Business Environment 22027Y

Business Environment
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introduction
In this task is about to exploring the significance of international trade and European dimension for UK business. UK is a small country. The domestic market is small.UK can improve its economy only through increasing it market ,through international trade. The flourishing economy of UK during colonial rule was due to its large market, UK procured raw materials at cheap rates from colonies and sold finished products in colonies. Now the share of UK in international trade is at rock bottom. It has lost its markets. Once popular brands like Phillips, BSA etc are not wanted in market and they have been replaced by cheap goods from Japan, China etc.UK has no future unless it reestablish its brands, recapture its markets through international trade. The buying and selling of goods and services across national borders is known as international trade. International trade is the backbone of our modern, commercial world, as producers in various nations try to profit from an expanded market, rather than be limited to selling within their own borders. There are many reasons that trade across national borders occurs, including lower production costs in one region versus another, specialized industries, lack or surplus of natural resources and consumer tastes. One of the most controversial components of international trade today is the lower production costs of developing nations. There is currently a great deal of concern over jobs being taken away from the UK and other developed nations as countries such as China, Korea, India, Indonesia and others produce goods and services at much lower costs. UK country have imposed severe restrictions on imports from Asian nations to try to stem this tide. Clearly, a company that can pay its workers the equivalent of dollars a day, as compared to dollars an hour, has a distinct selling advantage. Nevertheless, European consumers are only too happy to lower their costs of living by taking advantage of cheaper imported goods.
Exploring The Significance of International Trade and European Dimension For UK Businesses |22027Y
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Task A
4.1 Discuss the importance of international trade, economic integration and global markets to UK business International Trade International trade is the exchange of goods and services between countries. This type of trade gives rise to a world economy, in which prices, or supply and demand, affect and are affected by global events. UK trade consists of the movement of goods and services within the European Union (EU), of which it is a member, and to non-EU countries. International trade in the UK is assisted by UK Trade & Investment (UKTI). This government organization focuses on enhancing the competitiveness of UK companies through overseas trade and investments. It also aims at continuing to attract high-quality foreign direct investment (FDI). UK trades are manufactured goods, beverages, fuels and chemicals. According to a World Trade Organization (WTO) report published in 2008, the UK has retained its position as the worlds largest commercial services exporter. Moreover, with the UK recording a profit of $263 billion in the commercial services sector, the country continues to be the worlds second largest provider of these services. Importance of International trade to UK business Production Cost - By trading in other countries, the company also opens itself up to lower production costs. For example, a TV manufacturer in Australia may discover that its product could be created for substantially less in a factory in UK. This not only saves the company money, but it helps the consumer as the TV can be sold for less. Furthermore, UK's economy is helped thanks to the TV company paying the factory to create its product. Markets - If a company based in the UK was to only sell and trade their products domestically, never marketing or pushing their product to consumers in other countries, the country would completely limit its potential. They may always gain a steady trade from UK consumers, but they wouldn't be able to grow as much as if the company traded with eight other countries, for example. This is why international trade is so important for companies and the economy - it increases traffic, customer figures and sales.
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Economic Integration Economic integration is the combination of several national economies into a larger territorial unit. It implies the elimination of economic boarders between countries. For more about economic integration please refer (Appendix 1). Below is the stage of economic integration. Before Integration
Preferential trade agreement : lower tariff on trade among member countries. e.g. British Commonwealth established tariff preference scheme in 1932. First Stage
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FTA (Free Trade Area): is a group of countries without any trade restrictions within the area, but each member country retains its own tariff and quota system on trade with third countries (EFTA) Second Stage
CU (Customs Union) is created when a group of countries removes all restrictions on mutual trade and also adopt a common system of tariffs and quotas with respect to trade with third countries (EEC became one in 1968). FTA - CU: inevitable (otherwise, nonmembers take advantage of differing tarffs among
member countries)
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Third Stage
Common Market: A CU becomes a common market with the removal of all restrictions on the movement of factors. CU Common Market (slow. Common heritage, language and culture will expedite this process.) FPE also facilitates the formation of a common market. This transition to a common market is desirable in order to prevent nonmember countries from taking advantage of different wages and taxes. Nonmember countries invest in the countries where taxes and wages are lowest. E.g., Japan builds TV factories in Mexico, rather than in the US. Fourth Stage : Economic Union
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supernational authorities coordinate economic policies. It requires a single monetary system, a central bank, a unified fiscal system, and a common economic policy. e.g., US, Belgium + Luxembourg, 1921. CM Economic Union (relatively easy, because of economic gains from a single currency)
Global Market Global marketing is when a company views all of their markets as one and decisions are no longer limited by borders. Because this level of marketing is reached through much time, effort and growth, one may wonder why it is important at all. So it is so important because when domestic markets become saturated in developed areas of the world, extending beyond national borders allows a firm to capitalize upon countries experiencing economic and population growth. This trend can prove true in both b2b and b2c business models. One instance where this can be easily observed is in the IT and telecommunications industries. Taking advantage of uneven income streams by supplementing domestic sales with international can also serve as another opportunity to balance cash flow and grow a business . For example, if you are a maker of sun tan lotion that is only usually bought in hot, summer months, marketing to a new country with opposite seasons may be the chance to double your sales. Globalization of production and distribution (essential components of the marketing mix) may help your company minimize costs and lower your bottom line. As in article that I just take from Innovation Uk website about Global Markets, one of line on the articles said that Many of the UKs creative industries have great track records of
succeeding in global markets. As new opportunities open up, particularly in the high growth markets of the world, so companies need to be alive to the opportunities and potential pitfalls of competing on a global stage. Many products and services now have to be born global. As such, companies must be open to new business models, understand how to adapt to, or create, new supply chains and learn how to optimise local partnerships. This is undoubtedly one of the major challenges for the creative industries in the next few years. - Christine Losecaat,
Creative Industries Adviser to UK Trade & Investment, MD Little Dipper.
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For a young entrepreneurs to start doing business in UK, first they must come up with a realistic idea that they can turn into a product or service. Find a local support, including help with developing business ideas. Before young entrepreneurs turn their ideas to business, what they must do is make a research about UK market. In UK market, there was has the advantages and disadvantages of starting a business. The explanation about this advantages disadvantages just like below. Advantages of Starting Business in UK In UK market, transaction costs will be eliminated. For instance, UK firms currently spend about 1.5 billion a year buying and selling foreign currencies to do business in the EU. With the EMU this is eliminated, so increasing profitability of EU firms. So that for young entrepreneurs not have to worry about getting your money changed, therefore avoiding high conversion charges. Next advantage is in UK uncertainty caused by Exchange rate fluctuations eliminated. New marketer or firms become worry when investing in other countries because of the uncertainty caused by the fluctuating currencies in the EU. Investment would rise in the EMU (European Monetary Union) area as the currency is universal within the area, therefore the anxiety that was previously apparent is there no more. Besides that, increased Trade and reduced costs to firms also can be advantages to starting business in UK because considerable economic trade through the wiping out of exchange rate fluctuations, but as well as this it helps to lower costs to industry because companies will not have to buy foreign exchange for use within the EU. For them, EU represents the completion of the Single European Market. It is vital if Europe is to compete with the other large trading blocs of the Far East and North America. Next advantages is Inflation. From the mid-1980s onwards, there were a number of economists and politicians who argued that, for the UK at least, EMU provided the best way forward to achieve low inflation rates throughout the EU. In UK central banks were controlled by government. If the UK government decided to loosen monetary policy, for example, by reducing interest rates, it had the power to order the Bank of England to carry out this policy on its behalf. There have always been especially strong pressures before an election for UK governments to loosen the monetary reins and create a boom in the economy, with the subsequent increase in inflation following the election. So because of low inflation in UK, this will give benefits to consumers and businesses are better able to make long-range plans because they know that their money is not losing its purchasing power year after year.
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interest rates, both in nominal and real terms, are lower, encouraging investment to improve productivity and allowing businesses to prosper without raising prices Start-up businesses are typically more costly and risky since there is no proven formula. In order to obtain capital to fund the business, a lengthy detailed business plan must be put together. All of the details of starting the business, including licenses, marketing, naming the business, finding product sources, etc. are the responsibility of the owner. But for starting a business in UK market it still have risk to takes for new entrepreneur. The legal basis for setting up a business in the UK is the Companies Act 2006, which provides a comprehensive code of company law. So below in disadvantages of starting business Disadvantages of Starting Business in UK In UK, there are legal forms for businesses, this is include the legal structure under which a business is registered will affect the way it is taxed and the accounting records, so for Sole Trade the disadvantages is include a lack of support, unlimited liability and the fact that you are personally responsible for any debts run up by your business. And for partnership, There is unlimited liability and, as a partner, people are personally responsible for any debts that the business runs up, and problems can occur when there are disagreements between partners. Next disadvantage is the formation of an Limited Liability Partnership is more complex and costly than that of a partnership. If the number of partners is reduced, and there are fewer than two designated members, then every member is deemed to be a designated member. Other disadvantages in UK market is over estimation of Trade benefits. Some economists argue that the trade and cost advantages of EMU have been grossly over estimated. There is little to be gained from moving from the present system which has some stability built into it, to the rigidities which EMU would bring. To this will give much competition market for new entrepreneur. There are also disadvantages in EU (European Union) membership. That include as below : Disadvantages of EU membership Cost. The EU costs the UK 6.4bn. See UK government spending. The Bruges (which is an anti European group claim the cost per head of EU membership is
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873, but according to Foreign and Commonwealth office the cost is about 300 per head Inefficient Policies. A large percentage of EU spending goes on the Common Agricultural Policy. For many years this distorted agricultural markets by placing minimum prices on food. This lead to higher prices for consumers and encouraging over-supply. Reforms to CAP have reduced, but not eliminated this wastage. Problems of Euro. Membership of the EU doesn't necessarily mean membership of the Euro. But, the EU has placed great emphasis on the Single Currency. However, it has proved to have many problems. See: Problems of Euro Net Migration. Free Movement of Labour has caused problems of overcrowding in UK cities. The UK's population is set to rise to 70 million over next decade, partly due to immigration. This has pushed up house prices and led to congestion on roads. More bureaucracy less democracy.
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Task b
4.2 Analyze the impact of two policies of the European Union on UK business organization In this task I choose two policies of European Union which is Consumer Policy and Environmental Policy. And I will analyzed the impact of this two policies towards business organization which is operating in UK. Consumer Policy The EU's Consumer Policy supports the aims laid out in Articles 153 and 95 of the Treaty establishing the European Community, which promote the interests, health and safety of European consumers. It is designed to ensure that the internal market is open, fair and transparent, allowing consumers to exercise real choice, excluding rogue traders, and helping consumers and businesses take full advantage of the market's potential. In consumer policy, the impact to business organization are include with European strategies and program. EU Consumer Policy Strategy The overall objectives of the Strategy are to empower consumers, to enhance their welfare and to protect them effectively. The Commission's vision is to achieve by 2013 a single, simple set of rules for the benefit of consumers and retailers alike. More broadly, the European Consumer Policy aims at making the European Union a tangible reality for each European citizen through guaranteeing their rights as consumers in their everyday life. Consumer policy can also contribute to alleviate social problems and, thus, contributes to a more cohesive society throughout the 27 Member States. The priorities of the strategy are to: Increase consumer confidence in the internal market which contributes to the improvement of business competitiveness by establishing a uniform regulatory environment that is equally enforced across the European market and which effectively protects consumers. Strengthen consumers position in the marketplace by developing consumer education tools, the active support of EU consumer organisations, and their involvement in policy making.
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Ensure that consumer concerns are taken into account in all EU policies. Complement Member States' consumer policies. Collect consumer-related data to support the development of legislative proposals and other initiatives. EU Consumer Policy Financial Program Every year, the European Commission establishes its annual work program setting out the various budget items for consumer policy to be absorbed on that given year. The Consumer Program 2007-2013 was adopted by the Council and the European Parliament on 18 December 2006. The Consumer Program 2007-2013 aims primarily to ensure a high level of consumer protection, notably through improved information on consumer-related data, better consultation and better representation of consumers interests. It also to ensure the effective application of consumer protection rules, notably through cooperation between authorities and organizations responsible for the implementation of consumer legislation, information, education and dispute resolution. Consumer Right and Safety European standards are voluntary, Europe-wide agreements which set out criteria for manufactured products. Standards help to make sure that products are fit for their purpose, safe, comparable and compatible. A harmonized standard is elaborated on the basis of a request from the European Commission to a recognized European Standards Organization to develop a standard that provides solutions for compliance with a legal provision. Such a request provides guidelines which standards must respect to meet the essential requirements of a 'New Approach' or another relevant directive. Compliance with harmonised standards provides a presumption of conformity with the corresponding requirements of the 'New Approach' directives and other relevant directives. Manufacturers can use harmonised standards to demonstrate that products comply with EU legislation. The use of these standards remains voluntary. Manufacturers are free to choose any other technical solution that provides compliance with the essential requirements.
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Results of the survey on consumer representation in standardisation In 2004, the European Commission conducted a survey to assess the participation of consumer representatives in the work of standard-setting bodies at national, European and international level. The objective was to collect information on consumer associations experiences, views and needs relating to the representation of consumer interests in standardisation activities. The results confirmed that consumer organisations are aware of the importance of taking part in standardisation activities to ensure a greater representation of consumers interests throughout the process. However, they require a more consistent and binding framework and increased financial and technical support to ensure that their intervention is active and efficient. EU Product Legislation The aim of EU legislation in the field of distance selling is to put consumers who purchase goods or services through distance communication means in a similar position to consumers who buy goods or services in shops. "Distance communication means" include traditional means of distance of communication, such as press adverts accompanied by order forms, catalogue sales, telephone. It also covers more technologically advanced means of distance communication such as teleshopping, mobile phone commerce (m-commerce), and the use of the internet (e-commerce). The General Product Safety Directive (GPSD) is intended to ensure a high level of product safety throughout the EU for consumer products that are not covered by specific sector legislation (e.g. toys, chemicals, cosmetics, machinery). The Directive also complements the provisions of sector legislation which do not cover certain matters, for instance in relation to producers obligations and the authorities powers and tasks. The Directive provides a generic definition of a safe product. Products must comply with this definition. If there are no specific national rules, the safety of a product is assessed in accordance with: European standards, Community technical specifications, codes of good practice, the state of the art and the expectations of consumers.
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Environmental Policy The EU has some of the world's highest environmental standards, developed over decades. Its main priorities are: protecting endangered species and habitats and using natural resources more efficiently - goals that also help the economy by fostering innovation and enterprise. The objective of the European Commission's Directorate-General for the Environment is to protect, preserve and improve the environment for present and future generations. The objective of DG (Directorate-General) Environment is to protect, preserve and improve the environment for present and future generations. To achieve this it proposes policies that ensure a high level of environmental protection in the European Union and that preserve the quality of life of EU citizens. In effect, an environmental policy is an organisations statement of environmental goals, which clearly outline commitment to environmental improvement. In so doing it should be detailed enough to define future actions and provide information so that management and workers can clearly determine their areas of responsibility and authority. The policy statement should therefore also include specific policies on how your company intends to improve. You may wish to list the policies under specific headings such as resource use, waste management, purchasing, community relations, transportation and so on. The list of policies could be endless, it is important that only those policies your company intends to pursue be included. In formulating policies it is essential to choose those that can be translated in to 'actions' and that can be measured. By doing this you are you can turn your policies into actions and demonstrate that you are implementing your environment policy. By ensuring the policies are measurable, you will also be able to track your performance at regular intervals. The policy must be comprehensive and detailed but should not contain statements, which your firm cannot hope to achieve. This will do more harm than good if exposed. The issues addressed will depend upon the nature of your organisation. Impact of Environmental policy to business organization is committed to delivering high quality programmes, which have a minimal effect upon the environment we work in. Our environmental objectives and targets are set at management level with an aim for continuous environmental improvement.
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EU environmental policy within the business organization in UK includes: Compliance with, and wherever possible exceeding, environmental legislation and local users agreements A commitment to reduce pollution and carbon emissions. Management of waste products including the reduction, re-use and recycling of all possible office materials and supplies. Use of energy efficient methods wherever possible. Integration of environmental objectives into the everyday management of our activities. Annual reviews and reporting of environmental policies and practices throughout Impact, including inductions for all staff. Use of raw materials from sustainable sources wherever possible.
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Task c
4.3 Explain the economic implications for the UK of entry into EMU A key consideration in determining whether it would be in the UKs economic interest to join Economic and Monetary Union (EMU) is the impact of membership on UK business sectors. To what extent might EMU entry help, hinder or reshape the UKs industrial performance, and how might this impact be distributed across different UK industries and over different time periods? Entry into EMU would offer UK industry potential opportunities as well as challenges. The removal of the exchange rate between the UK and the euro area would reduce a barrier to doing business across a huge market. As a result, cross-border trade and investment between the UK and the euro area could rise. Over time, the level of competition in EU industry and markets might increase. Strong, competitive business sectors would prosper and find new opportunities to expand; weaker industries, however, would have to adapt to an environment of increased competition. EMU entry would also have important macroeconomic implications for UK industry. The loss of an independent monetary policy and nominal exchange rate flexibility would fundamentally alter the way in which the UK economy adjusts to economic change and unexpected disturbances. Much of this adjustment would take place through changes in the industrial environment. While this study takes into account these macroeconomic issues and their potentially important consequences for business sectors, its focus is on the microeconomic implications of EMU entry for UK business sectors. A standard result of economic theory is that the removal of a barrier to cross-border transactions usually enhances economic welfare. This means that the emphasis of this study is on the potential benefits of EMU. It is, however, important to recognize that these potential benefits would not be realized unless the UK had joined EMU on the basis of sustainable and durable convergence. If this were not achieved because, for example, the transition to membership required a significant change in the exchange rate or the interest rate, or because economic structures in the UK and the euro area were different, then EMU entry could lead to increased macroeconomic instability and, over the longer term, potentially lower output and employment.
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The advantages and disadvantages towards business organization if UK uses euro currency. The Euro was introduced on New Years Day 1999 as an electronic trading currency, on January 1 2002 the came into being a actual currency, freely usable in all cash transactions throughout the Euro zone. For individuals the effect was that they can use the Euro as a common currency throughout the Euro zone. As a concept creating a Single European Currency, the is not new, since the founding of the EU, Europe has been working to towards this end, i.e. the . At present Britain, Denmark and Sweden are the only EU member states that have no intention to join the Euro-area. As part of continuing efforts to promote prosperity within all the regions of European Union, the Euro is part of efforts by EU member states to implement policies that will encourage the creation of a Single European Market throughout the European Union. The implementation of the Euro further assists in the removal of the current trade barriers that divide EU economies; this is especially the case in the labour, finance and movement of goods in the markets of Europe. Advantages In addition to cutting costs and risk, the European Union's single currency benefits business by encouraging investments and bringing more certainty to business planning thus allowing businesses to be more effective overall. Interest Rates - With the single European currency comes the single European interest rate. This means that interest rates will be set by non-elected individuals (as with our own rates which are set by the Bank of England) and will be at a rate that best serves all single currency members: the issue here is that the rate could be set at a rate that helps the majority (who could be in a semi-recession but penalize a country not suffering from economic upset (like UK) More cross-border trade A direct benefit of the euro is that, within the euro area, there is no need for businesses to work in different currencies. A company can buy and sell throughout this area, paying and being paid in euro. Previously, when doing business in another EU Member State, a company would need to take account of the risk of fluctuating exchange rates i.e. the stated foreign currency amount on the invoice might change in value before being paid. This meant either
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export prices were higher, or companies were discouraged from exporting within the single market. This risk has now gone, as have the costs associated with exchanging different currencies. With the euro, these costs have disappeared in the euro area, and this money is now available for more productive investment. With no exchange risks and costs, cross-border trade within the euro area is encouraged. Not only can companies sell into a much larger home market, but they can also find new suppliers offering better services or lower costs. Better borrowing, better planning, more investment Before the euro, volatile interest rates meant unpredictable costs. With the euro, inflation has come down to a low and stable level, which also means low and stable interest rates. Firms can borrow more and more cheaply and can invest more confidently in the long term. Long-term investment is further encouraged by the sound and prudent management of Economic and Monetary Union, which builds trust in the economy of the euro area and reduces uncertainty about the future. Companies can invest more in growth and new technologies rather than saving money in reserve in case of an economic downturn. Better access to capital The euro gives a large boost to the integration of financial markets across the euro area. Investors, such as banks, are no longer limited to local markets. Capital can flow more easily because exchange rate risks have disappeared and because financial market rules are being progressively harmonised allowing investors to move capital to those parts of the euro area where it can be used most effectively. More international trade The euro is a strong international currency backed by the commitment of the euro-area Member States and the firm and visible management of monetary policy by the European Central Bank. The euro area is also a large and open trading bloc. This makes doing business in euro an attractive proposition for other trading nations, which can access a large market using one currency. Euro-area companies also benefit because they can export and import in the global economy while paying, and being paid, in euro reducing the risk of losses caused by global currency fluctuations.
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The Advantages of the Euro are manly in the economical sense: 1. Both consumers and firms would are able to make significant savings in the cost of transactions within the Euro-zone, leading to the development of Europe wide markets for goods and services as a result of not having to convert currencies. This is already benefiting many poor regions of Europe. 2. Firms within the Euro zone are already finding it easier and cheaper to raise money to invest, enabling businesses to improve their competitiveness on the world markets. 3. The introduction of the was already demonstrating savings for business in reducing the cost of transactions between member Euro-zone states. The enables cash received from several different countries to be lumped together instantly and without conversion and deposited in the highest interest earning country. 4. Clearer and better information on input costs and competitors prices enable improved opportunities for long term planning and strategy formulation, as there will be less uncertainty concerning prospective returns on foreign EU operations. 5. Euro zone economies are as part of a massive market are not expected to fluctuate as dramatically as in the past from boom to bust. This added stability is expected to reduce inflationary pressure and stimulate the economy of Europe.
The disadvantages and disadvantages towards business organization if UK uses euro currency. While there are many advantages to the euro, there are also some disadvantages. Other economists believe that the UK can continue to prosper as an economy outside the Euro Zone whilst still deriving some of the benefits from participation in the single European market.
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Disadvantages Risk of deflation and higher unemployment Currency unions have collapsed in the past. There is no guarantee that EMU will be a success. It may prove to be a recipe for economic stagnation and high unemployment if the ECB pursues a deflationary monetary policy for Europe to keep inflation within the 2% limit. Many economists have been critical of the reluctance of the ECB to cut interest rates during its first three years in operation. The ECB seems to have been trying to build up anti-inflation credibility - but this has depressed economic growth in the Euro Zone Euro not an optimal currency zone The Euro Zone does not meet the conditions required for an optimal currency area. By this we mean that within the Euro Zone countries there is insufficient wage flexibility inside European labour markets to cope with external economic shocks Member economies have not converged fully in a real or structural sense. Although there has been a substantial amount of nominal economic convergence during the run up to the establishment of the Euro, there are still huge differences in the economic performance of member nations. And, at some stage in the future, there is a risk that excessively high interest rates will be set across the Euro Area because of an inflationary fear in one part of the zone that is unsuited to another area. Loss of monetary policy autonomy Joining a single currency reduces Britain's monetary policy autonomy. Britain might be better off if she retains the flexibility to set interest rates to meet her own economic objectives. Entry to the Euro Zone means a permanent transfer of domestic monetary sovereignty to the European Central Bank. Member countries have signed up to the fiscal stability pact that means there is little scope for fiscal policy to cushion the effects of economic shocks affecting different countries in different ways. The stability and growth pact limits national budget deficits to 3%. And the EU budget is not big enough for international transfers to take the strain instead. Britain is more sensitive to interest rate changes than other EU countries - in part because of the high scale of owner-occupation on variable-rate mortgages. Joining a currency union with little monetary flexibility requires the UK to have more flexibility in labour market.
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conclusion
The conclusion in this task is to explore the significance of international trade and European dimension for UK businesses. UK is a small country. The domestic market is small.UK can improve its economy only through increasing it market ,through international trade. The flourishing economy of UK during colonial rule was due to its large market, UK procured raw materials at cheap rates from colonies and sold finished products in colonies. Now the share of UK in international trade is at rock bottom. It has lost its markets. Once popular brands like Phillips ,BSA etc are not wanted in market and they have been replaced by cheap goods from Japan, China etc.UK has no future unless it reestablish its brands, recapture its markets through international trade. The UK's economy is dependent on foreign trade. The government supports free and unrestricted trade and has championed international trade organizations such as the World Trade Organization and the EU. Because of its dependency on trade, the British have few restrictions on foreign trade and investment. International trade has help bring in new resources and market competition which has helped to allocate economic resources among countries for example the rising costs, especially oil, and deterioration in cash-flows hampered growth in the first three months of the year, with most firms reporting they expected turnover and profit growth to slow. High cost of oil has leads to high fuel and petrol prices which eat into a companys profit and growth. Some of the importances of international trade are. It enhances domestic competitiveness on firms export prosperity, wellbeing which helps balance import of energy, raw materials, industrial research, innovation, infrastructure, technology development and market productivity standards on goods and services. It helps promote economic growth through production, distribution and consumption of goods/services, which has help increase the standard of living, income and globalization.
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appendices
Appendix 1
Methods of Economic Integration

(i) Alexander the Great started the first European integration. As a result, the Mediterranean world became one integrated area, and Greek become the universal language adopted by traders. Free trade was the result of military conquests. Economic integration cannot occur unless transportation and communication systems are well developed. In the East, the Chinese established the Han Empire in 206 BC. In the West, King Philip II of Macedonia began to conquer the neighboring city states, uniting Greece in 358 BC. Alexander the Great finished the work, conquering most states in the Mediterranean world before his death in 323 BC. However, because of his premature death, actual integration of the Meditrannean world had to wait until the Romans reconquered the Mediterranean world. The Romans built roads and knew how to govern the people, but the Europeans spoke Greek throughout the Roman Empire. (ii) Romans also followed the same tactic. (iii) Even in the 20th century, Mussolini tried to create a new empire in Europe (e.g., Mare Nostra = Our Sea = Mediterranean Sea)
1. Military Conquest
Medallion of Alexander the Great
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(Imperial War Museum) Similarly, Japan made a similar attempt in Asia in the 1940s.
Hitler's idea of integration
Imperial War Museum, London
Frank Haushofer (1869 - 1946) advances the theory of geopolitics, "Lebensraum," (living space) that a race has the right conquer neighboring regions. His student Rudolf Hess introduces him to Adolf Hitler while he was serving in Landsberg prison. Haushofer later becomes Hitler's adviser. Haushofer goes to Japan and learns about a secret society of warriors called Black Dragon, and creates a secret, copycat society "Thule Society," which uses Hackenkreuz (swastica) and later creates German Workers Party. Hitler joins and later changes its name to "National Socialist German Workers Party (NSDAP), known later as the Nazi party. Haushofer introduces the idea of axis, and persuades Hitler to form the axis with Japan. (i) In the 21st century, military conquests are no longer feasible, due to the presence of the Nuclear Club.
2. Free Trade Agreement
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(ii) Free trade agreements are the only possible means to achieve economic integration in the modern world. Gradually, counries become more interconnected through free trade, eventually becoming an economic union. Examples: NAFTA, European Union.
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Appendix 2 (Article)
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references
(2012, 05). Economic Integration and Global Markets to Uk Business Organizations. StudyMode.com. Retrieved 05, 2012, from http://www.studymode.com/essays/EconomicIntegration-And-Global-Markets-To-1008500.html Global Markets, Innovation UK (Taken 15 May 2013) Retrieved from : https://connect.innovateuk.org/web/global-markets
Article How Can Directors Turn The Global Marketplace to Their Advantage, Business Sense (15 May 2013) Retrieved from : http://www.rbs-businesssense.co.uk/import-export-advice.html
Business Explained, GOV UK, (4 April 2013) Retrieved from : http://europa.eu/youreurope/business/starting-business/setting-up/unitedkingdom/index_en.htm
General Contractual Right, EUbusiness, by Inadim (28 August 2009) Retrieved from : http://www.eubusiness.com/topics/consumer/contractual-rights
The Euro Advantages and Disadvantages, Schreiben10 website (taken 15 May 2013) Retrieved from : http://www.schreiben10.com/referate/Politik/4/The-Euro---Advantages-andDisadvantages-reon.php
The Euro: Advantages and Disadvantages Of A Single Currency, Currency Solution (Taken 15 May 2013) Retrieved from : http://www.currencysolutions.co.uk/euro/the-euro-advantages-anddisadvantages-of-a-single-currency
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Business Environment 22027Y

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Business Environment

Methods of Economic Integration

Medallion of Alexander the Great

Hitler's idea of integration

Imperial War Museum, London

2. Free Trade Agreement

Business Explained, GOV UK, (4 April 2013) Retrieved from : http://europa.eu/youreurope/business/starting-business/setting-up/unitedkingdom/index_en.htm

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