BU7412 International Business Assignment Sample 2024
Introduction
Economic globalization is the primary reason behind trade liberalization where each country is seeking the fruitful opportunity to explore the market around the globe to prosper with economic might. The United Kingdom (UK) is parted away from the European Union (EU) to independently rely upon its own strengths and weaknesses where the business aspect also changed after the Brexit movement which needed more collaboration with the world order to prosper economically with negotiating suitable business relationships.
In this report, the political environment of the UK and its impact on foreign business and trade relations between Asia-Pacific Economic Cooperation (APEC) and the UK will be briefly described.
Section 1: Political Environment of UK and its impact on foreign business
The way internal political environment in the UK
Political environment is an integral factor in the growth of a business internationally and adds benefits as well as risks for the company because of several factors such as political stability or instability, tax policies, trade restrictions, law for labourers, tariffs, and many more.
The current political situation is favourable as a stable government is in the UK which effectively aids the business to grow the barrier and the relation with the other countries with the UK is also good. Brexit is a controversial issue regarding the political environment of the UK , however, the recent political situation has caused a steady development of new business.
The tax policies such as income tax also depend on the stability of the current Government and the flexibility of the trade laws offers a scope to establish new business or expand existing business. In contrast to that, restrictions regarding trading may pose a threat for the foreign business because new entries in the market always find out the scopes to avoid the restrictions which limit the barrier of the company.
The country has set a law regarding labourers to maintain minimum wage rate which is effectively helpful for the company to expand the business. In many countries the state is playing a pivotal role in the case of growing business as it acts as a supplier, customer of a business (Johnson, 2020).
Positive or negative impact on foreign business
Political environment is a key factor of analyzing scope for foreign business and the environment has both positive as well as negative influence on the foreign business to expand the barrier of the company. The politically unstable situation includes risks such as reduction in equity price as well as Foreign Direct Investment (FDI) which provides negative impact on the business.
Reduction in FDI may lead to decreased economic growth as well as amplify social issues such as corruption, wage gap issues and many more. Furthermore, the contemporary political situation is stable in the UK and foreign business may take advantage as there is no lack regarding FDI which ultimately supports the business to expand its barrier.
The stable government also provides financial security to the foreign business as the tax rates are flexible in the country which immensely helps the company to start a new business among the highly competitive market. The relation of the other countries such as USA, China, and India with the UK is favourable and this positively enhances the scope of the business for the company and continuity in the relation provides aid to foreign investors in the purposes of business.
Political visits boost the opportunities for business networking as merger activities increase due to the political relationship which also ensures reduction in investment uncertainty (Aleksanyan, 2021). Brexit creates an obstruction for the business in the UK as the financial instability directly impacts negatively through labour crisis as well as growth of the business.
The trade laws are flexible in the UK and it supports the foreign business for future development as well as ensures opportunity for the business through reduced tariffs, less barriers for the business.
Approach taken by Government to support the foreign business
The government of the UK takes several approaches to support the foreign businesses in four ways through finance, connection, encouragement as well as information to boost the confidence of the business. The country offers export credit facilities, export insurances, trade finance solutions, direct lending facility, international finance executives which immensely help the business to expand.
The strong connection among the company with overseas buyers, sellers, which are boosted through ministers’ visit, trade envoys of Prime Minister, United Kingdom Export Finance (UKEF) suppliers fairs which ensure positive approach of the government to motivate the international business players to operate in the country. Encouragement is another approach of the government and several campaigns such as GREAT campaign regarding international brand marketing, UK export champions and so on to inspire as well as encourage the foreign business.
Additionally, the current government in the country sets a goal to achieve better Gross Domestic Product (GDP) to take competitive advantage as well as provide scope for foreign business which helps the country to increase its footprint globally (Refers to Appendix 1).
The export strategy of the country boosts the foreign policy of the government as well as the development agenda and this helps to reduce poverty and increases opening for the new business. Along with that, the trade policies after Brexit ensure several kind of opportunities for the foreign business and it is indeed good approach for the country to deliver convenience for business around the whole of the UK.
Contemporary issues within the country creates challenges for the foreign business
There are several contemporary issues within the country such as threat of Covid-19 pandemic, failure of climate actions which enhances financial crisis, cyber security failure which affects the financial risks, lack of suitable labourers due to high demand and many more. Economic loss due to the pandemic poses a real threat for the company which operates internationally as the financial insecurity rapidly affects the foreign companies such as Tesla, Pfizer and many more.
The constant failure of climate actions nowadays thwarts challenge for the foreign business as the climate crisis enhances several natural calamities which drive to financial loss and it creates challenge for business expansion in the UK. In the modern digital era, hacking of data, losing of privacy may enhance the scope of losses for the business as the country has to protect the foreign companies from unknown cyber access.
The cyber attack is a great challenge for the company as due to the attack the company may face financial loss as well as loss of important data regarding strategies, next steps for the future which affects the all over development of the company. Technological problems as well as export limitations negatively impact etho-national ties on global business relation opportunity exploitation and it severely creates challenges for the foreign business (Kim, 2020).
Recommendation to mitigate those issues
The contemporary issues are severely affecting the c business in the global range as well as in the UK and there are some recommendations to overcome those issues and maintain the growth of the business. International Business Strategy (IBS) may help a foreign company to assess the whole condition of a foreign country before venturing in a new country and the framework comprises internationally executable practices and activities, international market product service offering and many more (Bhattacharyya, 2020).
The country may take better initiatives to curb the issues of climate change which directly helps the foreign businesses to avoid financial crises due to natural calamities, as well as the company must allocate funds to fight the climate crisis. Digital technologies have provided opportunities and new business models for the business, focusing on major changes which enhance the strategies of the firm, cross-border management and many more to resolve the issues in foreign countries (Ghauri, 2021).
The company may increase its own privacy as well as security regarding digital access to protect its data in the foreign country and the strong privacy policies of the UK may provide better protection.
Section 2: Evaluation of challenges and competition to UK to trade with APEC
Discussion of trade relation between UK and APEC
The United Kingdom (UK) is a developed economy which has a vast trade relation with the other economies of the world where Asia-Pacific Economic Cooperation (APEC) is a regional trading bloc which is a group of 21 countries who are aiming to encourage a growing economy through economic liberalization. APEC is coordinating the cross border tariffs, economic and technical cooperation, exchange of information on trade and investment with a simplified regulatory and administrative process to regularize a free trade area with supporting the integration of services.
On a specific note, the UK is eager to join the APEC to boost its export and import through a comprehensive and progressive agreement for trans-pacific partnership (TPP) with a market of around 500 million people (Refer to Appendix-2). The market is the fastest growing market which has a positive potential for British products and services to explore and earn huge revenue through low cost tariffs and economic collaboration. It is also beneficial for the British manufacturers to import the raw materials at a cheap price as well as export products to gain the positive market share more confidently.
On the other hand, the inclusive business in APEC has helped the governments to facilitate the job creation and delivery of essential services for the poor, low-income population of south east and South American nations. Recently the UK has left the European Union’s (EU) where most of the UK business market is concentrated on the trade relation with APEC countries of the USA, China, Japan, Australia, and New Zealand as the big trading partners of the UK besides the EU countries.
The industries of the UK such as automobile and breweries have a wide acceptability in this market which has influenced the free trade agreements with APEC to connect the market and gain a positive advantage in market economy with boosting the revenue generation more appropriately.
The cooperation with the APEC countries will be advantageous for the UK companies to shift focus from the EU to APEC where the member countries are influenced by the open trade and integration of services to boost the economic operation comprehensively to achieve economic prosperity. The UK is importing goods from the APEC nation China will account 13.4% for more than £10 billion in one quarter of 2020 and create a deficit in trade with the UK (Statistics.).
The export of Services to the US government accounted for 27.7% which is around £39 billion along with 15.5% exports of finished product in the first half of the 2020 largely driven by professional and management consulting services. The UK trade is quite widely related with APEC countries where Japan accounts for more than half of import in road vehicles from UK as well as the UK imports automobiles from Japan where Japan is the UK’s largest non EU importer.
Australia and New Zealand and Canada are also the member countries of APEC who have a brief trade relation with the UK in terms export and import of electrical and mechanical machinery along with meat and meat products (Gharleghi, 2020). Australia imports more than 15% mechanical machinery from the UK along with lead and mining industry related business transactions.
However New Zealand is one of the big trading partners of the UK which accounted for around 4.8% meat and meat preparation imports and became the 7th largest meat import partner of the UK (Refer to Appendix-3). it also be noted that, the business collaboration also optimize the cooperation between the countries with interference of digital technology which enlarged the participation with the APEC countries through openness, growth, productivity and plurilateral agreements according to the regulations of world trade organization (WTO) (Pomfret, 2021).
Discussion of Challenges and competition in trade relation with UK and APEC specific to industries
| Challenges and competition in trade | Impact on industries and companies |
| Voluntarism/non binding approach | Countries of APEC trade bloc are often divided on tariff rates and business negotiations without a clear format with a lack of supra national institutional approach |
| Open regionalism | APEC country may discriminate the other member and non member countries which often influenced by political obstacles |
| BoGor Targets | It is often cited as ineffective and time consuming which set target for the countries for free trade liberalization with industrial set up without any penalty for non conformity with the motto of free flow of goods and services across the cross borders |
| Presence of NAFTA and ASEAN | The presence of North American free trade Area(NAFTA) and Association of Southeast Asian Nations (ASEAN) are diverging the APEC free trade liberalization where those group of nation often engage in themselves where it is not a uniquely defined tariff rate for all the member and non member countries and often controlled by the concerns of ASEAN countries |
| Cultural diversity | The cultural diversity is among one of the disadvantages for the UK to cordially reflect the business transaction with the APEC countries where regional diversity is greater than any other regions and again with different rates and negotiation processes are taken into consideration without a free and fair trade agreement having regional competitors in the market operation |
Table1: Challenges and competition in trade relation with the APEC trade bloc
(Source: Self-created)
It needs to be mentioned that, there are several drawbacks of the APEC trade bloc which are affecting the business transaction of UK industries such as manufacturing, automobile, machinery and other goods and services with fixed rate and agreements with the trade bloc. It is not organized as WTO to formulate a uniform framework to define the trade barriers more accurately to do business transitions accordingly with market correspondence for UK companies where the exports and imports are relied on bi-lateral ties with the countries not as APEC confirmation.
The reduction in trade barriers does not dismantle the existing trade barriers of the country to reflect on the open trade liberalization with association of Information Technology Agreements (ITA) to validates the global sector liberalization initiatives to appear for some test for the products and services as consumer electronics, automobiles and industrial chemicals which might be not generalized for global economies to adhere according the self propelled negotiations by the executive members of APEC.
On the contrary, the principle of concentrated unilateralism which is the primary mechanism for liberalization where proposals are not formerly negotiated and member countries are formulating the offer of agreement on annual summit for trade and investment liberalization measures known as Individual Action Plan (NLA) and contradicts with the members disagreements for lowering trade barriers.
The existence of non- tariff barriers which are aiming to favour the domestic business is quite affecting through irregular competition for the business objectives of the UK companies to make noteworthy business through APEC trade bloc. The business approach is found inappropriate by the UK companies where it has to make bi-lateral agreement with the specific member country of APEC which lacks the enough digital trade to monitor the cross border data flow for business transactions ensuring the privacy and security (Fefer, 2019).
Section 3: Analysis the steps and initiatives need to be taken by UK to overcome the issues
The trade relations of UK companies with the APEC countries need better dialogue, communication through brief engagement for bargaining the negotiations to get greater access to the APEC markets with availability of free trade areas (Szkudlarek, 2020).
More than that, UK companies need to comply with the law of specific countries on standard of quality to get access to the market with a high degree of recognition. It also needs to incorporate digitization as a tool to monitor and track the flow of goods and services in cross border transactions. The erosion of preferences through the status of Most Favoured Nation (MFN) needs to be revived to integrate according to the market preference of the regional countries to deliver the business efficiency most fluently.
Usually UK companies have to harness the local market expertise to accommodate the pros and cons of the local market to withstand the competition from the domestic player more actively. Other than that, developing partnership with domestic players in the region is collaboratively preferred for business growth in the APEC trade bloc while protecting the interests of both countries.
It needs to explore different lines of products and services for business transactions which are not subjected to high tariffs and sanctions to make the profit with the opportunities to market dealings. The UK companies have to make high offerings during the business negotiation with the APEC countries to make a grand entry in the market with unique product and service to gain the market confidence shortly and regularize the business relation with the APEC countries.
The optimization 0f supply chain logistics is the broad area for business transactions across the borders where UK companies with integrated supply chains may prosper through cost effectiveness in the line of free trade agreements or open market access (McWilliam, 2020). The compliance with the international law also positively contributes the UK companies of automobile, machinery, food products and breweries to continue the successful endeavour in the APEC regions.
The use of local resources in the regional market will enable the UK companies to reduce the cost of tariffs which will eventually help the companies to effectively deliver the business proficiency in the market operation to maintain the cash flow along with the competitiveness.
The UK government’s commitment as well as industrial strategy will remain fruitful for the UK companies to engage with the APEC countries by formulating their own decisions on economic policy by separating from the EU and independently taking decisions. It might influence the effectiveness of the UK companies to prosper along with export and imports of products and services to place it in the economic heights.
It also dedicatedly defines the strategy to connect the international buyer for generating business friendly approaches to pave the way for economic liberalization to deal with the developing economies of the APEC regions. The government-to-government commercial models are also beneficial to reduce the burden of tariff and non tariff barriers in APEC countries which will make a great representation of the companies to effectively conduct the business transactions and make profit earnestly.
Further UK companies may adopt the business strategy to set up subsidiary organizations in the APEC region as per the training availability with developing nations preferred with the consecutive trading relationship. It may help the companies to avoid the competition in the country with the domestic players to coordinate the market operation and grow the market share through domestic organization.
It may be suggested that the Bogor target taken in the APEC summit now might be taken into consideration as the time frame is exhausted to make industrial set up for liberalizing the economy with free trade policy. The UK government and the business executives may lobby about the preferred commitment of APEC to withdraw the trade restriction through multilateral talks with the member countries and influence the reduction of existing barriers to propagate the business relation across the APEC region with economic feasibility and market opportunity to foster the growth in export and import.
It also helps the APEC countries to set ties with UK and other countries to enhance the business operation across the globe and make way for free flow of goods, services, labour, information and other associated links to actualize the business potential and grow with public acceptance. Apart from that, UK companies may establish manufacturing units in the APEC country and utilize the local resources as raw materials for the finished goods will effectively make the business transaction positive with continuing the cash flow for the company.
Moreover, UK companies have to pre evaluate the barriers of trade more comprehensively with the help of local associates, partners and consultants to minimize the barriers and develop an authentic market strategy integrating the logistics, marketing and distribution development plan (Cory, 2021).
The presence of NAFTA and the ASEAN sets different laws regarding business, which create conflict among the countries as the tariff rate is not unique and it amplifies the issues for the UK.
Tariffs are the tools through which the country protects the domestic industries from international competition; however, in this case the country also determines the rate by assessing the market and with the help of the customs department to optimize the issue.
The company may interfere in setting the tariff as the country may save new launches of a foreign company as well as maintain high employment rate, avoid aggressive trade, maintain the safety of consumers and so on. The UK government may ban some products as well as minimize the rate of the tariff as to balance the export as well as import for the country and to balance the cost price of the product of the foreign business.
The tariff regime is important for international business and Global Production Network (GPN) and Global Value Chains (GVN) framework helps to set the tariff in a unique way (Curran, 2019).
Cultural diversity is another problem which affects the business with APEC countries and in this case the country may provide diversified work culture to mitigate the issue in the future. Verbal communication is a key part of the cultural difference and the country may set a language as global communication to enhance the way for foreign business.
The country may also implement stringent policies to avoid the cultural differences in case of foreign business for the APEC countries. The country may set a guideline for the organizations to provide organizational training to curb the issue regarding the diverse work culture which increases opportunities for international business.
The country may promote open communication which offers the employees from foreign countries to address the problems, resentment, misunderstandings regarding workplace which helps the country to combat the issues. The country may implement guidelines to give common language training for all the companies to boost the interaction process among the employees from different countries. A new cultural training programme which combines meta-cognitive, behaviour, motivational aspects as well as balances traditional and experimental methods may help the people to develop better cultural intelligence (Azevedo, 2019).
Conclusion
From the above discussion it may be concluded that the political factor of a country immensely influences the foreign business as the stable government ensures a progress in business of a foreign country. The political relations with other countries are a major factor for the business and the UK has good relationships with other countries which attracts the foreign investors to invest in the business.
The stable government also sets a good tax as well as reduces the labor crisis which effectively enhances financial support for the foreign business in the UK. Brexit creates a real challenge for the government to offer scope for foreign business; however, the government overcomes the challenges through effective policies.
The government takes various approaches such as achieving better GDP growth, implementing flexible trade laws, several kinds of websites for information, and various modification export rules to increase the scope for expansion of business. On the other hand, there are some issues which are creating severe challenges for foreign business such as the unachievable targets regarding climate change, insecurity of data due to cyber attacks, high demand of labourers. International Business Strategy is an effective process which may help the company to overcome the challenges in the UK as well as implementation of digital technologies also aids in the same process.
The UK is also maintaining a vast relationship with other countries where APEC is a regional trading bloc to boost the growing economy and it regulates the business relationships through economical as well as technical co-operations. The inclusive business under the APEC makes the business procedure more convenient in terms of employment, supply chain as well as logistics, trade agreements and many more.
In recent days China has tried to restore its aim as well as expand its sphere of influence in APEC in terms of politically, socially, and economically on the international market after the pandemic (Vu, 2021). There are various challenges regarding the UK and the APEC in case of foreign operations in terms of international laws regarding business, tariffs, and cultural differences and so on.
There are some recommendations such as setting policies regarding diverse work culture, setting unique tariffs for the county to enhance the scope for the foreign business to expand in the country. The UK is already an economically developed nation and some changes in the existing rules and regulations may ensure the scope for new foreign entries in the country in future.
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