to them. Most of the UK exports are to markets within Europe, which form the lion’s share of UK export market. As of 2006, this market accounted for 63% of British goods exports and 56% of the total trade. It also appears that the value of exports within the EU is higher than the non-EU exports. The EU exports accounts for about 4.9 million pounds while the latter brings in about 1 million pounds. This proves that the EU market is more viable. It is therefore surprising that most of the exporters deal with the non-EU traders.
Overall, it has been proven that the import-export trade has beneficial effects on the economy of the UK. This is more so given that the MNEs and the exporters have an above average performance. Therefore, with their expansion, the overall productivity of the UK rises, which is a good thing for the economy.
3. Legal system followed in UK regarding international trade.
Businesses tend to do well when there is a form of competition. Otherwise, the effect of monopolization can lead to laxity within the traders, since they are aware that no matter what, everyone must come to them. Monopoly therefore leads to the production of low quality and more often than not, expensive consumer goods. The import-export trade helps to dilute the monopoly effect. With many traders bringing in their wares, the level of competition ensures that only quality goods are brought in, much to the benefit of the consumer. Competition also spurs up innovation and therefore propels productivity on the upward scale.
There are, however, barriers that can hamper the activities of the MNEs. Therefore, it is upon the government and its trade regulation agencies to ensure that these barriers are eliminated or have no effect on the trading activities. This can effectively smoothen out the operation of these sectors, leading to the much needed boost on the economy of the UK. Some ways in which the government can intervene include strengthening of social networks and internationalization activities besides providing access to information and advice which cannot be provided by private sector. If these are implemented, then the UK is bound to reap maximum benefits.
Powell and Rickard (2010) have made it that though trade is generally conceptualized as the flow of goods and services between and among countries; there actually are sets of agreements between the buyers and the sellers concerning this exchange. These agreements constitute the legal aspects of trade. This brings up the issue of contracts and agreements which are legally binding documents. If one party involved in the agreement backs down, then the other party has all the legal rights to take the issue to court for further pursuant.
These legal documents are the core of any international business affair, as they help to bring assurance to the concerned parties that they are actually going to get what they agreed, and also reminds them of the obligation that they have bound themselves to. The contracts tend to reduce the risks involved in the trade. There are, however, differences in the legal systems in different countries, and this can lead to a slight variation in the manner in which different people handle the contracts. Therefore, a trader should be cautious to be clear of all the terms and conditions of any legally binding aspect as they put themselves into 9Powell an Rickard, 20100.
The UK has its set of rules that govern the international trade, so as to protect its investors and citizens alike. According to newavwessays.com (2011), the UK is highly devoted to the legal norms and the fairness in international trade. It has therefore got a legal framework by which disputes among foreign investors can be resolved. It is notable that the UK was among the first ever countries to set up such a law. This shows the much that the country is committed towards ensuring a favorable work environment.
There is the transnational commercial law. This law seeks to resolve disputes among international organizations in a manner by which both parties would be satisfied and content with the ruling. The UK is also concerned with the international commercial arbitration. The arbitration takes place in a court of law and the proceedings are also observed by other international courts, so as to ensure that the truth and justice are pursued to the letter. In order to make this arbitration more applicable, the Arbitration Act of 1996 was enacted, which gave a solid structure on what is to be done in case of a conflict. This structure is in line with the ICC procedures, and therefore quite credible (newavwessays, 20110.
The business laws in the UK are both local and international. This ensures that the trading activities go on without hitches. As a result, investors and foreign traders feel secure and protected. This also injects confidence in the parties of the trade. With such an environment, business is bound to boom and the benefits to the UK economy is bound to go higher, even to levels that may not have been anticipated by everyone. However, it is also notable that in pursuing the legal provisions, there is a slight confusion as to what should be done with the Islamic laws. As Powell and Rickard (20100 observes, the Islamic laws also have an impact on the international trade. This poses a challenge to the British trade laws when one of the parties of trade ascribes to the Islamic rule. Therefore, synchronization is needed so as to align this issue and make business go on smoothly.
4. Ethical standards followed in UK business sector.
In the field of business, just like any other aspect of life, there is the need for considerations of ethics. Ethical and moral values are not observed so much because of business functions, but it is generally an acceptable and agreed code in interacting with people from different backgrounds and beliefs.
As discussed earlier in the essay, the contemporary technological developments have led to the emergence of the globalization, which comes with the aspect of the global image. That is, people from all over the world can interact with a greater speed and at a deeper context. This means that an individual happens to interact with people from different backgrounds, different languages, varying religious and cultural beliefs. Unless this issue is carefully approached, then there is bound to be some conflict. This brings in the issue of ethical considerations (Ethical space, 2009).
It is also noticeable that corporations are obliged to observe the social corporate responsibility. This is an act of ethical consideration, since the community living in the vicinity of the corporation tends to draw benefits from it. This, besides enhancing the relations between the corporation and the local community also makes the organization more credible and trusted.
Ethical space (2009) provides a check for the ethical impacts of any business entity. That is, evaluating the core values of the business and finding out how the ethics can be value added so as to reduce the risks. This process involves all the stakeholders of the corporation who participate in the building of the business case.
The next step involves the embedding of the ethics. This is through the creation of a framework to enact the ethics code. This step is three-fold: one, the core values and key ethics are designed. The ethical structure is then constructed and finally the evaluation is done in order to ascertain the extent to which the ethics have been implemented. The evaluation process is beneficial in its own right. Besides enhancing the business reputation through trust and confidence, the process also reduces the burden of regulation and compliance. As a result, the process further strengthens the corporation’s relations with the community (Ethic space, 2010). If only traders followed this example, then there would be no ethical clashes in the business world. Trade would be smooth and peaceful.
It is the ethical considerations that led to the creation of the Business Ethics and Education at the Financial Services Authority. The main aim of this was to keep the businesses in check in order to ensure that there is no breach of the business code of conduct. There is also the Ethics Foundation in the UK which advises businesses on the ethical considerations in a business setting. As illustrated above, the business field involves a convergence of people from different backgrounds and settings. Therefore, an ethical regulations framework as the one discussed in the essay can help to foster good relations among all the stakeholders in the business world. The end result is the satisfaction of all parties involved the smooth running of business, and growth of profit margins. This, for the UK economy, translates to a boost in the economic system.
5. Value of foreign investment and effect on international business value and UK economy.
Riley (2006) examines the effect f the international or foreign trade in the UK economy. On a negative note, Riley notes that the country may lose some of its manpower to the developing countries. In supporting this thesis, Riley cites the difference in production costs in the different countries. This proves that the production costs in the developing countries are relatively lower than in the developed countries. Therefore, with the development of the international trade, then the producers are likely to base their production countries in the cheap countries, in order to reduce the costs and increase the profit margins. As a result, the developing country, such as the UK, is bound to lose some of its skilled labor.
However, there are some positive benefits that can be derived from this trade. For instance, the wider market can help to increase the life cycle of a product as the foreign markets are opened up. There is also the benefit of the increased profit margins given that the production costs are brought down. Another factor that boosts the profits is the elimination of transport barriers and the avoidance of tariffs and non-tariff barriers. Of course, all this boosts the profits.
The UK has not been left behind in tapping from these trade benefits. As such, the country lifted the barriers to the foreign investments back in 1979. Further deregulations have continuously been observed in the financial markets, which have led to the huge trade in the stock market, bond markets and the short term money markets. These benefits come about thanks to the openness of the global economy. This has led to the transfer of knowledge and technology, therefore encouraging the nations to exploit their strengths to the maximum. The UK has taken full advantage of this (Riley, 2006).
Quelch (2006) also examines the impact of this trade on the UK economy. He notes that while the UK economy is one of the stable economies in the world, yet its productivity is quite low. For instance, he notes that an American worker has an estimated level of productivity that is 27% higher than a worker in the UK. The Foreign investments can help to remedy this productivity deficit in the UK. This can be achieved through two major avenues. First, when the foreign firms base their operations in the UK, they hire personnel from within the country. Surprisingly, the performances of the UK nationals employed in the foreign firms tend to be the same as that of their foreign counterparts. This therefore implies that if more foreign firms came in, then they would boost the productivity level (Quelch, 2006).
Secondly, the foreign firms base their operations in the same localities as the local firms. Therefore, the domestic firms can observe the techniques that are employed by these foreign firms. The UK firms can then try to replicate the strategies observed from the foreign counterparts. As a result, the productivity in the UK industries is also bound to go up. Furthermore, the employees of the foreign firms can later be hired by the domestic ones. This means that new blood is pumped into the home based firms, and therefore productivity is bound to go up. In conclusion, it is evident that international trade, encouraged by the current developments in transport and communication, is vital in the growth of a country’s economy. This has been proven through a case study of the UK, which seems to be drawing much benefit from this international trade.
References
BERR. (2008). Globalisation and the Changing UK Economy. Retrieved on 19th Dec. 2011 from http://www.bis.gov.uk/files/file44332.pdf
Callsure. (2011). Callsure Telephone Numbers & Fax Services. Retrieved on 19th Dec. 2011 from http://www.callsure07050.co.uk/
Newavessays.com. (2011). UK Promotes and Harmonises International Trade. Retrieved on 19th Dec. 2011 from http://newavessays.com/service/custom-essay-writing/samples-of-essays/rgohlm/
Powell, J. & Rickard, S.J. (2010). International Trade and Domestic Legal Systems: Examining the Impact of Islamic Law. Retrieved on 19th Dec. 2011 from http://personal.lse.ac.uk/RICKARD/law.pdf
Quelch, J.A. (2006). The Value of Foreign Direct Investment to London. Retrieved on 19th Dec. 2011 from http://vlstatic.com/l-and-p/assets/media/london_focus_52billion.pdf
Riley, G. (2006). Macroeconomics/International Economy. Retrieved on 19th Dec. 2011 from http://tutor2u.net/economics/revision-notes/a2-macro-globalisation-effects.html
Theethicalspace.com. (2009). Corporate Ethics. Retrieved on 19th Dec. 2011 from http://theethicalspace.com/corporate-ethics
UK Trade & Investment. (2011). Export. Retrieved on 19th Dec. 2011 from http://www.ukti.gov.uk/export.html?guid=none
