Consumer Confidence and Business Outlook in the UK: An Analysis

This article analyzes the consumer confidence and business outlook in the UK, providing insights into the economic conditions and changes in the business cycle. It also suggests legal structures for a new business startup.

Global Business
Environment

Table of Contents
COURSEWORK 2A - NEWSPAPER ARTICLE ON CONSUMER CONFIDENCE..................1
COURSEWORK 2B – EMAIL MESSAGE REGARDING A BUSINESS START-UP...............5
REFERENCES................................................................................................................................9

COURSEWORK 2A - NEWSPAPER ARTICLE ON CONSUMER
CONFIDENCE
Business and consumer confidence can be explained as the study of businesses and the
experience of customers with the help of surveys that are commonly released before the
declaration of official data statistics (Kokodey and et. al., 2018). It mainly presents the changes
or shifts in the business cycle, economic cycle and economic conditions throughout a given
duration. In short, it can be explained as the release of informal statistics before the release of
official data that provides a description of changes in the economic conditions in the economic
cycle. According to the ONS business insights and conditions survey conducted voluntarily to
identify the challenges faced by the economy in the UK and its impact on the businesses. It was
obtained from the survey that was conducted in the end week of June 2022, approximately 17.6%
of businesses have chances of increasing their business performance within the upcoming 12
months. 13.7% of respondents thought that their businesses will decline in upcoming 12 months
and others assume that their businesses will remain nearly at the same condition in upcoming 12
months.
Figure 1Business Performance over next 12 months
The UK's economy is mainly dominated by the service sector, which consists of finance,
business administration, professional services, hospitality business and retail (Morrison, 2020).
Service industry is among the highest contributors in Gross Value Added (GVA), approximately
1.7 trillion that is 80% of total contribution to the economy in the UK. GVA helps to measure the
total economic growth similar to GDP that measures the value of goods and services produced
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after deducting the costs of production. Service industry is more likely to contribute towards the
growth of the economy in upcoming 12 months in the future. The attached document provides
economic output data for broad industrial sectors from 1990 to 2021 which entails that the
service industry is more likely to grow in future 12 months. Example of Tesco can be taken that
shows the growth of the organisation in the upcoming 12 months.
CBI industrial trend survey conducts monthly and quarterly industrial trend surveys that
show that the manufacturing industry could rise over the next 3 months in comparison to its
decline. More likely the manufacturers will support the growth of industry in the upcoming
duration and will also provide higher chances of employment in the manufacturing sector
(Bhagra and Sharma, 2018). The sheet shows that the manufacturing industry could provide
approximately 7% of upcoming jobs in the next 12 month duration. Rio Tinto and Unilever are
among the biggest manufacturing organisations in terms of their revenue throughout the UK that
will grow in the upcoming duration.
Figure 2: UK Economy industry structure
There could be no other customer research project with the life span, thoroughness and
unwavering quality of OECD Consumer Confidence Indicator. This marker offers a hint of
future upgrades of families' usage and saving and the cyclic changes of business, considering
replies concerning their ordinary money related situation, their viewpoint about the by and large
monetary situation, joblessness and capacity of save reserves (Hamilton and Webster, 2018). A
marker north of 100 signals a lift in the clients' conviction towards the future monetary situation,
because of which they are less disposed to save, and more inclined to consume cash on huge
purchases in the following a year. Values under 100 shows a critical decline towards future
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improvements in the economy, conceivably bringing about a tendency among customers to save
more and consume less.
Customer spending is very important for any market economy (Tuleja, 2021). On the
wireless transmissions or internet, there will never be a deficiency of information, examination,
and link critique in regards to customer behaviour. The degree of customer confidence certainty
will be a significant variable that decides the eagerness of buyers to spend, acquire and save. An
elevated consumer confidence certainty will empower a higher peripheral inclination to
consume. A fall in the degrees of consumer confidence indicates the downfall of the economy.
Figure 3: Consumer Confidence Index showing the fluctuating consumer confidence
For a long duration, UK service industry investments have been made tremendously. The
UK Investment Industry have woven the story that higher expenses for dynamic administration
gets you better execution, particularly when challenges gain out of influence, contrasted with
aloof/list supervisors. At the point when markets get intense, they can switch into money or more
cautious offers to safeguard the investment funds for the organization. Back in 2020, the CEO of
Schroder said that the shortcoming of record supports would be uncovered in downfall as “The
shortcomings of mechanised trading, better known as passive trading, will come into sharper
focus”. Deutsche Bank downgraded its price targets on IAG and EasyJet to 140p and 490p
respectively, with Wizz Air now at 2,350p. Ryanair is its only “buy” recommendation, but the
Dublin-based carrier also got the price downgrade treatment today.
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Figure 4: Consumer Confidence Marker
The GfK Consumer Confidence marker in the United Kingdom tumbled to (-)41 in June
2022 from (-)40 in May, setting another record low for the second continuous month and adding
to worries of a pullback in customer spending in the midst of drowsy monetary development.
"The customer mind-set is presently hazier than in the beginning phases of the Covid-19
pandemic, the consequence of the 2016 Brexit mandate, and, surprisingly, the shock of the 2008
worldwide monetary emergency, and presently there's discussion of an approaching downturn,"
GfK client technique chief Joe Staton said. Four of the five estimates that structure the certainty
file diminished in June contrasted and the earlier month, with the most honed fall enlisted in
customers' transient viewpoint about their individual finances. UK yearly expansion arrived at a
four-decade high of 9.1% in May in the midst of rising food and energy costs, the most
noteworthy among G7 economies. The country's economy likewise contracted both in March and
April, raising the probability of an economic downturn this year (Ronit, 2018).
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COURSEWORK 2B – EMAIL MESSAGE REGARDING A BUSINESS
START-UP
From:
To:
Cc:
Subject: Message regarding a Business Start-up
Dear Friend,
I would thank you for providing me this opportunity to help you out with the establishment of
new start-up. I have brought you some options that could be suitable for establishing your
business along with the suggestions what I prefer. Your business idea is very convincing and
overall it has higher chances of being successful in the economy where the service industry is
biggest contributor to the economy. As I would see it, the arrangement to import modest cell
phones from Taiwan or China and offer them to provincial financial backers in arising
economies who need versatile business correspondences that is modest and dependable to
develop their own business. This must be a gradual growth for your business and you need to
focus on local market area before moving to the external economies. I have underlined certain
ways in which you can start your business and take it towards growth and success.
Legal Structures
There are different ways of being self-employed:
 Sole trader: It refers to a business that is managed, owned and controlled by an individual
and for starting this type of business less finances is required (Dzwigol and et. al., 2020).
Sole trading provides highest flexibility of operations and full control of the business
because the owner is working alone and has the key rights to take decisions. The major
advantage of this form of business is that all the profits belong to the owner only and
decision making power is in the hands of owner. The drawback of this form of business is
that it requires huge investments and all loses are also bearded by the owner.
 Partnership Firm: This form of business can be explained as the business that is owned
managed and controlled by two or more people who come together to mutually share
their part in the business. This form of business provides flexibility of operations and
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chances of operating the business with multiple talents. The major drawback of this form
of business is the interruption of partner in every activity.
 Limited liability Company: A liability company can be considered as an organisation that
is established by acquiring finances from various sources and business is entirely separate
from its owners (Rezaee, 2019). The limited liability business has a separate identity and
the funds are raised from various sources of finance like shares, debentures and other
forms of finances. In this the organisation needs to pay the specific part of its profits to
the investors who invest in the business for a part of share in return.
 Franchising: Franchise of a business that is already set up could help to establish
business in the name of an organisation that is already well established. In this form of
business an individual needs to invest a very less amount that is required for establishing
the business and acquiring the resources. The person can manufacture or acquire
resources from the already existing brand and sell it in the market without any challenges.
In return for the franchise the franchisee needs to pay specific share of their profit to the
brand.
Sole trader will be a good option for you to establish the business because this will help you
to establish the business as early as possible. Moreover, beginning another business can be
energizing and fulfilling, yet it is likewise loaded with difficulties. With responsibility, drive,
constancy and backing from loved ones you can change your business thought into the reality.
Contemplate what being independently employed will mean to you and think about a few
potential benefits and impediments:
Advantages Disadvantages
Gaining self-source of income and
remuneration
Single decision maker
Flexible work hours and schedules
Have higher level of satisfaction of using your
skills and talent for your benefits
More independent to take risks and achieve
greater benefits
Regular income may not be guaranteed
The finances will always be needed
Lengthy hours of work and over-burden
sometimes
No holiday or sick pay and no pension
Need to sort out your payments and clear the
tax for the personal incomes and business
incomes
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Market forces also play’s a very important role in the success of a business and it is
necessary to evaluate the competition in the market (Barr and et. al., 2018). Porter’s 5 Forces can
be helpful to evaluate market competitiveness for the business. The cell phone industry is set
apart by weighty contest but the use of communication technology in investment sector is less
involved. The main brands in this industry with the most noteworthy pieces of the pie are
Samsung, Apple, and Huawei. Lately, the interest for cell phones has levelled.
 Bargaining power of suppliers: The haggling force of providers in the cell phone
industry is for the most part low with the exception of the couple of huge players like
Google. A portion of the primary factors that limit the haggling force of providers in the
cell phone industry incorporate their more modest size and lower monetary strength
contrasted with cell phone producers.
 Bargaining power of buyers: The dealing force of purchasers in the cell phone industry
has expanded attributable to a few elements. One of the essential explanations for the
becoming stronger of the clients is the big number of substitutes in the business.’
 Competitive rivalry: Organizations are putting forcefully in R&D to keep up with their
pieces of the pie. The main organizations are likewise among driving spenders on
innovative work.
 Availability of substitutes: The danger of substitutes arising out of contending items
likewise becomes higher on the grounds that separation has become troublesome. Most
models in a classification accompany comparable highlights and almost comparative
handling power.
 Threat from new entrants: Aside from putting resources into mechanical advancement,
which is fundamental for separation and market coverage, they additionally need to zero
in on showcasing and client experience.
There are certain taxes and extra charges that must be calculated by you before you estimate
the total costs and its profits for the business. You might have to pay VAT on products sent from
to another country on the off chance that their worth surpasses a specific sum. Import VAT
applies to buy products worth more than £135 (barring extract merchandise) and gifts worth
more than £39. For organizations situated in Great Britain, Customs Duty will apply to products
entering from anyplace outside the UK. On the off chance that you really want to pay Customs
Duty, the instalment cycle is generally taken care of by the dispatch or conveyance
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administration dealing with your products. They ought to reach you to make sense of how much
is expected and the way that you can pay. Tank is generally paid to the provider, import VAT is
paid straightforwardly to HMRC. The HRMC and VAT should be determined on the import and
product of labor and products.
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REFERENCES
Books and Journals
Barr, T.L. and et. al., 2018. Development of indigenous enterprise in a contemporary business
environment–the Ngāi Tahu Ahikā approach. Journal of Enterprising Communities:
People and Places in the Global Economy.
Bhagra, A. and Sharma, D.K., 2018. Changing paradigm of employability skills in the global
business world: A review. IUP Journal of Soft Skills, 12(2).
Dzwigol, H. and et. al., 2020. Formation of global competitive enterprise environment based on
industry 4.0 concept. International Journal of Entrepreneurship, 24(1), pp.1-5.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Kokodey, T. and et. al., 2018, October. Modeling the global business environment based on
polycyclic theory. In The International Science and Technology Conference"
FarEastСon" (pp. 487-499). Springer, Cham.
Morrison, J., 2020. The Global business environment: towards sustainability?. Bloomsbury
Publishing.
Rezaee, Z., 2019. Business sustainability, corporate governance, and organizational ethics. John
Wiley & Sons.
Ronit, K., 2018. Global business associations. Routledge.
Tuleja, E.A., 2021. Intercultural Communication for Global Business: How leaders
communicate for success. Routledge.
Online
Business and Consumer Confidence, 2022. [Online] Available through,
https://commonslibrary.parliament.uk/research-briefings/sn02817/
OECD Consumer confidence index, 2022. [Online] Available through,
https://data.oecd.org/leadind/consumer-confidence-index-cci.htm
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