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Oecd and Pwc in Uk

Essay by   •  August 23, 2017  •  Term Paper  •  984 Words (4 Pages)  •  997 Views

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Economics

Many global economic institutions and consultant such as OECD and PwC has forecasted that the UK economic growth will decline compare to the average in the last five years. The causes of this condition are the recent decision that UK made to exit European United or also known as EU, has significant impact to the economy, particularly the trade activities both inward and outward and also investment. Besides that, there is influence from world economic slowdown that happened since 2015. But the decline as not as bad as what have been forecasted. According to Bruce, UK economy is still supported by consumer spending (2017). Due to this condition, the central bank of UK decided to increase the interest rate as solution.

Another problem also rose due to both causes, pound sterling suffered because of exchange rate depreciation and it led to escalation of inflation rate, which has exceeded the 2% target. This rate is the highest among the rate in last four years. This contributes to the incline of prices for many products, from FMCG to housing (Allen, 2017).

Separated from Brexit and global economic slowdown, the productivity in UK has fallen in a last decade. Combination of the low productivity and inflation that has exceeded the target is leading to reduction the possibility of wage growth in the near future. As the time goes by, it might hurt the consumer spending that currently supporting UK economic growth due to the wage received by UK citizen not sufficient to fulfill the needs as the price of goods going up.

Further, there is a concern that stated by some economics expert that the whole condition of UK economy might increase the risk of collapse for certain firm. Hence, many firms decide to postpone the search of new employee, or even reduce the number of employee to maintain their chance to survive in a good rate. In the end, it might significantly impact the employment rate.

If we look further to trade activities particularly outward, the disruption not only occurred due to Brexit and economic slowdown. According to OECD (2017), the UK export market share will suffer a long-term decline. It exposed to the risk of global protectionism.

These conditions, if it left unsolved by the UK government might lead the country to big economy dip, which make it hard to reverse.

Considering all the aspect of UK economy that has been mentioned above, it will be very risky to conduct business expansion to UK. But, for product such as FMCG and food and beverage industry, the risk might be lowered compare to product that are included in staple needs and also marketed with high price. Despite of that, the strategy needs to carefully consider in order to avoid b the business failure.  

Technological

There are several technological aspects that should be discussed when it comes to navigating the external environment for business expansion.

First, the technology that related to product creation/making. As UK is developed countries, acquired an advanced technology to create product with good quality in the most efficient way will not take much effort. For example: technology that need to mass food product. There are plenty of firm that provides a state-of-art technology, thus the product can be created in less time but does not reduce the quality and make sure each product has the same quality. In the near future, the advancement of technology might increase, since UK government and also huge private firms willing to spend huge number for the purpose of research and development. This condition can help the business to reduce the operational cost, fulfill the demand of consumer, and increase the satisfaction.

Second, the technology that related to marketing activities. Similar to most developed countries, UK is supported by well-created infrastructure in excellent maintenance system. It reflects from the average speed of internet in UK, according to annual study which conducted by Ofcom, the average s now 36.2Mbps (up from 28.9Mbps last year), with uploads hitting 4.3Mbps (up from 3.7Mbps) (Jackson, 2017). Despite of that, the speed between urban and rural area still has a huge gap.

With high speed internet, most of UK citizen can go online. The percentage of adult that is using internet in UK has increase from 88% in 2016 to 89% in 2017. The rest of them never used internet and dominated by senior citizen age 70 or above. Most of internet users are age 16 – 34 years (UK Office for National Statistics, 2017). The most preferred device to access internet is mobile phone, it means a large percentage of UK internet users can go online anywhere and anytime.

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