The Global Enterprise - Assignment Example

The Global Enterprise Introduction The economy of the United Kingdom is the fastest growing and the world’s most globalized economy. It is accounted to be the 5th largest economy in the world in terms of its Gross Domestic Product (GDP). The UK economy comprises of the economy of England, Wales, Scotland, and Northern Ireland (Phillip 2009, p. 21). The main contribution in the GDP is from the services sector which is around 78% of its total GDP. Most of the businesses and people live in big urban cities and are engaged in the services industry. It all started from the industrial revolution in the 18th century when UK first adopted the technological advancements and industrialized products. Ever since then, UK has been one of the most influencing and dominant economies in the world. In the recent years, UK has been marked as the ninth largest exporter of goods and services and fifth largest importer in the world. Some of the main industries which are operating in the UK currently are the financial services industries, aerospace industry, pharmaceutical industry, and the automotive industry. The major booster of the UK economy is the oil and gas production in the North Sea which is worth £250 billion. London is the largest hub for the economic activities in the UK and in fact, in the whole of Europe. It is known as the world’s biggest financial center and largest city economy (Floud and Paul, 2004, p. 154). Moreover, one of the major driving factors of the UK economy since 2010 is the tourism industry. The tourism industry is seeing a great boost since 2010 making it one of the major contributors of the GDP. It is said that by 2025, the tourism industry would account to £257 billion worth (Lickorish, 2012, p. 132). The tourism industry had always been powerful because of the cultural landscapes, heritage, architecture, and the Royal family being situated in London. The tourism industry brings great revenue and economic wealth into the country strengthening its economic conditions and GDP value. The tourism industry doesn’t only contribute to the GDP and bring foreign revenue to the country, but it also creates jobs and growth opportunities for businesses; this causes more production, more growth, and more employment which overall strengthens the economy. Tourism results in direct consumer spending which causes the economy to strengthen. UK is amongst the countries that are most desirable for tourists in the world (Lickorish, 2012, p. 54). This is a dominating factor in making the economy powerful in the recent years and in the coming years, as predicted. The UK has enjoyed the strength and power of their economy ever since the Industrial Revolution took place. Even though there have been many competitions and challenges in the economies from USA and Germany, in 2015, UK still holds a great powerful position in the world economy as a global strength. There was a global financial crisis that the UK also faced the consequences of in 2008. It faced a downfall for the first time but after 2013, it went on a recovery after which their economy is firmly expanding its territory. Resulting, the UK economy turned out to be 6% bigger and larger than what it was before the crisis. In the recent years since 2013, the UK has become the fastest expanding and flourishing economy in the G7 countries and it is still growing enormously. In 2009, their budget deficit was about 11% of their GDP, and recently it has been reduced to 3.9% (Phillip 2009, p. 21). The UK economy follows a laissez faire approach. The government involved in exercised by the HM treasury and is headed by the Department for Business, Innovation, and Skills, and Chancellor of the Exchequer. The central bank of England is the Bank of England; the currency used is the pound sterling which is one of the most valued currencies of the world and largest reserve currency as well (Sawyer, 2005, p. 65). In the 19th century, the British Empire and the economy had covered about one half of the world area. The UK had the most dominating merchant navy in this time, it was protected by the royal navy, and it developed a mercantile system through which they transported resources, capital, and people in order to generate great profits for the whole of its empire including the East India Company which operated in India and South East Asia. The development of the British Empire was a great boost to the economic conditions of the whole region especially the main region comprising of modern day UK as all the revenues were brought to the homeland. The boost was also driven by the powers of science and technological developments that took place during that time. These were the foundations of the UK economy (Broadberry et al, 2013, p. 27). However, the expansion of the economic power somehow led to the World War I and World War II after which the UK economy was moved and it paid a heavy price. Even after the war, the UK kept on paying the price of the rebuilding and for losing its allies. This was the time when the US established and came out as an economic challenge for the UK. Nevertheless US became the largest economic power of the world and are still a key influence on the world economy along with the UK (Phillip 2009, p. 21). The global business environment is enhancing and expanding day by day due to globalization. Globalization is seen as the biggest factor that impacts the global economy today as businesses are expanding globally and reaching the international markets and consumers. This global environment has to have an effect on all the economies of the world including the major ones such as the UK. Globalization would increase the integration and dependence of the economy where there will be more trade and the movement of labor and capital will also highly increase (Sassen, 2001, p375). Some of the effects are that on the comparative advantage as UK firms are mostly in the tertiary sector, specialized labor and goods can give them a comparative advantage which would result in lower prices for the end customers. The globalized business environment will also lead to a shift in sectors as in the UK the manufacturing industries are no longer competitive so it will give a chance to the developing countries to advantage from the low costs of labor (Horrell, 2000, p. 77). There will eventually be increased competition in the international markets and the domestic monopolies will now face international competition. This eventually results in higher productivity, more efficiency, and lower prices for the consumers; eventually resulting in the fast pace growth of the economy. For the UK, the global business environment can allow more migrants and workforce to enter the country and work to increase employment, production, and GDP (Ball and David, 2001, p. 32). It will also allow the UK to enhance their housing and public service policies to help these immigrants; and would also result in increased taxes. All in all, the global business environment would allow the UK economy to flourish and grow more in the international marker. It would allow the economy to regulate more exports and more imports for their consumers which would ease the market and enhance productivity (Horrell, 2000, p. 77). A negative aspect can be the recession and its impacts as the UK economy is vulnerable so any recession or financial crisis in other countries would likely impact the UK economy as well if it depends too much on the international markets (Berghahn, 2014, p. 512). In the beginning of 2015, there were 5.4 million businesses in the UK out of which 99.3% of the private sector businesses were small firms. This means that small and medium sized enterprises pose great importance in the UK economy and they hold a significant position in their production and employment sector especially. There were 15.6 million people who were employed in these firms with a turnover of £1.75 trillion which is a huge figure. Out of these businesses, 62% of them were based on sole proprietorships and around 30% of them were companies, and rest partnerships. In London, there was an increase of about 36% in the number of businesses from 2010 to 2015 (Fyfe, 2015). Most of these SMEs are operating in the construction sector, others in Professional, scientific and technical sectors, and in repair, wholesale, and retail trade sectors as well. Access to finance has become a major problem for these small and medium sized businesses in the UK. The government is looking into the problem to solve the issue to promote growth, benefits, and public value of these SMEs so that their contribution and results can continue to impact on the economy (Broadberry et al, 2013, p. 27). The government has a renewed focus on the financial challenges that these SMEs are facing and there is a great scope for more programs to help these businesses grow. An example of a fast growing SME in the UK is International Travel Connections. It has 87 staff members and has managed to become the leading independent luxury tour operators. The global business environment has affected the business greatly as it gained more recognition, more customers, and a competitive edge for its services in the market (Straus, 2009, p. 14). The department for Business, Innovation, and Skills is set up to examine the financial problems that these SMEs are facing and they will include additional finance available for them. The BIS and HM Treasury, the government mechanisms, are creating a body for decision making on the finances available to SMEs. However, much of the efforts has been paid off and there is guaranteed support promised by the government. This is a way the government would assist these businesses as they provide employment opportunities in the market to the new graduates and contribute to the high employment rate (Ashworth, 2005, p. 93). Conclusion Thus, the UK economy has seen a great amount of turning points, highs, and lows and continues to be a strong economy today. It has strong roots ever since the Industrial Revolution which allows it to be powerful to face any crisis such as the global financial crisis after which it prevailed. The political and social system of the country is suitable for this type of strong economy and the policies and regulations are easy for the private owners and workforce hence there is increased production resulting in higher GDP rates. The current economic condition of the UK can be said to be growing and flourishing and is expected to grow intensively in coming years. The rise of the small and medium sized businesses is a great advantage to the UK economic conditions and if these businesses continue to grow and expand in the global environment, it will be a huge advantage for the UK economy. References Ashworth, W. (2005). An economic history of England, 1870-1939. NY: Taylor & Francis. Ball, M. and David, S. (2001). An Economic History of London, 1800-1914. London: Routledge. Berghahn, V.R. (2014). American Big Business in Britain and Germany: A Comparative History of Two "Special Relationships" in the Twentieth Century. London: Princeton University Press. Broadberry, S.; Campbell, B. M. S.; Leeuwen, B. (2013). "When did Britain industrialise? The sectoral distribution of the labour force and labour productivity in Britain, 1381–1851". Explorations in Economic History 50 (1): 16–27 Floud, R. and Paul J. (2004). The Cambridge Economic History of Modern Britain. London: Wiley & Sons Fyfe N. 2015. The UK Economy, 2005-2015. UK: Anforme Horrell, S. (2000). "Living Standards in Britain 1900–2000: Womens Century". National Institute Economic Review 172 (1): 62–77 Lickorish, L. 2012. British Tourism. NY: Routledge Phillip I., "Reports of recovery much exaggerated, says CBI", The Guardian (UK), 15 June 2009, p. 21 Sassen, S. 2001. The Global City: New York, London: Princeton University Press. Sawyer M. 2005. The UK Economy. UK: Oxford University Press Straus J. 2009. The Role of Law and Ethics in the Globalized Economy. UK: Springer Read More