Globalisation Creates More Opportunities for Uk Businesses Essay

Globalization is the growing trend towards worldwide markets in products, capital and labor, unrestricted by barriers. Globalization is not a new process but it has accelerated in recent years with the rapid growth of multinational companies and with the expansion of free trade with fewer quotas on imports. There are many key features of globalization, which has made an impact on business strategies such as; increased international trade, freer movement of workers between countries and finally the growth of multinational businesses in all countries. These create both potential opportunities but also limitations to businesses. In this essay I will discuss both sides. The expansion of national businesses has helped to raise productivity and efficiency in the UK economy. This provides a solid foundation and sustaining a comparative advantage in the areas where the UK still has some world class manufacturing businesses. Inward investment allows for the application of better manufacturing techniques, this could include Just-in-time supply strategies, which also speeds up the process of applying new technologies and spreading information. Honda use this system of JIT in the UK market, by doing this is creates more competitors within the business because you always order the right amount, which will keep your inventories low which therefore, means your costs will be lower. By Honda having this advantage it allows them to invest there saved money elsewhere in the business. Globalization creates threats for UK businesses because it has intensified the competition with in other businesses. Due to the rising import penetration and also the switch of manufacturing to find a lower-cost production centres in Eastern Europe and South Asia, this has caused a fall in output and therefore thousands of jobs are lost in the UK each year. By this happening it leads a rise in unemployment, which ultimately lead to worsening in the regional economic divide. An example of this is Dyson, they moved from a small village called Malmemsbery in the county of Wiltshire to South East Asia, by doing this is made 800 employees redundant and this has a massive effect on the local community. Globalization creates more opportunities than threats for UK business; due the current movement of globalization the terms of trade have moved into the UK favor. For example, the UK economy is moving further and further towards the high production, sale of high value manufacturing and high knowledge services which tend to command in global markets a price higher than the cost of importing cheaper manufactured goods e.g. the UK exports of high quality luxury cars such as Bentley and Rolls Royce which seem to command the market around the world the nit comes to luxury cars. Due to the manufactures high expertise it is very difficult for other car companies who want to enter the market such as Ford or Toyota as they do not have such as expertise in their business. This switch towards more expensive products as the main source of exports provides the UK with better living standards and most importantly the opportunity cost of exporting has moved in to the UK favor. Another threat in which globalization has caused is the threats to the UK service industries. O2 outsourced there call centers out to India as it has lower labor costs. This links back to my last point of making people redundant due to the outsourcing of a business abroad. Another negative claim is that O2 customers, the British public prefer to have English accents and easier to pronounce names this is not xenophobia on behalf of the British public but instead an ease of transaction as many customers report unsatisfactory calls. This also puts pressure on the businesses as they are taking a risk of moving abroad but also it may cause the business to drive down real pay levels in the UK serve sectors in order to compete more effectively. Over the last 12 years the UK has enjoyed a period of sustained economic growth, rising employment and improving living standards. The UK growth has been on a trend rate of 2.5% per annum, which is the one of the longest growth phases for nearly 100 years. This healthy trend is due to the rising levels of trade and investment spurred on by international competition. Finally a threat in which globalization can cause is the fear of the effect globalization will cause to the environment. The huge growth in competition in the UK has lead to a massive influx in pollution over the UK from sea freight transport to international air transport, this long distance travelling leads to pollution being spread all over the UK and the ever rising scale of household and industrial waste leads to an enormous external costs. The likes of Tesco and ASDA which freight and ship a variety of food products and cheap electrical goods has meant that the customer has benefited the most from cheaper costs however this has had a detrimental affect on the environment, with broccoli from Japan, oranges from Florida and lamb from New-Zealand this is meant that these companies are racking up huge amounts of travelling which leads to a massive increase of carbon footprint. To conclude this quote sums up my views of globalization in the UK: â€Å"The things that Britain has always had a comparative advantage in selling to the world — financial services, scientific research, education, entertainment and so on — are rising in price. Because of this shift in relative prices, the British people have effectively enjoyed a large pay increase without having to work any harder†