Impact of Covid-19 on Consumer Confidence and New Business Start-up in Global Business Environment

This article discusses the impact of Covid-19 on consumer confidence and new business start-up in the global business environment. It covers prospering and struggling sectors, legal structures, market structures, and Porter's five forces.

Global Business
Environment
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Table of Contents
Coursework 2A................................................................................................................................3
Newspaper article on consumer confidence...........................................................................3
Coursework 2B................................................................................................................................6
A new business start-up..........................................................................................................6
References.......................................................................................................................................9
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Coursework 2A
Newspaper article on consumer confidence
Consumer confidence is one of the economic indicator which measure the confident
about the overall state of the economy. It is important for the growth of company to expand the
economy and boost up the production within the company. It is important to have perfect
information about the market and change the stock market performance for the growth of
different industries in market (Ahmed and Alam, 2021).
Prospering sectors
 Online Stock brokerage: These industries deals in operating websites online which acts
as agents purchasing and selling stocks and other securities. The progress made in this
industry is accelerating due to the increase in number of investors who started trading
online. Due to the increasing rates of unemployment following the pandemic situation,
online trading serves as an excellent option to generate income (Amankwah-Amoah,
Khan and Wood, 2021). The brokers offering online trading services such as Fineco
Bank are expected to grow significantly.
 Ordering food online and delivering platforms: The introduction of appealing and
user-friendly applications has made food delivery a major option to enjoy ready-to-eat
happy meals. During the course of pandemic, lock downs and social distancing needs
gave this particular industry a major push boosting the growth opportunities enormously.
The food delivery option serves as a saviour for the restaurant industry which was facing
serious complications during the pandemic situation (Britain’s economy is hot but not
overheating, 2021). These applications of online ordering are enhancing ease for
consumers with options like tech-enabled driver communication system. Moreover, they
attract consumers by providing the option of promo codes and offering discounts. Food
delivering apps like Deliveroo is showing faster growth and is expected to perform better
in near future.
Struggling Sectors
 Airport and aviation industry: Aviation is one of the major strategic and economically
significant industry in the UK. The abrupt and nearly absolute shutdown of passenger air
travel due to the pandemic had a serious economic effect on airlines, airports and air
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freight (Bathula and Gaur, 2021). In fact, airport and aviation industry was the first to get
majorly impacted due to the outbreak of Covid-19 as international borders got closed by
government to handle the consequences of pandemic. This sector has to bear innumerable
loses which are very hard to recover considering the fact COVID-19 new variant is still
causing disturbance in the economy (Consumer Confidence Continues Slide on Covid-19,
Inflation Worries, 2021). The number of employees in airline industry has reduced to a
significant extent. Beside this, the civil aviation industry in UK has been liable for
greenhouse gas emissions further declining the scope for overall growth.
 Hotel and hospitality industry: This industry has been majorly affected due to the lock
downs and government restrictions causing the hotel and hospitality sector to decline
during the course of pandemic. Consumer spending in this sector declined due to the
growing awareness and consciousness regarding health. The need for social distancing
caused the profitability margins of hotels to diminish strongly. This impact was even
major for night clubs and bars as they were already facing competition during pre-
pandemic period (Demirbag, Apaydin and Sahadev, 2021). Nightclubs have closed in
large numbers as the owners were facing challenges due to regulations, licensing and
other policies impacting their overall growth rate. Many consumers prefer to buy alcohol
from local shops at cheaper rates instead of ordering pricey drinks at bars and clubs.
 Cinema industry: The united kingdom is one of the most leading and reputed box office
all over the world. These past few years served a considerable decline in this industry
following the major outbreak of Covid-19. The revenue generation of UK cinemas
declined by around 80 percent due to the temporary termination of movie theatres. Some
theatres have permanently closed in the pandemic situation causing the sector to further
decline. It will take some time to cope with the effects of the pandemic to recover from
the losses that the cinema has to bear during the shutdown.
Suggestion for an amateur investor
The demand and supply models are seem to be abruptly affected considering and
evaluating the above information. Consumer spending patterns are constantly changing
indicating a shift in platforms where they are likely to spend more. In isolating situations as
faced in lock-downs the increasing use of online services and internet suggest that there is a
major scope in the field of e-commerce (Hänle, Weil and Cambré, 2021). It recommended for an
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amateur investor to allocate their funds in the sector of e-commerce. This industry deals in
providing a wide range of goods and services through online portals which has shown
remarkable changes over the past decade. Previously a declining industry that was operating
through depending upon mail orders and direct sales through TV, radio and telephones, has
shown significant growth due to the expansion of internet services. The convenience of online
spending and increasing use of smart phones has widened the dimensions for these industries.
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Coursework 2B
A new business start-up
Market suffers a lot due to Covid-19 and from its impact many of the businesses suffer
and for starting own business is kind of difficult for the armature person. If the individual choose
right business structure and know about the market structure and its competitive can be helpful
for the new business to run and gain success (Kosnikov and et.al., 2021).
There are different legal structure relates to the sole proprietorship, partnership and
company. There advantage and disadvantage are explain below:
Basis Sole proprietorship Partnership
Meaning These are the business which are
owned by one person and have all
responsibilities for running the
business activities. They can be
independent contractors, freelancer
and home based businesses.
In this legal structure, two or more
people share the ownership of a
business and their profit and loss
sharing ratios are divided as per
their partnership deed. These
business are effective for the
medium or small scale enterprises.
Advantage  Profit is all related to the
owner of the business.
 The decision are all in the
hand of owner.
 This is one of the easiest and
effective way to doing the
business on small scale.
 These businesses are easy to
established.
 They have separate legal
structure.
 Profit are taxed only once in
a year.
Disadvantage  They have unlimited liability
in business activities.
 Issues in raising the funds.
 They have no separate legal
status (Le and Do, 2021).
 Partners are liable for each
other's action.
 Profit must be shared with
the other partners of the
company.
 Decision making power is
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distributed.
On the basis of new business idea for importing mobile phones from Taiwan and China
and sell them to different rural investors who have the need of mobile communication. This is
effective and applicable for the rural areas as here, the owner can sale their products to people at
cheap and reliable prices. For this business idea, partnership is reliable and appropriate. Some
reasons why the partnership is suitable for them is it is one of the easy and general way for doing
business and does not involve any type of legal and long business procedures. Furthermore, after
the impact of Covid-19 many of the people have spend their savings so, partnership will help
them to manage more funds with less efforts (Montaudon-Tomas, Pinto-López and Amsler,
2021). Here, the amount of sharing profit or loss are contributed for the growth and enjoy the
need to accomplish the need to manage wide range of applicable sources and manage funds
effectively. The other benefit which the owner can gain while using partnership is they can
manage their profit and losses through to the personal tax return of the owners.
There are different market where the company can start new business such as Pure
competition, that involve large number of small firms competing each others. Here, supply and
demand determine goods and services produced. Another is monopolistic firms sell similar but
highly differentiate products. Third firm is related to oligopoly that is dominated by the few
companies in market and have limited competition. Last market structure is related to one firm
which control the entire market which means they have no close substitute in market (Pereira
and et.al., 2021).
These market structure have different competitiveness spirit in the environment, for
understanding competitive forces at play for conducting structure and gain effective and strategic
options for make decision making approach. For this Porter's five forces are used which is
helpful for managing different sectors to accomplish competitive advantage of the mobile
industry in an effective way (Tuleja, 2021). These stages are related to:
 Competitive rivalry: Mobile industry have intense competition as this industry have
already a wide range of market within the UK market. Some of the competitors are
Vodafone, Apple, Nokia and many more.
 Bargaining power of suppliers: They have large number of suppliers as in Taiwan and
China have different technology related products.
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 Bargaining power of customers: The new business industry have high number of
customers either wholesaler or end to end users.
 Threat of new entrants: As this business have very few cost of capital require for
branding and other processing. So, they have high threat for the new entrants in this
business.
 Threat of new substitute: In this, the force does not threaten the foreseeable in future
for the growth of the company in UK market.
After identifying above market and legal structure of the business it has been analysed
that the new business should work as per the market demand and supply. Furthermore, they
should work on the HMRC import duties and its charges as it affect the cost of the new business
at high level. For example goods worth £135-£630 charges import duties of 2.5%. So, it is
important to considered all the variable and fixed factors of market before start a new business.
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References
Books & Journals
Ahmed, F. and Alam, M.A., 2021. Business Environment: Indian and Global Perspective. PHI
Learning Pvt. Ltd..
Amankwah-Amoah, J., Khan, Z. and Wood, G., 2021. COVID-19 and business failures: The
paradoxes of experience, scale, and scope for theory and practice. European
Management Journal, 39(2), pp.179-184.
Bathula, H. and Gaur, S.S., 2021. Contours of the Global Business Environment in the Post-
COVID-19 Era: Key Implications for Businesses. The New Normal: Challenges of
Managing Business, Social and Ecological Systems in the Post COVID 19 Era.
Demirbag, M., Apaydin, M. and Sahadev, S., 2021. Micro-foundational dimensions of firm
internationalisation as determinants of knowledge management strategy: A case for
global strategic partnerships. Technological Forecasting and Social Change, 165,
p.120538.
Hänle, F., Weil, S. and Cambré, B., 2021. Chinese SMEs in Germany: an exploratory study on
OFDI motives and the role of China’s institutional environment. Multinational Business
Review.
Kosnikov, S.N., Shershukova, N.V., Sorgutov, I.V., Bessonova, T.V., Kobets, E.A. and
Zatsarinnaya, E.I., 2021. Business education: global trends and prospect. Linguistics
and Culture Review, 5(S1), pp.478-487.
Le, Q.C. and Do, T.N., 2021. Sub-national governance quality and economic growth: a cross-
region study in Vietnam. Global Business and Economics Review, 24(3), pp.279-295.
Montaudon-Tomas, C.M., Pinto-López, I.N. and Amsler, A., 2021. Virtual Collaboration in
Remote Project Management: Challenges and Recommendations. In Remote Work and
Sustainable Changes for the Future of Global Business (pp. 73-95). IGI Global.
Pereira, V., Budhwar, P., Temouri, Y., Malik, A. and Tarba, S., 2021. Investigating Investments
in agility strategies in overcoming the global financial crisis-The case of Indian IT/BPO
offshoring firms. Journal of International Management, 27(1), p.100738.
Tuleja, E.A., 2021. Intercultural Communication for Global Business: How leaders
communicate for success. Routledge.
Online
Britain’s economy is hot but not overheating, 2021. [Online]. Available
through:<https://www.economist.com/britain/2021/05/20/britains-economy-is-hot-but-
not-overheating>
Consumer Confidence Continues Slide on Covid-19, Inflation Worries, 2021. [Online].
Available through:<https://www.wsj.com/articles/consumer-confidence-continues-slide-
on-covid-19-inflation-worries-11632842406>
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