Executive Summary
Starting a business in the United Kingdom requires an understanding of the business environment in which one wants to invest. This paper presents an analysis of the UK as a chosen business destination for the passenger motor vehicle assembly business. The paper is divided into three main parts. The first part of the paper presents an overview of the business in question relative to the business destination.
This is followed by an analysis of the internal and external business environments of the United Kingdom. Here, the key strengths and weaknesses of the United Kingdom in terms of the political, economic, and sociocultural development are brought out. The third part presents recommendations on the suggested business in the UK based on the critical factors brought out in the second part.
Overview of the Proposed Business
The proposed business is the establishment of the passenger motor vehicle business in the United Kingdom, specifically the assembly and distribution of passenger vehicles across Europe. The main objective of this business is to take advantage of the large market in the European Union by offering an alternative means of travel apart from rail and air transport.
Therefore, the United Kingdom is not only chosen as a manufacturing destination but also as a potential local and first market for the manufactured vehicles.
The established country will be assembling luxury passenger vehicles of different seating capacities to capture the travel needs in entire Europe. According to Campestrini and Mock (2011), the market trends in the passenger vehicle market segment across Europe show intense diversification of the passenger vehicles through branding.
The passenger motor vehicle business lies in the larger automotive industry, but specifically the motor-vehicle assembling segment in the industry. The automotive industry in the United Kingdom is quite broad. However, the business of motor vehicle assembly is highly concentrated in other regions, especially outside the European Union.
This implies that the automotive industry is quite active in other regions of the world like Asia and North America, making the European Union be a consumer rather than a producer of motor vehicles. However, it is important to note that passenger motor vehicles, also referred to as commercial motor vehicles, are also produced in the United Kingdom.
A lot of concentration in the industry is the assembly and marketing of personal cars rather than the manufacturing of passenger cars (Leach, 2013). Moreover, motor-vehicle production in the United Kingdom, especially the production of passenger vehicles, has been quite lower in the United Kingdom compared to other countries in the region like Germany (Bureau of Transportation Statistics (Multimodal), 2012).
This can either be taken as a challenge or a motivating factor as far as the establishment of the business in the country is concerned.
Country Analysis
Background of the United Kingdom
The United Kingdom is the largest kingdom in entire Europe. It comprises of Scotland, England, Wales, and Northern Ireland. The country has a population of approximately 63 million people. The size of the United Kingdom as a whole is approximated to be 244,108 square kilometers (Bowen & Pallister, 2000).
The language that is widely spoken across the United Kingdom is English, although there are also Scots, Welsh, and Gaelic languages that are spoken in the United Kingdom, especially in specific kingdoms as denoted by the names of the languages. The business environment in the United Kingdom is quite complex because of the presence of many ethnicities in the United Kingdom among the people of the United Kingdom.
However, it is critical to note that the ethnic minority groups in the United Kingdom are not quite protruding because of the embrace of a collective culture at the national level. This pacifies the individual cultural attributes of the minority groups (Clark, 2013). The most dominant religion in the country is Christianity.
The Political Economy of the United Kingdom and Investment
According to Nee (2013), the economy of the United Kingdom is the third largest in Europe and ranked among the top ten economies in the world. The primary currency that is used as a medium of exchange in the country is the Pound Sterling. However, the fostering of a monetary union in the European Union also makes the Euro an acceptable currency that is used as a medium of exchange in the country.
The Euro comes second in terms of utilization in trade and transactions in the country after the Pound Sterling. It is important to note that the economy of the UK is largely intertwined with the larger European Union’s economy. Therefore, the country has an open trading environment that embraces the elimination of trade barriers, especially for trading activities with the member countries of the European Union.
There is a great transformation in the labor market of the United Kingdom. This transformation has been necessitated by the increased immigration in the country as a result of the policies of economic decentralization that is being pursued by the European Union.
Therefore, it is important for any investor to pay attention to the transformation to strike a favorable balance in their business undertakings in the country. This is critical in maintaining a balance between business costs and business outcomes (Coe & Jones, 2010).
Another factor that promotes business in the country is the fact that the country has a stable government. This enhances the development of effective economic policies that promote investment and growth of the business. Here, it is critical to observe that Britain is one of the most efficiently functioning constitutional monarchies in the world.
It has the executive branch that is headed by the monarch who heads the state and the prime minister who heads the government. The country also has a strong and efficient judicial system that helps in the enforcement of the law in the country. A sound policy environment in the political and economic realms of the United Kingdom is an incentive to the investors in the country (“A Short Guide to the British Political System,” 2013).
According to Cockburn (2011), the United Kingdom has a comprehensive tax regime that applies to the entire business environment in the country. Small businesses are taxed differently from the businesses that operate on a large-scale basis. The domestic tax law of the United Kingdom has been restructured to meet the demands of integration as stipulated in the regulations that guide the operation of the EU.
Under directive 166 of the European Union, the United Kingdom has sought to adjust its task regime by removing extreme charges for non-residents as the country seeks to promote the spirit of economic integration that is exemplified by the European Union (Maisto, 2011).
Cultural Issues in the Business Environment in the United Kingdom
Jackson and Shams (2006) observe that the United Kingdom embraces an open business culture where corporate social responsibility is put at the center of investment in the country. This happens because of the intertwined realms of development in the country.
Any investor in the United Kingdom has to be keen and embrace best practices in the economy as a way of winning the confidence of the customers and fostering positive relations with the community in which the business is established.
The level of literacy and knowledge among the population in the country is quite high. An assessment of the issues of education and qualification as part of the business culture in the country reveals that education is an essential component when looking for a desirable workforce in the country.
Analysis and Recommendation
Analysis of the Business Environment
An observation of the United Kingdom reveals that the country is a favorable business destination. One of the most critical factors that determine the favorability of any business environment is the prevalence of political stability and a sound policy environment for advancing business policies. As it is, the United Kingdom is a stable country with a large population that is promoted by immigration trends that are observed in the European Union.
The stability that is enjoyed by the country provides a good environment for investors. In such a country, business risks are quite limited. This is an incentive for potential investors. Another valuable thing in the country is the embrace of a collective culture. This promotes unity and coexistence, thereby enabling investors to freely make business choices and market their business across the United Kingdom.
The other important aspect of the United Kingdom as the selected business destination for the passenger motor vehicle business is that the country has an expansive business environment. The most important element of the business environment in the United Kingdom is the opening up of business policies to capture the opportunities that prevail in the European market.
Investors that come from outside the United Kingdom and the European Union are slightly disadvantaged because they are subjected to a more intense taxation regime as opposed to other investors. The United Kingdom also embraces policies that help to foster trade and investment with other countries outside the European Union.
This is a sign of enhancing the principles of liberalization of trade in the globalized business environment. However, it is vital for the company to look at other competitors in the industry and enhance branding as an aspect of variation and market penetration in the UK and the larger EU region.
Policy Recommendations on the Establishment of the Passenger Motor Vehicle Assembly Business in the UK
From the analysis done in this paper, it is evident that the United Kingdom does not present a lot of opportunities when it comes to the marketing of passenger motor vehicles. However, the growth of the population and increased movement of people are factors that denote the presence of investing in the transport industry by providing a wide range of passenger vehicles.
This can help in complementing the railway transport and the use of personal cars and taxis for transportation. Creativity is a key factor for an investor who wants to successfully establish a passenger motor vehicle industry in the United Kingdom. Coming up with car models for public transportation that are enticing to customers is a comprehensive activity.
First of all, such cars need to embrace technology and comfort. These are the two most important things for thriving in the public transport industry (Zapata & Nieuwenhuis, 2010).
The assembly of passenger vehicles in the United Kingdom should be established based on the opinion of the public because they are the consumers of these vehicles. The other thing that should be given attention before considering such a business is the issue of the cost of importing the different parts of the vehicle from outside the European Union.
References
A Short Guide to the British Political System. (2013).
Bowen, A., & Pallister, J. (2000). AS level geography: For AQA specification A. Oxford: Heinemann Educational.
Bureau of Transportation Statistics (Multimodal). (2012). World motor vehicle production, selected countries (Thousands of vehicles) – United Kingdom (total passenger cars and commercial vehicles). Web.
Campestrini, M., & Mock, P. (2011). European vehicle market statistics. Web.
Clark, U. (2013). Language and identity in Englishes. London, UK: Routledge.
Cockburn, R. (2011). Small business tax planning: All you need to know from start-up to retirement. Hampshire, England: Harriman House.
Coe, N., & Jones, A. (2010). The economic geography of the UK. London, UK: Sage Publications.
Jackson, P., & Shams, M. (2006). Developments in work and organizational psychology: Implications for international business. Amsterdam: Elsevier.
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Maisto, G. (2011). The meaning of “enterprise”, “business” and “business profits” under tax treaties and EU tax law. Amsterdam, The Netherlands: IBFD.
Nee, P. W. (2013). Key facts on the United Kingdom. Boston, MA: The Internationalist Publishing Company.
Zapata, C., & Nieuwenhuis, P. (2010). Exploring innovation in the automotive industry: new technologies for cleaner cars. Journal of Cleaner Production, 18(1), 14-20.