There are various global factors that have a great impact on the UK business organizations. Companies doing trade international should understand the global factors which they could directly affect the business processing. Trading in the international market helps the business to provide opportunities to the business to enter into the new market. Dealing in the global market helps in enhancing the economy of the country and developing positive relationship with other countries. New market opportunities can be developed by trading in the global market. Dealing in the global market helps in enhancing the availability of the resources which creates the opportunity to trade in various markets and grow.
Global factors ensure that company could grow globally which helps in growing the business and building brand image in the market. Companies could attain competitive advantage by indulging in the global market. Global factors also include protectionism which is the policy developed to support fair trade between the countries which are indulged in the export and import practices. Global factors include World Trade Organization which regulates the international trade and ensures that fair trade in the international market between the countries.
? Trading blocs throughout the world:
A trading bloc is an intergovernmental agreement or a trade pact in which the countries who have agreed to participate either minimize the trade barriers or completely eliminate them to have a smooth trade. UK is a member of the European Union (EU) which is called a free-trade association where countries who are a part of it, discuss the agreement with the EU.
? UK membership of EU:
UK joined the European Union in 1992, and became one of the 12 founding members, after previously joining the European Economic Community (EEC) in 1976. It has become the most powerful trading bloc in the world and has a GDP exceeding that of the United States. It is also the largest explorer and the second largest importer. In 2008, it is estimated that the GDP of the EU was accounted for over 22 % in terms of the world’s economic output.
? Enlargement of EU:
Enlargement of EU is also known as the process of expanding the European Union by welcoming new states. EU started with just six states and more famously known as the “Inner Six” in 1952. Since then, it has grown in stature and expanded to over 27 members with most recently being Bulgaria and Romania. For 2013, Croatia is scheduled to be appointed.
? Importance of Global Market:
Importance of global market and to maintain is very significant to UK because for over decades, UK has been trading with USA, Germany, the Netherlands, France and the Republic of Ireland. Across most of the sectors analyzed, the 11 key markets accounted for at least a third of total UK exports. Within this group of markets and sectors, between 2002 and 2007, the UK had diversified its exports away from its historically more important trading partners such as the USA, Germany and Japan towards the eight emerging markets.
? Emerging Markets:
Among the high growth markets there are those that are at a more advanced stage in their development, such as Korea, Singapore, Taiwan and Turkey, and those that are growing faster from a lower level of GDP per capita, such as China, India, Indonesia and Vietnam. Middle Eastern high growth markets (Qatar, Saudi Arabia and the UAE) already have relatively high levels of GDP per capita. There are also several countries emerging as a new wave of high growth markets; Bangladesh, Egypt, Nigeria and the Philippines are expected to record average growth rates above 7 per cent per annum between now and 2050, creating more long-term opportunities.
? Change in climatic conditions:
Change in the climatic conditions of the countries is affect the production, supply and sale of goods and services. Demand and consumption of a good is depending on the prevailing climatic conditions. Companies do expenditure on new technologies to bring good products for consumers. Climate change can reduce the demand of those goods and thereafter companies will incur loss.
? Change in International trade duties:
All the import and export of goods and services between countries are done with import and export duties. When one company purchase any raw material or good from other country than it has to pay import duty and when company sale its good and provide services to other country then it has to pay export duty. If import and export duties are increases than prices of the product will rises and it reduces trade between countries and companies will lose its customers.
? Global Financial Stability:
Companies requires finance whenever they go for doing business in other country. For fulfilling their demand companies use international financial institutions and regional trade agreements to decrease tariff rates. If financial conditions of country are stable and good, companies would be encouraging to invest their money for developing the business. In unstable financial conditions are risky for doing business.
? Impact of government Policies:
government policies of countries have major effect on their balance in trade. Government policies regarding subsidization of exports, restriction on imports etc. Effects the international trade and that’s why, many companies prefer to supply their product in BRIC nation because policies of BRIC members are liberal.