a2 business political and legal environment part 2 (bashar)

Political and Legal Environment:

Political and Legal Environment An insightful and ground breaking look into the relationship between business and the political and legal environment by Bashar Al Khaja ‘Simply brilliant, Bashar is a genius.’ – The Guardian ‘Marvellous, Fantastic, Stupendous.’ – The Times ‘A shoe in for the Nobel prize.’ – Mr Freeman

Slide 2:

Political decisions affecting trade and access to markets The 2 main political developments that have recently affected the UK’s trading relationship with the rest of the world are: The growth of the EU (a political and economic community of 27 states, accounting for 30 percent of world GDP). The movement towards greater freedom of trade. (Single Market between all EU member states where there should be no barriers or obstacles in the movement of goods, capital, people or services.

Slide 3:

Future Developments Pros of the UK adopting the Euro: It would reduce transaction costs when buying and selling in the Euro zone (no need to spend money exchanging currencies). Reduced uncertainty when buying or selling. (No exchange rate movement). Transparent prices. Increased trade and capital movements as money transfers will be easier. Cons of the UK adopting the Euro: Losing bank of England independence means interest rates may be set too high or low for UK business conditions. Transparent prices – UK firms must now be competitive with the best firms and cant ‘hide behind’ a pricing system. The pound: euro rate at which the UK joins the Euro zone. The one off conversion costs of accounting systems, tills, display materials etc. OR

Slide 4:

Pros for UK of further EU expansion (e.g. nations like Turkey): Huge new markets accessible to UK firms without any barriers. Potential for easier takeovers of businesses in these economies. Easier and cheaper to outsource operations to low wage nations, Immigration from abroad will boost UK labour force and increase supply of labour for some skills. Cons for UK of further EU expansion (e.g. nations like Turkey): Low cost imports from new member countries will drive UK suppliers out of business. Decision making and law making will be slowed down by the higher number of members. Many new member states have low GDP per head so they will contribute little, however they will be eligible to high payouts. Eastern Europeans may face political instability which is never good news for the EU’s economy.

Slide 5:

Homework Task ‘ Further expansion of the EU represents a great opportunity for large UK companies wishing to become global players.’ Discuss why this may or may not be the case. (30 marks)