Political Environment Uk

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Negatives to the sociocultural environment in the UK include the costs associated with labor. These costs have increased through the first quarter of 2014, which means that utilization of the English workforce by a business would result in higher costs. Additionally, trade unions represent almost 6 million workers in the UK. From an American business standpoint, the fact that workers are entitled to four weeks of paid vacation (if the employee works five days a week) and 9 months of maternity leave is a huge consideration because of the related costs. Expanding upon the political landscape assessment, there are a large number of immigrants whose living standards are below average and there are some slight accusations of terrorism to minority groups.

When conducting business in England, business should be careful when it comes to the issues that have occurred between ethnic groups. There have been some accusations of terrorism, which can lead to political, economic, and cultural downturns. The culture is slightly different from the culture of the United States, including such measures as power distance. However, there are many similarities like high individualism and masculinity, which would lead us to believe that business wouldn’t be radically different from a cultural standpoint.

Opportunity/Recommendation

Taking the viewpoint of an American company looking to venture abroad, we believe that the services industry is the best sector of the English economy to enter. This is because services contribute over 70% to the country’s economy, leading to the conclusion that this is an important industry and there is great demand within it. Additionally, as reported by BBC News, employment levels as of June 2014 have seen record growth. It is also reported that this industry is driving about 75% of the economic growth within the country (BBC News, 2014). Specifically, we would enter the financial services industry. According to the UKTI Inward Investment Report for 2012 – 2013, financial services ranked second in terms of the top sectors by number of investment projects in the UK. The report goes on to state that the UK is home to the largest financial center in Europe, with London specifically being named the best location in the world. Due to these positive aspects of the landscape of the financial industry, we believe there is a very strong demand for financial services on a global scale and that England is the right location for this business venture. We would recommend setting up the business within England, as compared to exporting our financial services from America. This is because England is the hub of international financial services and we want to be in the middle of the action, leading to a greater demand and success of our business. This decision comes with a low level of risk because the political, economic, and sociocultural environments of the UK are fairly stable and there is no “red tape” or excessive considerations to worry about. As mentioned by the UKTI, the UK offers businesses in the financial services industry many positive influencers for reasons to operate in the country. Among these include the high ease of doing business in the country, the enticing corporate tax structure, the common use of the English language and English law in regards to business operations, and the UK’s participation in the European Single Market. All of these reasons, as specifically stated by Alderman Roger Gifford, The Rt. Hon. The Lord Mayor of the City of London, lead us to believe that we could take our knowledge from the United States and transfer it to a financial services company in England. As can be seen by the country’s annual GDP growth rate, the UK continues to recover from the recent global economic recession. While we do understand the risk involved with entering a foreign country is turbulent times, we also believe there is an opportunity to be sought. As the economy continues to return to pre-recession levels, business will also continue to return to prosperous levels. We want to take advantage of this and strategically place ourselves in the financial services industry. While we will not be recognizing any kind of first-mover advantages, we may beat out other competitors who are waiting to see how the economy progresses. Another advantage to entering the English market now is the ability to capitalize on the strong growing FDI market in the UK. As the UKTI expresses, the UK is open to foreign direct investment in multiple industries because this type of investment is seen as extremely beneficial for the UK economy. The country is extremely open to this type of business, which classifies it as a free market. Due to all of these advantages, we believe there is demand to be found both in England, the UK, and the world and England offers us a stable and growing market to do so. With this being said, we would enter the financial services industry via a wholly-owned subsidiary. As previously discussed, there are very few risks to taking our domestic financial services abroad to England. We believe that our company will be the most successful with this setup because the UK welcomes foreign investment of this kind.

Reference

BBC News. (July 3, 2014). UK Service Sector Growth Remains Strong. Retrieved October 10, 2014, from http://www.bbc.com/news/business-28140512.