Business Environment - Essay Example

The UK has a rising level of its output being exported across borders and overseas and it is an open economy (Holden et al, 1995, p.44). It is at present number eight as the largest exporter in the world for goods and number two in being the largest exporter for services. It also has highest ratio of outward as well as inward investment to the GDP among any of the leading economies in the terms of capital flow. Inevitably the pattern as well as the balance of trade of goods and services changes over the time, this is reflection of movement in the relative prices of different traded goods as well as the shifts in the comparative advantage in various global markets.

Other factors that affect the trade pattern are decisions of foreign investment of the UK as well as overseas companies and economic development and growth of countries, regions etc. Major part of UK’s trade of goods and services is carried with the countries that are part of European Union. Since UK became a part of EEC in January, 1973 there has been long term shift in its trade with the European Union. The trade growth has been pushed by single market; this has led to trade diversion and the trade creation effects (Aylott, 2007, p.4) Trade of UK with the countries in North American region has declined, although the U.

S still is the largest single market for exported UK goods after EU (Great Britain Department for Business, Innovation and Skills, 2011) , comprising of 15% of the total exports of UK. Over the previous 15 years trade with the countries that are oil exporters has declined in its relative importance. In the year 1979 percentage of UK’s exports which went to these countries was 10%, which is now only a small percentage of a little over 3%. Apart from the exports the imports from this oil exporting countries has also fallen.

Another important change in UK’s pattern regarding trade in geographical sense is its rising share of trade with the fast growing and emerging economies in Asian region. These include Malaysia, China, South Korea, Thailand, Singapore and Taiwan. The rate of growth in Indian economy is also probable to help boosting exports to sub-continent in future years; this provides businesses in the UK to grab export opportunities in this region. Analyse the impact of global factors on UK business organisations International trade is crucial for the UK, like any other country.

If the UK did not participate in international trade, it would not be able to acquire many different materials that are needed to produce products that are used every day, especially concerning food industry. Cold climate in UK makes it rely on other countries with hotter climate to import fruits like mangoes and bananas which don’t grow domestically, similarly the countries with hot climate rely on countries like UK for vegetables like potatoes to import (in UK’s case, export). If international trade did not exist people in UK and everywhere else across the globe will have very limited choices, and business will not have enough markets to expand.

There are various global factors that would affect the business