UK is a small country. The domestic market is small.

UK can improve its economy only through increasing it market, through international trade. The flourishing economy of UK during colonial rule was due to its large market; UK procured raw materials at cheap rates from colonies and sold finished products in colonies. Now the share of UK in international trade is at rock bottom. It has lost its markets. Once popular brands like Phillips, BSA etc are not wanted in market and they have been replaced by cheap goods from Japan, China etc.UK has no future unless it reestablish its brands, recapture its markets through international trade.

The buying and selling of goods and services across national borders is known as international trade. International trade is the backbone of our modern, commercial world, as producers in various nations try to profit from an expanded market, rather than be limited to selling within their own borders. There are many reasons that trade across national borders occurs, including lower production costs in one region versus another, specialized industries, lack or surplus of natural resources and consumer tastes. One of the most controversial components of international trade today is the lower production costs of developing nations. There is currently a great deal of concern over jobs being taken away from the United States, member countries of the European Union and other developed nations as countries such as China, Korea, India, Indonesia and others produce goods and services at much lower costs. Both the United States and the European Union have imposed severe restrictions on imports from Asian nations to try to stem this tide. Clearly, a company that can pay its workers the equivalent of dollars a day, as compared to dollars an hour, has a distinct selling advantage. Nevertheless, American and European consumers are only too happy to lower their costs of living by taking advantage of cheaper, imported goods. Even though many consumers prefer to buy less expensive goods, some international trade is fostered by a specialized industry that has developed due to national talent and/or tradition. Swiss watches, for example, will never be price-competitive with mass produced watches from Asia. Regardless, there is a strong market among certain consumer groups for the quality, endurance and even snob appeal that owning a Rolex, Patek-Philippe or Audemars Piguet offers. German cutlery, English bone China, Scottish wool, fine French silks such as Hermes and other such products always find their way onto the international trade scene because consumers in many parts of the world are willing to foster the importation of these goods to satisfy their concept that certain countries are the best at making certain goods. One of the biggest components of international trade, both in terms of volume and value of goods is oil. Total net oil imports in 2005 are over 26 million barrels per day (U.S. Energy Information Administration figures) (Note: Imports include crude oil, natural gas liquids, and refined products.) At a recent average of $50 per barrel, that translates to $1billion, three hundred million, PER DAY. The natural resources of a handful of nations, most notably the nations of OPEC, the Organization of Petroleum Exporting Countries, are swept onto the international trade scene in staggering numbers each day, and consumer

nations continue to absorb this flow. Other natural resources contribute to the movement of international trade, but none to the extent of the oil trade. Diamonds from Africa, both for industrial and jewelry use, wheat and other agricultural products from the United States and Australia, coal and steel from Canada and Russia, all flow across borders from these nations that have the natural resources to the nations that lack them. Despite complaints about trade imbalances, effects on domestic economies, currency upheavals, and loss of jobs, the reality of goods and services continually crossing borders will not go away. International trade will continue to be the engine that runs most nations.

Businesses are affected by an external environment as much as they are affected by the competitors. Global factors influencing business are legal, political, social, technological and economic. Understanding of these factors is important while developing a business strategy. a. Social factors - These factors are related to changes in social structures. These factors provide insights into behaviour, tastes, and lifestyles patterns of a population. Buying patterns are greatly influenced by the changes in the structure of the population, and in consumer lifestyles. Age, gender, etc all determine the buying patterns and understanding of such changes is critical for developing strategies which are in line with the market situations. In a global environment it is important that business strategies are designed keeping in mind the social and cultural differences that vary from country to country. Consumer religion, language, lifestyle patterns are all important information for successful business management. b. Legal factors - These factors that influence business strategies are related to changes in government laws and regulations. For a successful business operation it is important that the businesses consider the legal issues involved in a particular situation and should have the capability to anticipate ways in which changes in laws will affect the way they must behave. Laws keep changing over a period of time. From the point of view of business it is important that they are aware of these changes in the areas of consumer protection legislation, environmental legislation, health & safety and employment law, etc. c. Economic factors - These factors involve changes in the global economy. A rise in living standards would ultimately imply an increase in demand for products thereby, providing greater opportunities for businesses to make profits. An economy witnesses fluctuations in economic activities. This would imply that in case of a rise in economic activity the demand of the product will increase and hence the price will increase. In case of reduction in demand the prices will go down. Business strategies should be developed keeping in mind these fluctuations. Other economic changes that affect business include changes in the interest rate, wage rates, and the rate of inflation. Incase of low interest rates and increase in demand Businesses will be encouraged to expand and take risks. Therefore, business strategies should have room for such fluctuations.

d. Political factors - This refers to the changes in government and government policies. Political factors greatly influence the operation of business. This has gained significant importance off late. For example: companies operating in the European Union have to adopt directives and regulations created by the EU. The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. Business must consider the stability of the political environment, governments policy on the economy etc e. Technological factors - These factors greatly influence business strategies as they provide opportunities for businesses to adopt new innovations, and inventions. This helps the business to reduce costs and develop new products. With the advent of modern communication technologies, technological factors have gained great impetus in the business arena. . Huge volumes of information can be securely shared by means of databases thereby enabling vast cost reductions, and improvements in service. Organisations need to consider the latest relevant technological advancements for their business and to stay competitive. Technology helps business to gain competitive advantage, and is a major driver of globalization. While designing the business strategies firms must consider if use of technology will allow the firm to manufacture products and services at a lower cost. Firms can select new modes of distributions with the help of technology. It has become easier for companies to communicate with their customer in any part of the world.

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Business is affected by the external environment as it is by the competitors. It is important that firms are aware of the changes in the external environment to be successful. Understanding the influence of Macroeconomic factors helps the firms to determine the current market conditions and how beneficial will they be for the success of their business. Various macroeconomic factors that influence the business are: a. Economic Growth. Economic activities refer to the level of buying and selling activities happening in an economy over a time period. It is a highly complex activity and keeping accurate track of it is beyond comprehension. Economic activity is not constant and can change rapidly, thereby affecting the business. Economic activity changes could happen due to the following reasons:

Changes in income levels Future prospects of individuals. Future of the economy The level of economic activity in the world as a whole Political activities around the world Natural disasters - like hurricanes, earthquakes, or flood etc Changes in prices of raw materials - oil, metals, fuel, energy and so on

Changes in world stock markets

The level of economic activity is usually measured by GDP (Gross Domestic product). It refers to the total amount of goods and services a country produces. Businesses are greatly influenced by the economic activities. When GDP rate falls or slows down, there will be a fall in demand for good or services offered by businesses. As a result, businesses will witness a fall in revenues and profit margins. To curb this business will have to reduce their prices to increase the sales. This could further lead to increase in unemployment. On the other hand when there is an increase in GDP, the demand for products will automatically increase and hence the prices will go up. To cope with the increase in demand business will need to employ new people resulting in reduction in Unemployment rates. b. Inflation: With the increase in Inflation there will be an increase in the level of prices of products and services over a specific period of time. As a result the firms will have to incur higher costs of operations. This will be also due to the increase in wages of the employees. c. Interest Rates: Interest rates are the charges levied by the banks for lending a loan. Increase in Interest rates will directly influence the business as businesses borrow money from the banks from time to time. Increase in interest rates will lead to higher interest expense: Businesses will have to incur higher costs to repay the loan. Interest rate changes also affect customers who in turn will affect the business. In case of increase in interest rates the amount that individuals need to pay to borrow the money will increase thereby, reducing the demand for large products in the market. Further, if the interest rates decrease then the charges on a loan to buy larger items like cars, electrical equipments are likely to fall. As a result, a large number of people might be willing to buy such items. There will be a sudden increase in the demand for the products offered by such businesses.

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ironments Globalisation Internationalisation

Globalisation / Internationalisation
Looking For: Free Globalisation and Internationalisation Essay? There are differing perceptions on Globalisation and Internationalisation. Both the terms are often used interchangeably which is a big mistake.

A number of scholars insist that Globalisation and Internationalisation are two distinct terms. The European Unions definition of Globalisation suggests that Globalisation refers to the movement of goods, services, capital, technologies and people worldwide, as more and more countries around the world open up to wider contact with each other. In economic terms Globalisation can be defined as the increasing integration of economies across national borders through trade in goods and services, the migration of labour and the investment of capital. Widely, it also involves the spread of cultural influences and ease of communication across borders. Contrary to this, Internationalisation refers to the growing significance of trade, relations, alliances, etc. between or among nations. In Internationalisation, nation still remains the primary unit, even as relations among nations become increasingly important. In case of Globalisation previously national economies integrate together to form one global economy by means of free trade, free capital movement and ease of migration. Globalisation is an effective way of removing national boundaries for economic purposes. (Herman E. Daley, 1999) Internationalisation requires participatory involvement among the equivalent associates. However, it is not necessary that the partnership between the advanced and developing countries would ensure equal treatment to all involved. Whereas Globalisation creates homogeneous social, economical, and cultural processes.

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vironments Contraints

Business Constraints
While establishing a business there are various limitations that one needs to consider. Business Constraints are nothing but the non-functional requirements that need to be considered or else will have a significant impact on the smooth running of operations.

Typical businesses face the following constraints:

a. Operating Constraints: Business face a number of operating limitations such as:

1. The size of the market: there should clearly be a market for the product being offered. Absence of proper market conditions would lead to low sales. 2. Demand in the market: Thorough market research should be undertaken to anticipate the requirements of the customers. 3. The availability of resources: Supplier availability is very important for setting up operations. 4. Extent of competition: If the competition in the sector is highly stiff, then this could lead to major constraint on business success. Attempt should be made to limit the effect of competition in the market. 5. Investment requirements: Liquidity is very important for business success. Business need to have minimum funds to sustain themselves in dire situations. 6. Skilled labour: It has been acknowledged by businesses around the world that human resource is one of the most important resources of any organisation. Human resources help the organisations to gain competitive advantage as it is not easy to duplicate the capability of skilled labor. b. Legal Constraints Legal and regulatory constraints have significant impact on business success. Different governments have different regulations for setting up business operations in their respective countries. Business should not overlook the importance of such constraints. Various legal constraints that business faces are confidentiality and privacy of information, regulations and contracts that must apply when consumers and providers are located in different countries.