1.Introduction: The purpose of the followingreport is to examine and outline the interconnecting factors of the globalbusiness environment, with direct reference to a chosen country, which in thiscase is The United Kingdom. These interconnecting factors are as follows;Financial Direct investment involved with The United Kingdom, current countrycontext (key industries, demographic data and environmental conditions that mayaffect the United Kingdom’s international business affairs). As well as this,the report will outline the United Kingdom’s economic, political and legalposition in today’s international climate. To maintain relevancy, I will beusing data primarily from the last 5 years However in some cases I will berecalling data from the last a 10years. 2.
Current country context: 3i. ii. Political, Economic and Legal systems. 3i. The Political System: There are two predominant formsof political system. These being, a democracy and a totalitarian government. Ademocracy is a group of electorates whom govern a country or state, which arenormally voted in by the public.
In contrast, a Totalitarian regime is basedupon a singular vision of one person or group which have a total control. Todayhowever, the Democracy approach is the preferred method of Governance due toits fair approach to swearing in power, as it is the populist opinion of thepeople. This in comparison to a totalitarian regime which is only used in severalrepressed countries like North Korea. A totalitarian government is done by,however, not limited to; media censorship, fear, police or army enforcement andpropaganda. (Hill, 2014) 3ii. The Political System in The United Kingdom: The United Kingdom’s Politicalsystem is based off a parliamentary representative democracy with a constitutionalmonarch.
There is a monarch who’s head of state, and a Prime Minister Whom Ishead of government. The People vote in members of parliament via an election tobe their representatives.(LawTeacher, 2013) In the United Kingdom, we follow rulesset by our government but also by the European Union, however, as of 2016 we nolonger are part of the European union, therefore, we can assume there will bemajor Parliamentary changes, as the United Kingdom gain more independence fromEurope in the next 5 years. 3i.
Economic: There are three Economic models: TheMarket economy, Command economy and Mixed economy. A market economy is anindividualist model of the economic system where the market is judged upon thetrends of the consumer, this determines the quantities, quality of products or theservices’ a country needs. This type of economy promotes fair trade and ahealthy competition between private companies which allows for innovation in acountries Service and products.
if we compare it to a Command Economy which isa government owned economy, where they determine the level of quality andquantity of service or product a country is given. Due to the Economy beingState ran, it prevents private corporations from breaking into the market, thisis because there is no incentive to compete. This is down to the efficiency ofthe company, if the state can do the service at half the cost, there is no needfor competition.
3ii. The Economic system in The United Kingdom the United Kingdom is known as a Mixed Economy, this is becausethey give private sector business’ a free market, therefore allowing the buyingand usage trends of the Great British population to determine the supply andquality of goods and services. As mentioned earlier, the United Kingdom is amixed economy, this is because it has a command economy on services such asDefence, Welfare, and education and as a result the population pays tax to payfor said services. The British Government also pays for public, freeHealthcare, known as the national health service, accredited for being one ofthe best health service’ in the world. (Amandeo, 2016) During theconservative parties’ tenure lead by Margaret Thatcher (1975-1990), many of TheUnited Kingdom’s public services were privatized, examples of this are; Britishrailway and other means of public transport, energy suppliers and telecommunications. 3i.
Legal:(Hill, 2014, pp. 46-47) Finally, we aregoing to outline the Legal system which regulates and governs the country orterritory we live in. Laws are a set of Maxims, that a state enforces to createorder and perimeters around business, criminal and societal scenarios. Theretwo main types of legal system. There are many variations of legal systems,today we shall be outlining three main systems. Common law is the system based offtradition, social precedence and customs.
Societal norms are what causes theselaws to have such Precedence. Civil law is a code based legal system, whichfollow detailed and analytical rules, specific to the scenario. Finally, thereis theocratic law, which is based off Religious teachings, Islamic law cannotbe changed for instance, therefore it is integrated into certain Muslim countrieslegal systems, like Pakistan. 3ii. Legal system in The United Kingdom: (Rab, 2017) The United Kingdom doesn’thave one set of governing rules (otherwise known as a constitution) it iscompounded through statute law, Case law and international treaties such as thoseformed in the United nations and in the European Union. The United Kingdom isthe Oldest Constitutional Monarchy in existence followed by Belgium, Monaco andSpain. (LawTeacher, 2013) However, in 2016 the United Kingdom held a European UnionReferendum, this meant that the public could vote to see whether the UnitedKingdom would remain, or leave the European Union. This therefore means, thatour political system is in time of turmoil, the uncertainty of how it willaffect everyone is still to be determined.
Many believe it will allow the UnitedKingdom to great laws that do not comply with the European Union, however, ifwe do not comply with European laws, we cannot trade with them and this willpotentially affect our economic growth. 4i. Economic growth, what it drives and how economic growth ismeasured: (The Business Dictionary, 2015) “Increase in acountry’s productive capacity, as measured by comparing gross national product(GNP) in a year with the GNP in the previous year”. Robert Solow, known as oneof the pioneers of the Neoclassical approach to economic growth and the founderof the Solow economic growth model, stated that there were variable factorsthat drive economic growth.
These include; a capital and Labour input, as wellas innovation and technological advances. (Solow, 1956) Economic Growth Is measured through many factors, forexample: Gross domestic product 4ii. Economic growth in the United Kingdom in the last five years. 5i. Foreign direct investment: Foreign direct investment is atransaction of financial resources, from a Home Country Business to a hostcountry where said business wishes to set up, this is so that the company fromthe home company can assume majority management power. There are two predominanttypes of Foreign direct investment, the first being greenfield FDI, this iswhere the company builds new facilities and provides jobs such as contractorstherefore contributing to the local economy further than merely their companies’main economic contribution, they also have total control of the business. The second being Brownfield FDI, this iswhere a company acquires a facility in the host country and gain majority ortotal control over the business.
5ii. Foreign Direct Investment in The United Kingdom: