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Economic recession

In economics, a recession is a business cycle contract

UNISON is the largest British and European trade union which deals with public sector. It has more than 1.3 million members across Europe covering most of the industries like health, education, local government, police, private contractors providing public services, gas, electricity, gas, water, transport and voluntary sector etc.

In order to develop a business strategy, companies first start scanning internal and external factors to understand the business, its market position and market itself. Internal factors can be controlled by the companies itself but external factors are out of their control. So the companies have to formulate their business strategies according to the external factors.

PEST analysis is an important business tool which is used as a first step towards strategy formulation. It covers political, economical, social and technical factors. Some authors do add environmental and legal factors also making it PESTEL analysis.

It is evident that UNISON has taken utmost care in understanding its member’s needs and requirements as well as market conditions. That is why they have devised several strategies and tactics which are very helpful in achieving their aims and objectives. Let us discuss how UNISON has taken care of the PEST factors in establishing successful strategies:

Political factors:

Being in Europe UNISON has considered the UK as well as European policies, rules and regulations. UNISON is in a strong favour of migrants to the UK and openly supports the UK Labour Party. Workers from EU countries move to the UK for a better wage rate, flexible rules, excellent working conditions and better life style. According to the government figures, after the EU expansion in 2004, more than seven hundred thousand Polish workers moved to the UK as registered workforce to strengthen the UK workforce and national economy.

” Migrants make a net contribution to the exchequer when tax receipts are compared with expenditure. This net contribution is higher for migrants than for other groups. The gap between the net contribution of migrants and that of the wider population has in fact grown over recent years”.

Migrants are not provided with the proper health services and housing. London and South East of England are the most populated areas of migrants, where facilities are not up to the British standards. Because of the short term movement of migrants most of the national and local bodies are unable to keep a track of these migrants’ movements.

One of the most important areas for UNISON is to make sure that government policies meet the basic needs of the workers and best suit them in their working environment. In order to create a favourable environment for workers in the UK, UNISON lobby in the government to get the best working rules and regulations for the British workers.

Trade Union Directive (TUC) found that many employers are not following the minimum wage rule and working time directive. That means some workers were forced to work under minimum wage and some were forced to work extra hours without pay. Generally this was happening due to the ignorance of migrant workers from rules and regulations and overall fear to lose the job. Another hindrance was the language, since most of them are unable to speak English fluently.

British government helps the workers to understand their legal employment rights in the country and also provide them legal aid in case of conflicts at employment. But due to the government’s cut in funding this service has affected a lot. UNISON has come forward to resolve this issue by offering free advice centres and legal advice to all their members. This legal advice and information services are helping the migrant workers to understand their responsibilities and legal employment rights in the country.

Economic factors:

UNISON recognises the importance of migrant workers in both public and private sectors of the economy. UNISON’s main focus is make sure that migrant workers get the fair employment terms and conditions and suitable career development opportunities to keep UK as an attractive place for migrants.

Government figures of the year 2006 show the clear and concise picture of migrant’s role in the UK economy. Total 400 thousand people left the UK for economic benefits to other countries of the world and UK received a total of 590 thousand people as migrant workers. The net result of this migration was a positive Gross Domestic Product (GDP) of 0.5% growth in the UK economy. This GDP growth of 0.5% is equivalent to £6 billions to the UK economy.

People migrate from one country to another in search of better jobs, better lifestyle and also safe and secure environment. Fortunately the UK provides all these attractions to the people in the outside world. An average salary in 2007 was £2500 in the UK as compared to the £500 in Poland. So a wave of Polish migrants came to the UK in search of good economic conditions not only for themselves but also for relatives back home.

Migrant’s top priority is always to get any kind of employment. That is why they take any employment rather than area of their expertise. So most of them end up with industries like agriculture, service industry or blue collar jobs like cleaning and packing. Most of the time they take the jobs which are not liked by domestic labour due to the working conditions (like outdoor jobs) or low paid wages. In this way they do the unwanted jobs by the domestic labours and fill up the local labour market gaps giving more choices to the employers.

Most of the employers found migrant workers as self motivated and hard working employees. They also mention that migrant workers show more keenness and positive work ethics as compare to some of the domestic workers. Through this businesses achieve an important target of competitive edge over their competitors. Migrants are playing very important roles in both public and private sectors of the UK economy.

Social factors:

While analysing the social factors, UNISON has given utmost attention to the migrant worker’s social integrity to the local society and a smooth transition from one culture to another. Social factors contribute very positively to attract the migrant workers to the UK. Standard of living is the biggest attraction for the people in Asia and around the Europe as well.

The UK has an ageing population with higher percentage of retired people. That simply means the local labour market will shrink without migrant workers. The government forecast is that the issue will become a serious concern in 20 years time. Our care worker industry comprise of 16% migrant workers. Without these migrants, first of all we are unable to manage the existing care services and secondly it is a skilled shortage area within UK and most areas of the world. These migrant workers get trained in their home countries and then migrate to the UK to fill the skill shortage void.

UNISON has researched that most of the migrant workers have very strong language barriers, which makes communication very difficult. This makes them socially inactive with their English speaking co workers. Since they can’t read very important documents like company employment rules, contract of employment etc., therefore, they remain unaware of their legal employment rights. Even at shops, accessing government departments and understanding the welfare system becomes next to impossible for them to understand.

In order to resolve the above mentioned issues UNISON has taken firm steps in two directions. They have negotiated with the employers that:

Employers will produce welcome packs in different languages for migrants

Employers will print health and safety information in different languages

Employers will give paid time off to migrant workers

Employers will pay the course cost to learn English

Also the UNISON took positive steps to ensure the social integration of migrant workers and their families in the British society.

Special section for migrant workers on UNISON website providing information on social issues in different languages

Produces migration information leaflets in 11 different languages

Provide information on welfare and taxation

English for Speakers of Other Languages (ESOL) course for migrants

Technological factors:

UNISON’s own website is a clear example of technological revolution in the world. The members in the whole European area can find out information about employment, rules and regulations, social life, health and safety, right at work, and benefit system, with the luxury of getting information in their local language.

A United Nation’s recent survey shows that migrant workers send home twice the amount of dollars given in international aid to developing countries. So migration is suitable for both home and destination country. Migrants fill the labour gap and expand the labour market of the host country while developing the economy of the home country by sending extra income to their loved ones.

Development in automation and internet has changes the facet of the business world. Due to automation and computer, less skilled workers are required in factories and less office workers are required to handle data physically. In shopping malls accurate data of goods in and out is maintained by computers, security is taken care by CCTV and scanners to catch the thieves.

Moreover online shopping has encouraged many migrant graduates to come and play their role. This area of skilled shortage is well covered by migrant workers. Internet has increased the availability of products, buyers and suppliers with no extra cost of transportation for all business players. Telecommunication has helped both employee and employer to access global labour markets.

Budget airlines have made the air travel very easy and cheap. That is why 75% of migrant workers use budget airlines to travel. Safe, secure and quick money transfer is another attracting factor for migrant workers.

Conclusion:

UNISON is a well represented company of millions of workers across Europe and takes care of most of the basic issues of domestic and migrant workers. They support migration in a very logical way and work for the betterment of both home and host populations and economies. UNISON has take in depth account of all external (PEST) factors.

UNISON understands the political issue of workers and trying to resolve them in number of ways at national and international levels. They are actively trying to win the best policies for workers across Europe.

Economic viability of migrant workers is quite clear from United Nation and governmental reports. Also figures from 2006 and 2007 support the strong view of UNISON of favouring migration for the UK economy.

On social grounds they have taken number of steps to help the migrants and made points towards the importance of migration. They have taken very positive steps towards social life of the workers and pushed successfully their bargain agenda to convince employers to give them a hand in resolving issues.

We are living in the age of technology, so everyday technological changes are changing our lives at greater pace than our expectations. UNISON has taken good account of the technological factors and has taken fruitful steps by equipping their website with loads of key information in different languages.

UNISON has a continuing role in asking government to implement favourable employment policies for migrants and assurance from employers to play their positive role for the benefit of migrant workers.

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ion, a general slowdown in economic activity over a period of time (Wikipedia, 2010). The economic recession is the worst period that any country can experience. It has many impacts such as unemployment, inflation, and many others. During economic recession, most companies fail to operate properly, others collapse.

The economic recession has brought upon many disputes to the countries that have experienced it. Disputes such as inflation, unemployment, social unrest, and decline of productivity of many firms. Despite all of these negative effects, some firms still manage to survive.

British manufacturing multi-national enterprises (MNE)

Multinational enterprise (MNE) is a corporation or an enterprise that manages production or delivers services in more than one country (Wikipedia, 2010). A manufacturing industry deals with the process of producing the products from raw materials to ready finished products which are ready for use.

Britain is one of the countries that are well developed in all important sectors, including the manufacturing industry. The manufacturing industry is well established in such a way that they operate beyond boarders.

PEST analysis for British manufacturing MNE

PEST analysis is an analysis of the external macro environment in which a business operates. These are often factors which are beyond the control or influence of a business, however are important to be aware of when doing product development, business, or strategy planning.

The following is PEST analysis for British manufacturing industry:

Political

Political analysis is the most important and influential part in analyzing a country before a company decides to do business there. All other factors like economical, social, and technological are influenced by politics. Hence, political analysis is a very crucial fact that any company should analyze before entering.

For Britain, the manufacturing multinationals enterprises are influence by various political factors; such as:

Trading policies; these are policies that govern all the business bodies in Britain. The trading policies in Britain are not very harsh to the manufacturing industry; in fact, the policies are a bit favorable to the manufacturing industry in terms initiatives. When in to labor policies, the rules and regulations are very difficult to follow.

Funding, grants, and initiatives; this is a very crucial fact since that Britain is in an economic recession. The manufacturing industry is badly in need of grants and funds from the government due to the economic recession but the funds and grants are not equally distributed by the government due to various economic problems.

Wars and conflict; at the moment Britain is engaged in the war against terrorism in Afghanistan. This war has impacted the manufacturing industry and its international branches especially in the Middle East; the image of British products in the Middle East has a bad reputation due to the war.

Economical

For any country, the economy is the back bone that holds the country together. In business terms, the economy of the country is the number one priority that when it’s favorable it is highly considerable.

For Britain, the manufacturing multinationals enterprises are influence by various economical factors; such as:

Home economy situation; at the moment, the home economy is not doing well. Most of the British manufacturing multinational enterprises depend on profits from its international branches. The home economy is not doing well due to the recent economic recession, but Britain is slowly recovering from the economic recession.

Overseas economy situation; as mentioned early, the overseas economy situation is doing very well, as a matter of fact, the British manufacturing multinational enterprises manages to cope up with the economic recession due to the profits received from its overseas investments.

Taxation; in Britain, taxation may involve payments to a minimum of two different levels of government: the central government (Her Majesty’s Revenue and Customs) and local government; central government revenues comes primarily from income tax, national insurance contributions, value added tax and fuel duty (Wikipedia, 2010).

Unemployment; the rate of unemployment is gradually increasing every year. Britain is experiencing its worst unemployment rate ever. At the moment it’s more than 20%. Also the labor force in Britain is very low compared to other countries; the labor force is 31,100,000 compared to 798,000,000 of China (Daniels et all, 2009, pp-462).

Inflation; the inflation rate in Britain is about 3.4% and rising (BBC, 2010). This is not bad at all compared to other countries. This is also very good for the manufacturing multinationals since the price wont fluctuate much, it will remain standard.

Social

The social factor usually has much impact on the brand image of the company. In Britain, there are many social factors that impact the manufacturing multinationals, some of them are:

Consumer attitude; most of the British consumers are not price sensitive, they are quality sensitive (Daniels et all, 2009, pp-447). This means that the companies will not worry about price related issues, they will concentrate on the quality of the product only.

Media views; the media is a very strong organization in Britain; it can destroy a company very quickly. For the manufacturing MNE’s, the media is a huge threat to them. The media influences things like labor strikes and destroying the brand image which is bad for the company,

Brand image; the brand image of the British manufacturing multinationals is highly admired internationally due its quality products. In Britain, the brand image is average shared by firms due to intensive competition.

Ethnic and religious factors; Britain is a country filled with a lot of ethnic and religious groups, but they don’t impact the businesses. Every person in Britain is concerned with his or her own issues.

Demographics; Britain population is about 49,138,831 in 2001 (Wikipedia, 2010). This means that the availability of potential customers is good, and it will attract more investments.

Technological

Competing technology development; in almost all of the European countries, technology is well developed and maintained. In Britain, the people admire technological produced products. Hence, this makes the companies competition in terms of technology to diversify and fierce.

Research funding; discovering and maintaining new technology requires a lot of funds and investment in the research and development department. Most of the companies in Britain fail to fund the research and development due to the economic crisis. The companies are in a dilemma, whether they should invest in R&D or in other departments.

Maturity of technology; in this time of science and technology, the technologies discovered reach maturity stage very early due to discoveries of other new technologies. This is true in Britain.

Technology legislation; in most of African countries technology legislation is not active at all, but in European countries, they are indeed very active. Technology laws help firms to license and patent its technology. In Britain, the technology legislation is doing their best to protect the companies.

Information and communications; the transfer of information and technology in Britain is very fast due to technologies such as the internet, mobile phones, satellite technology, and many others.

Transportation; the transportation system in Britain includes all land, air and water. The transportation authority is very efficient and effective. There are a lot of security threats in transportation system; such threat is of terrorists threats.

Ecommerce; Britain is a country which is well developed in terms of electronic business. A lot of transactions in Britain are made online. Almost all of the companies in Britain are operating online.

Ansoff matrix

The Ansoff matrix is a useful tool that aids businesses to decide their product and market growth strategy. The Ansoff matrix includes four categories:

PRODUCT

Existing

New

Existing

Market penetration

Product development

New

Market development

Diversification

MARKET

Market penetration

The purpose of market penetration is to achieve growth in existing markets with existing products.

This is when a company decides to promote its existing product in existing market.

This is useful when the product is at a decline stage

Product development

This is concerned with marketing new or modified products in existing markets.

This strategy is very important for introducing new product.

Market development

This involves the marketing of existing products in new market.

This is very useful for products which have failed in existing market.

Diversification

This occurs when new products are developed for new markets.

This requires a lot of research and development.

Recommendation

In this period of economic recession, the British manufacturing multinationals may use one of the Ansoff’s strategies. My recommendation is that they should use market development strategy due to the following reasons:

The economic recession has badly impacted the manufacturing industry in Britain; a lot of manufacturing companies are depending on the overseas investment. This is the reason why I recommend using the market development strategy. The companies will explore new markets but the same products will be used.

The availability of labor force in Britain is very low and expensive; by exploring into new markets, like China, the company may produce the same products but at low cost due to availability of cheap labor. This will bring the company a lot of profits.

The brand image of British products is highly respected in most of the countries in Africa. By implementing the market development strategy, the British manufacturing companies will benefit much by selling their products to Africa. This will also build a good relationship between Britain and African countries.

The transportation system in Britain supports the manufacturing multinationals to employ the market development strategy since that it will support them to sell their products outside Britain.

Research & Development

For a company to prosper and grow it must do more than keep up with its competitors and it must in fact get ahead of them whenever possible. Getting ahead means innovation which hinges on research and development (R & D).Research seeks to make basic discoveries and uncover new principles or facts so far unknown or unrecognized.

Research and development is very significant and influence nowadays; in fact, most of the big companies have introduced the research and development department and they pour a lot of money into it.

Research and development may also be considered as a competitive advantage for some companies. The company may use the new ways and new markets from the research and development department and use them against its competitors

New technologies

Technology is very significant to business, especially in this era of science and technology. Technology is a powerful weapon for firms to use them to gain advantage over the market. For example, technology is applied in methods of production resulting to efficient and low cost production method.

Other benefits of new technologies:

Gain first mover advantage. The company will gain the first mover advantage by introducing a new technology for the first time.

The company may use new technology as a secret weapon and use this advantage to gain superiority against their competitors.

The use new technologies by a company will diversify the brand image and the company will be tagged as a modern company by the people.

As time goes on, more new technologies are discovered, leaving the old ones to be forgotten. Companies should be more alert and keep their eyes open for new technologies. New technologies can be found by companies through research and development.

But, globalization is a huge threat to research and development as well as new technologies.

New technologies, Research & Development in an era of globalization

Most companies spend heavily on research and development so as to discover new technologies. Will the benefits of new technologies off-set the investment in research and development for international business in an era of globalization?

The answer is yes, as long as the new technologies are safely guarded by the company and the law. Depending on a country, the law offers the best protection for breach of information about the new technologies. The company can also protect the new technologies by its own methods and techniques..