Business environment entails a combination of both internal and external aspects that directly or indirectly influence organizational operations. Such aspects include competitors, owners, suppliers, government policies, technology, customer needs, the market, as well as, social economic factors (Shenkar, Luo & Chi, 2015). Interestingly, one of the key influencing factors to business environment is international trade. International trade involves multi-leveled exchange of products among more countries. It is therefore, a key determinant to growth of world economy, wherein, prices, supply and demand are influenced by global events. Different business units interact at global level in aspects ranging from imports, exports, outsourcing, business international law, public relations, to mention a few.
International trade in UK has led to welfare gains in the economy. Such gains refer to the net benefits the economic units get from producer surplus and consumer surplus from lower tariffs. International trade in UK has led to liberalization of trade leading to reduced frictions that translates to increased allocative efficiency in the economy. It, therefore, decomposes the price change and cost change channels in the economy thus yielding welfare benefits unlike the normal productive efficiency gains. Such welfare gains are from specialization from production, agglomeration, resource mobility, division of labour and access to wider markets. For instance, Mark & Spencer, a UK based multinational firm that is engaged in production of food stuff, cloths and home products has explicitly benefited from International trade. Increased sourcing of labour and food has remarkably enhanced reduced costs of production. M&S food business has gained as retailers source food stuff at lower cost as compared to its rivals while clothing line has been enhanced by the Better Cotton Initiative that aims at cloth recycling as production costs have relatively reduced.
Accordingly, international trade has led to increased the access to new technology for the countries that operate in the European business zone. Technology hasresulted to the adoption of new production techniques, adoption of e-commerce, Internet marketing and integration of automation in production lines. Automation in production has been a key factor that has led to standardization of products. Meanwhile, increased innovation has enhanced product development, thereby, enhancing consumer choice through a variety of products (Krugman, Obstfeld & Melitz, 2015). Both M&S and Dr. Marten’s Shoes have delivered value proposition from adoption of new technology that has been integrated in their marketing strategies. M&S has adopted retail tech that has permited retailers evaluate sales trends and align them with customer needs through the use of computerized MIS and Food Stock Management systems. Additionally, it has EPOS in its inventory flow management to ensure no stockouts and depletion of products from its stores. Dr. Marten’s Shoes has incorporated Internet marketing and Offline marketing to access global markets while its shoe production has integrated internal –air-pocket tech to produce the most selling shoes and boots globally.
Moreover, international trade brings economies of scale in the UK economy. Most of the UK industries have benefited from lower costs of production. Such an aspect results from unrestricted access to information and production technology, as well as, increased mobility of labor and capital (Alessandria & Delacroix, 2008). Consequently, reduced production costs are passed to consumers who in turn enjoy reduced prices for different goods (Dolton, 1992). Specialization and division of labour the key attributes that explain economies of scale. Such aspects translates to larger returns on production as employees concentrate on specific tasks which enhance improved skills and better performance. M&S and Dr. Marten’s Shoes have increased their efficiency in operations that has resulted from long-term relationship with customers and suppliers, staff remuneration and other staff packages among the best in UK markets. Economies of scale has been the secret to M&S develop internally to capitalize on core competencies and strategic positioning of the firm. Meanwhile, economies of scale has enabled Dr. Marten’s Owner to turn its attention to buying NHS supplier to establish its own powerhouse in medical services.
International trade has opened opportunities for may firms compete at a global scale. International trade opens up trade opportunities that allows liberalization to bring free trade to bring competitive relationships between businesses in these markets. Remarkably, barriers and other trade related restrictions have been reduced in the UK business zone. Such aspects make the firms in the European trading zone find it cheaper to trade internationally. Additionally, firms gain substantial support from the EU trade policies. Therefore, international trade as it opens up more markets and more competitive ones for businesses to trade globally. For instance, Mark & Spencer and Dr Martens Shoes, UK based organizations, have been able to expand their operations to compete globally.
The firms have been able to increase their market shares through strategizing on the different techniques on how to survive in the UK economy and even the globally. International trade has opened global markets for their products, access to cheaper labour and expertise that have facilitated their growth. Free trade that has cropped up from international trade has induced cheaper import of raw materials for Spark & Spencer’s clothing products and cost free exports for its cloths to other foreign markets. While Dr. Marten’s shoes firm has enjoyed relatively low transactional costs for its international transactions. It, therefore, makes these firms and other global competing firms capable of accessing global markets.
Lastly, international trade improves the standards of living and reduction of poverty for the competing countries. Building of the global markets translates to different aspects such as improved communication, construction of other infrastructure for both commercial and domestic use. With cross-border unrestricted purchasing, the purchasing power parity of the individuals and businesses in UK have increased. Individuals can access a variety of products at relatively lower prices. As these benefits accrue to the customers, firms on the other hand, are capable to trade continuously as they guaranteed of available demand. For instance, through reduced production cost, welfare gains, allocative efficiency among other gains, M&S and Dr. Martens Shoes have been able to produce relatively cheaper products that middle and even low-level income earners can afford. Additionally, a variety is delivered to their customers at cheaper cost. As customers enjoy all these benefits their standards of living have been improving, a key aspect that explains poverty reduction in UK as compared to other countries not associated with international trade such as in Africa.