Opportunities for Market Entry (ROME)

. Report on Opportunities for Market Entry (ROME) –  

The ROME builds upon the BEAR and asks students to assess the import and export prospects for MES-Sim regarding the target market.  The critical issue here is whether MES-Sim can effectively conduct international trade activities with the target market as a new base of operations?  Therefore, the ROME builds on the BEAR and requires a significant amount of analysis to develop recommendations.  Files: 

Business Environment Analysis Report – United Kingdom 0

Business Environment Analysis Report – United Kingdom

MES-Sim Corp – The M-Box

Business Environment Analysis Report – United Kingdom

United Kingdom Demographics

The UK is made of up four countries: England, Northern Ireland, Scotland and Wales. As of August 2019, the population in the UK has reached 66.4 million people with migration being the main driver to the population growth (GOV.UK. 2019, August). The population is ageing with the mean age of 39. The UK has 49.4% males and 50.6% females (GOV.UK. 2019, August). The population of UK is the third largest in Europe as of 2018 (Jaaskelainen, L. n.d.). There is a slowdown in the population growth rates. There are 12.8 million married couples, 3.4 million cohabitating couple families, 2.9 million lone parent families and there is an increase in the number of people living alone (GOV.UK. 2019, August). 13.4% of the people in England and Wales (7.5 million) were born outside of the UK. 80.5% of people in England and Wales said they were White British and 19.5% were ethnic minorities (GOV.UK. 2019, July 11).

GDP & GNP

Gross National Product in the United Kingdom increased to 544804 GBP Million in the second quarter of 2019 from 544473 GBP Million in the first quarter of 2019. Gross National Product in the United Kingdom averaged 175881.16 GBP Million from 1955 until 2019 (Trading Economics. n.d.). The GDP per capita as of December 2018 was $42 986 USD and GDP per capita PPP $40, 158 USD (Trading Economics. n.d.). Public consumption as a percentage of GDP has increased and is at 19.2% (Trading Economics. n.d.).

Major Sectors

The UK has a market-oriented and highly developed economy. The country also has the largest GDP based on PPP in the world (Sawe, B. E. 2019, July 8). The country’s economy accounts for 3.5% of the world GDP and is ranked as the 22nd with the highest GDP per capita (Sawe, B. E. 2019, July 8). The Capital city of London which is among the world’s largest financial hubs.

The major industries in the UK consist of the agricultural sector, manufacturing, construction, forestry and tourism (Sawe, B. E. 2019, July 8). Agriculture occupies about 25% of the country’s total land area and accounts for 1.5% of the country’s labour force. The UK famers are highly skilled using high sophisticated technology (Sawe, B. E. 2019, July 8). It accounts for $3003.00 GBP million of the GDP (trading economics). The UK is a leading manufacturer of engines and it accounts for $45925.99 GBP million of the GDP (Trading Economics. n.d.). The UK ranks the world’s sixth largest tourist destination and in 2018 received more than 40 million visitors (Sawe, B. E. 2019, July 8).

Currency

The British Pound (GBP) is the currency in the UK (Trading Economics. n.d.). The Bank Rate is 0.75% during October policy meeting (Trading Economics. n.d.). The Bank lowered the GDP forecast to 15 expansion by the end of 2019, 1.6% by end of 2020, 1.8% by end of 2021 and 2.1% by end of 2022. The target inflation rate is 2% (Trading Economics. n.d.). The UK interest rate average is 7.45%. Inflationary pressures are projected to lessen. CPI inflation remained at 1.7% September 2019 and is expected to decline to around 1.25% by spring 2020 (Trading Economics. n.d.).

Labour Force

As of April 2019, the UK had an employment rate estimated at 76.1%, an unemployment rate estimated at 3.8% and an earnings growth increasing by 1.25 (GOV.UK. 2019, June).

International trade partners

The UK has five major trading partners. The US is the number one export destination receiving 13.39% of the UK exports with a total value of $59.18 billion (Fleming, S. n.d). Germany is the second largest trading partner with 10.56% of its total exports valued at $46.69 billion (Fleming, S. n.d). The third largest trading partner is France with 6.88% of UK exports totaling $30.4 billion dollars (Fleming, S. n.d). Netherland is the fourth largest trading partner with 6.24% valued at $27.57 billion. Ireland is the fifth largest trading partner with 5.68% totaling $25.1 billion (Fleming, S. n.d).

Brexit

The effects of Brexit on the UK economy is showing to have a negative effect on the economy due to instilling insecurity in the market. June 23, 2016 referendum held where UK voted to leave the EU. As of now, the EU granted an extension to the UK government request to delay Brexit until January 31st, 2020. If a deal is not reached by then, the UK would no longer be an EU member and ti would have no trade agreements therefore eliminating Britain’s tariff free trade status with the EU members. This would raise the cost of exports, tariffs would also raise the prices of imports. Other effects include: inflation rising, restricted labour movement, wide spread real estate depression and the UK would have to pay a 51 billion Euro for its divorce to the EU.

Political and regulatory stability

There are many factors when it comes to an investor who wishes to grow their money in a foreign country or city. In England, there are many reasons why foreigners would invest their money in this European country. There are so many job opportunities which would benefit the economy, which would be an impactful attraction to foreign investors. There is also the opportunity for growth in new companies, which are welcomed to keep the high stable economy in England. As an investor, or even just as a citizen, people seek to cut the most costs possible. Therefore, there are cost saving opportunities that will be advantageous to investors which would put more money in their pocket in the end.

The English government is very open and welcoming to businesses overseas. “This government organization offer free advice and assistance to overseas businesses. They have a well knowledgeable and global network of business facilitators and staff in embassies.” (Foreign Investment, 2019) The government encourages corporations to grow within their country that will benefit their economy. By welcoming new businesses, there are job opportunities that are created which will help with the unemployment rate. Foreign investors may see England as a great way to grow their fortune as there are so many opportunities for growth and so much help from the country in order to be successful.

Religion and Culture

Religions and opinions on video games tend to differ in the UK, there are religions that use games to teach and to convert people or certain trends, while other games are banned in some cultures. Overall as the world is evolving, it is generating upstanding amounts of people who enjoy playing video games. The gaming industry within the UK no longer has the stereotype of the boys in their mother’s basement. The gaming industry has allowed people or all sorts to just kick back after a long day, whether it’s at school or work, and just sit down and play the games they enjoy for hours on end. It truly is a beautiful thing; it’s a place where people can play with people all around the world. “And today, the British online games industry is a giant of the global market. It’s widely predicted that by 2020, the sector will be worth some $113 billion to our economy.”(Gavin)

Business Customs and Practice

England faces distinct business customs and practices regarding issues like ethics, corruption, and respect of the law play. Business ethics in England is an interesting mix. Businesses may allow wearing unofficial clothes, although conservative people prefer official clothes. Other than professional titles like professor or doctor, it is considered polite to refer to a man as ‘Mr.’ while women as ‘Mrs.’ or ‘Miss’ when unmarried. It is actually recommended to use formal titles for businesses (Zibarras & Coan, 2015). It is also customary to be given a business card at the end of a meeting or for one to write on your business card. Furthermore, the meeting has clearly defined goals, with an agenda, and those attending are always expected to be a bit early or on time. During the meeting, facts are expected to be backed with facts and figures rather than emotions. It is also considered ethical to maintain eye contact without staring.

Ethics is clearly noted from the communication styles used in England. For example, when communicating with people who are equals or are of the same class or rank, the communication language used is direct but modest, while communication with known people may take an informal model (Zibarras & Coan, 2015). Written communication strictly follows rules of protocol and is addressed using the person’s title and surname, unless the person is known very well. Even when using emails, communication is mainly formal compared to other countries. Communication avoids slang and abbreviations. Major business decisions are usually made from the top management and passed down the chain with any confrontation ill-advised (Zibarras & Coan, 2015). The current management style is open and progressive compared to the previous approach that was conservative. It is also common for employees to be consulted on matters that might affect them in England, be treated with respect, and their time used efficiently.

Corruption in England is never treated lightly. Corruption cases are very minimal, as reported by the Transparency International (Lord, 2016), either because the corruption might occur to marginalized groups or because the corruption might occur in intangible ways such that the victims are not immediately clear. Business culture in England treats corruption as unethical, and Transparency International has established general and specialist training courses and advisory services to help people when faced with corruption issues (Lord, 2016). The Transparency International conducts “health checks” intended to regularly check the levels of corruption and identify appropriate responses to the growing threat. This is common in sectors where the response to corruption risks is uncoordinated and incoherent.

The respect of law play in England places everyone to be equal before the law. This is known as ‘equality before the law.’ Businesses and other public authorities are expected to act within the law assigned to them in England. Actually, for businesses to operate smoothly, they are expected to respect and obey the law, respect the rights of others and their opinions, treat others fairly, and look after the area the business is located and its environment (Kaplan, 2017). This guarantees the business freedom from unfair discrimination, the right to a fair trial, among other freedoms. The rule of law may be invoked when considering controversial government powers seeming to stray from precedent actions or breaking legislative ground.

Environmental concerns are a common phenomenon in England due to the high population causing increasing human activities, and therefore levels of pollution and contamination. England practices regeneration of the cities to deal with environmental concerns (Harper, Harper, & Snowden, 2017). The UK has enacted various policies to deal with environmental concerns like conserving water sources and lowering carbon emissions. For example, all companies listed in England are expected to submit their reports showing carbon emissions so that consumers can see the carbon footprints of the businesses and make their decisions. Environmental offenders are also facing higher penalties to prevent them from committing environmental offenses. For example, fines have increased from tens of thousands to hundreds of thousands. The government in England is also offering incentives to support the use of green technologies in providing electricity, heating, and transportation.

On the other hand, human rights issues are also addressed with the utmost care. Since England does not have a codified constitution, England uses its political system to protect fundamental human rights. This is done through the use of the Human Rights Act and other legislation, the courts, and the Parliament. The Human Rights Act, the common law, and other forms of statutes that may be formed by the Parliament are used to protect human rights (Symonides, 2017). There exists a strong institutional framework in England that guides and helps address human rights issues in England. A good example is the Joint Committee on Human Rights in Parliament, the Equalities and Human Rights Commission, and further backed by strong political support helps address human rights issues in England.

A Legal Synopsis: The UK

The UK is a constitutional monarchy, England and Wales operate a common law system which combines the passing of legislation but also the creation of precedents through case law. The laws are established by the passing of legislation in Parliament which consists of the Monarch, the House of Commons, and the House of Lords. The House of Commons is elected by the people and the Prime Minister is a member of this House ( Bodleian Libraries, 2019). Very similar to Canada, the legal system is transparent and fair, although differences do exist in Northern Ireland and Scotland for the most part import, property rights, copyright, and trademark laws are interchangeable throughout the UK.

Pertinent Laws and Regulations

The UK is a major hub for Foreign Direct Investment (FDI), despite the UK’s exit from the EU; the UK has seen a rise in total projects with FDI projects up by 6%, digital FDI projects increased by 33% which is more than three times the rate of overall market growth, a large number of these projects included computer services and sales as well as digital entertainment (Bletso, et al., 2018). The UK is a ripe market for FDI as there exists no domestic legislation that governs FDI this is because there is no policy distinction between foreign or domestic investment. In the UK the owner of a patent has the right to exclude others from doing certain acts in relation to the invention claimed in the patent, this includes importing products which use or are made in accordance with the invention patent, as such it is important to investigate any conflict patents with the gaming system which may be currently held in the UK (Bletso, et al., 2018). Imports to the UK from outside the EU are subject to a value added tax (VAT) and the importer must pay the VAT on import at the same rate as if the goods were supplied within the UK, customs duty and excise duty may also be payable on imports but will differentiate according to the type of good.

References

https://www.investmentuk.net/foreign-investment/ 2019

Bodleian Libraries. (2019, August 24). United Kingdom Law: Oxford libGuides. Retrieved from

Oxford libGuides: https://ox.libguides.com/c.php?g=422832&p=2887374

Bletso, Cardew, Collins, Gavin, Silverblatt, Mandeep, & Adams. (2018). Investing in the UK

(England and Wales). London: THOMSON REUTERS. Retrieved from

https://uk.practicallaw.thomsonreuters.com/2-602-

9807?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1

Fleming, S. (n.d.). These are the UK’s top five trading partners. Retrieved from

https://www.weforum.org/agenda/2019/11/brexit-trade-uk-eu/.

Gamer, Gavin. “Gaming Culture in the UK.” Game Skinny, GameSkinny, 24 Aug. 2016,

https://www.gameskinny.com/8w5wp/gaming-culture-in-the-uk.

Harper, C., Harper, C. L., & Snowden, M. (2017). Environment and society: Human perspectives on environmental issues. Routledge.

Jaaskelainen, L. (n.d.). Topic: British demography. Retrieved from https://www.statista.com/topics/3811/british-demography-2017/

Kaplan, A. (2017). European management and European business schools: Insights from the history of business schools. In Management Research (pp. 211-225). Routledge.

Labour market overview, UK. (2019, June) Retrieved from https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/june2019

Lord, N. (2016). Regulating corporate bribery in international business: Anti-corruption in the UK and Germany. Routledge.

Overview of the UK population: (2019 August). Retrieved from https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/overviewoftheukpopulation/august2019/previous/v1.

Regional ethnic diversity. (2019, July 11). Retrieved from https://www.ethnicity-facts-figures.service.gov.uk/uk-population-by-ethnicity/national-and-regional-populations/regional-ethnic-diversity/latest

Sawe, B. E. (2019, July 8). What Are The Biggest Industries In The United Kingdom? Retrieved from https://www.worldatlas.com/articles/what-are-the-biggest-industries-in-the-united-kingdom.html.

Symonides, J. (2017). Human rights: Concept and standards. Routledge.

United Kingdom GDP per capita. (n.d.). Retrieved from https://tradingeconomics.com/united-kingdom/gdp-per-capita.

Zibarras, L. D., & Coan, P. (2015). HRM practices used to promote pro-environmental behavior: a UK survey. The International Journal of Human Resource Management, 26(16), 2121-2142.

This is progressing well and you have plenty of information so far. Make sure you adhere to the sections as listed – some of this content is not entirely appropriate for now although it will be useful later.

Remember too that you are looking to invest, so be critical – would you risk your money?

The overriding impression reading this paper, is that is a series of summaries of what you have read. There is no constructive thinking or analysis at all in it. I would work on being more critical and not just repeating what you read, even if it is correctly cited.