Impact of Global Forces on UK Business Organisations

By John Dudovskiy

Impact of Global Forces on UK Business Organisations Global forces impacting UK businesses include, but not limited to increasing scale of international trade, increasing levels of multiculturalism in UK organisations, increasing levels of inter-dependency of national economies and others.

The impact of global forces on UK Business Organisations can be effectively analysed using PESTEL analysis where the abbreviation stands for political, economical, social, technological, ecological, and legal factors impacting businesses. The following table contains the application of PESTEL analysis in relation to businesses operating in the UK.

Political

  • The level of global political stability
  • The level of bureaucracy in international affairs
  • The extent of freedom of media
  • Global trade control initiatives
  • Threat of international terrorism
  • Tariffs between the UK and other countries
  • Global copyright, patent and intellectual property disputes
Economical

  • Impacts of intensifying economic globalisation
  • Global economic crisis
  • Sock market fluctuations
  • Cost advantages possessed by emerging superpowers such as China, India etc.
  • Impact of The World Bank and The World Trade Organisation
  • Increasing importance of outsourcing and offshoring initiatives

 
Social

  • Changes in family values in global scale
  • Changes in family patterns (same-sex marriages, single parents etc.)
  • Increasing popularity of immigration and migration practices
  • Increasing mobility between social classes
  • Greater concern for minorities in society
 Technological

  • Level of global technological infrastructure
  • Industry-specific technological breakthroughs
  • Regular emergence of innovative communication technologies
  • Adoption of technology as competitive edge by increasing numbers of businesses
Ecological

  • Impacts of global warming tendencies
  • Increasing levels of air and pollution
  • Increasing level of sensitivity towards “green” problems among business stakeholders
  • Activities and initiatives of global environmental organisations

 

 Legal

  • Laws and regulations related to data protection
  • Global data protection rules and regulations
  • Increasing levels of “legal globalisation”
  • Changes in cross-country employment and health and safety laws

The case studies of Martin Lishman and Aquaco mentioned above represent a few cases where UK businesses benefit from international trade. However, in total UK businesses are becoming disadvantaged in international trade with the volume of imports to the UK constantly suppressing the levels of exports from the UK for a numbers of years (Jones and Evans, 2013). The main reasons for this tendency relate to competitive advantage possessed by importers to the UK such as China and India and this competitive advantage is primarily associated with low labour costs.

The impact of increasing level of multiculturalism in workforce as another global force on UK businesses in not straightforward. On one hand, multiculturalism can benefit businesses in the UK through offering fresh and varying perspectives to traditional business problems.

On the other hand, high levels of multiculturalism in the workplace can generate misunderstandings due to cross-cultural differences and this can have negative impact on the performance of UK businesses.

Due to the UK membership of the EU local businesses in the UK are directly impacted by EU policies and legislations. For example the EU Liberalisation Policy introduced in 1993 requires businesses in UK, as well as, in any other EU member country are faced with competition within the EU in equal terms with local businesses. In simple terms, while imported goods to the UK are usually subjected to customs tariffs by the government in order to protect local producers, no such tariffs can be imposed to goods that are being imported from within the EU.

Moreover, according to EU policies, businesses in the UK aiming to merge need to seek the approval of the EU if the combined turnover of businesses does exceed specific threshold of sales that has been specified by the EU.  Additional EU policies that impact businesses in the UK relate to cartels, intitrust, state aid and others.

References

Jones, P. & Evans, J. (2013) “Urban Regeneration in the UK: Boom, Bust and Recovery” SAGE Publications

Category: International Business
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