Critical Issues in Business Management: Trade, Brexit, Finance

This report delves into critical issues in business management, focusing on the major trends in trade of goods and services among Commonwealth countries, the impact of Brexit on trade and investment within the UK's finance sector, and the challenges and opportunities faced by multinational enterprises in the financial sector. It examines the influence of digital globalization, urbanization, and emerging markets in the context of trade. The report analyzes the implications of Brexit on financial stability, passporting, talent drain, and the overall sustainability of financial firms. Additionally, it evaluates the impact of various economic and environmental factors on trade, growth, and sustainable development, emphasizing the need for adaptation and strategic planning in response to these dynamic changes. The report also highlights the initiatives taken by ministers to support commonwealth trade.

Critical Issues in
Business
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
1. The major trends in Trade of goods as services between common wealth countries.............1
TASK 2............................................................................................................................................4
2. Impact of Brexit on trade and investment within finance sector in UK..................................4
TASK 3............................................................................................................................................5
3. Evaluating the possible challenges as well as opportunities of multinational enterprise in
financial sectors on pro Brexit....................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The major issues that are faced by organisations are incorporating technology, production
as well as lowering trading costs that discharge the geographical barriers to economic activity.
Globalisation is the major issue as there are various aspects revolving around it. Internalisations
is referred to as widening, deepening as well as speeding up of worldwide interconnection in all
aspects of organisation sustainability. The global economy has affected the ability of enterprise
to market products and services all over the world. Enterprise that operates their business
globally are referred to as Multinational corporations. In competitive environment there are
many majors various variables in business environment that have great impact on the company
operating internationally. For instance Brexit has great effect on the great effect on the
profitability and growth of various firms operating in EU and UK. These factors have
consequences on the trade of goods and services.
The study has focus on analysing the major trends in trade of goods and services. It also
includes the identifying the impact of Brexit on trade as well as investment within finance sector.
Project will also evaluate the possible challenges as well as opportunities in multinational
company in finance sector.
TASK 1
1. Trends in Trade of goods as services between common wealth countries
Q1: You have made some improvements and commonwealth countries overview
evidenced in your analysis however Further improvements are required as outlined
below:
It would be beneficial to analyse the impact of digital globalization on these trends
(McKinsey), given that 30 Commonwealth's countries are Small States (e.g.
Jamaica, Kenya, Fiji and Malta) and the digitization has opened the door for
emerging economies and small businesses to participate directly in globalization or
trade of good and services. Additionally, to analyse the significance of Emerging
Africa in this context. On another note to discuss the urbanisation and its impact on
trade trends in commonwealth countries.
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Urban can be referred to as cities, towns, villages or localities. The urbanisation has great
impact on the growth and development of Common wealth countries. No common wealth
countries can generate higher income or foster rapid growth without substantial support of
urbanisation. There is direct relationship between urbanisation and per capita income. It helps
country in improving agricultural productivity and rural livelihood. Enhancing agricultural
income is very significant for reducing poverty.
There are 52 countries that are the part of common wealth. Some world largest, smallest,
richest as well as poorest countries are Africa, Asia, Europe, America, and Pacific. Common
wealth consists of 31 members that are classified as smallest states. These smalls state have
population size of approx. 1.4 million people. These countries bring together the values as well
as aspirations which unite commonwealth (Hudson, 2017)
In present Era of changing economic conditions and certainty have great impact on the
trade and economic pattern. It has unprecedented created threat to peace and security. This
factors have lead to surge in demand for democracy, human rights and economic opportunities
and increasing requirement of Commonwealth. It has acted has compelling force for excellent as
well as effective network for cooperating as well as for promoting development. Common
Wealth is referred to as Voluntary associations that consists of sovereign and independent states.
All states are accountable for its own policies, consulting as well as contributing towards the
serving the common interest of people and ion promoting global peace as well as understanding.
It has great influence on the society, as it get various benefit from the pursuit of shared values
and principles.
The strength of common Wealth is that it includes combination of diversity as well as
inheritance, culture and rule of law. The objective of common wealth is that it is more concerned
with consultation as well as sharing of experience by practical cooperation and coordination.
Common wealth intends to serve as model and catalyst in order to support developing states in
forming friendship and developing of cooperation spirit. Role of Common Wealth is considered
as intergovernmental champion of small states. The Function of common wealth is to identify the
needs of member states, assisting them by providing them policies as well as advising on issues
related to political, social, economic development and delivering technical assistance. There are
various legal bodies such as government, parliament, civil societies and profession provide
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support to the commonwealth. They also respect its values and principles. Some principle and
values of common wealth are mutual respect for each states, common actions, inclusiveness,
transparency, legitimacy, responsiveness and accountability. Common wealth is an effective
association of states as it ensures the sustainable response to the needs of member states and has
great capability to identify the important challenges for the future (Wheelen and Hunger, 2017)
Summary of Common wealth Ministers statement
In march 2017 Ministers accountable for Trade practices from across the common wealth
has called a meeting in order to identify the areas where the strength can be gained by common
wealth to improve and increase the demand for inter- common wealth trade and investment.
Ministers are more concerned about decrease international trade and increase in rate of
protectionism. The ministry has focus on analysing the way for recalling commitment to rule
based, transparent, free and ensuring fair multilateral trading practices. Minister has called
meeting in order to highlight the significance of international economy that has advantage to all
citizen. It has been realised by ministers that several developing countries requires effective
trading environment in order to accomplish their sustainable development objectives. Ministers
has focus on identifying the need of support by common wealth to strengthening trading system.
The area of improvement that has been focus by ministers are increase in inter-commonwealth
trade and the option they have selected to make investment that will provide benefit to members
states of common Wealth. As they have consider making this decisions based on various
consideration such as requirement of small as vulnerable economies and regional integration. All
the members of ministry has agreed upon the significance to diversify and deepen intra common
wealth trade as well as investment. The various initiatives taken by minister y to support
commonwealth are they have planned to regularise meeting, consent related to facilitation
agreement as well as on agreed to co-operate to ensure its full and effective implementation at
national and regional levels. Ministry has taken initiative to define the role of private companies
in trade and investment (The Commonwealth in the Unfolding Global Trade Landscape, 2015)
Major Trends in Trade of goods and services between common wealth countries
Many major as well as significant changes have taken place in international trade. These
significant trends have great influence on direction as well as sources of Trade. It also has great
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impact on trade patterns and the competitive strength of countries ors states. Such trends are
originated from various variables such as rapid growth in trade activities among developing
countries, increasing trade interconnectedness that is possible through international value chain,
trade agreements, elimination of dynamism in commercial multilateralism and embedding the
requirement of tactics for providing response top climate change. Sustainable development goals
have been developed by various international organisation in which significant role is being
played by global trade. Decline in economic growth rate has major impact on international trade.
Post economic crisis has matched with the trend during 2000 to 2008. International export of
products as well as services could be much higher in 2014. In 2012, there was not much
economic growth of various countries due to which they were enabled to facilitate trade. After
the financial crisis in international market, it has great effect on the common wealth countries.
There was decrease in exports. The annual growth rate of commonwealth was much lower
during 2009-2013. The effective and healthy relationship between increase in GDP and trade has
positive effect on commonwealth. Elimination of export diversification is the unique feature of
small states as well as commonwealth. The small states in commonwealth have to face major
challenges related to trade development. It also has aggravated the focus on primary exports.
After the financial boom, commodity exporters are more concerned about the prices of
commodities. The Commonwealth was contributing very little towards the UK trade. On other
hand, approximately 8.9 percent contribution made by UK towards trade of commonwealth
during 2015 and approximately 43.9 percent towards EU. UK imports majorly accounted for 53
percent and only 7.9 percent from commonwealth.
Global value chain is playing a significant role in transforming the traditional approach of
complete production procedure in particular country. This categorisation of production process
on the basis of geographical areas may provide opportunities to many countries. But it may lead
to challenges for them as it requires expertise.
The climate change is the major challenge or issue faced by many global companies. It
has great implication on trade, growth and sustainable development. There major business
environmental factors such as social, economic and environmental changes have great impact on
import as well as exports of goods and services. Some states in commonwealth have very little
capabilities to cope up with such changes. Many member state of commonwealth have high
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export concentration on the organisation that are dealing in sensitive sectors such as agriculture,
fisheries, tourism and resource extractions (Common wealth Secretariat, 2017) According to the
report of Mc Kinsey, digital Flow have a great effect on the GDP growth of Africa. It has been
identified from the report that global goods trade has been flattened and cross border capital
flows have decreased. The Digital Globalisation is considered as the new era of global flows.
This technological changes have provided organisations an opportunity to access global market
with less capital intensive business model. But it also brings new risk and challenges as well.
Trade of goods and Services is confined to advance economies and their large multinational
companies. On the basis of Report provided by OECD significant way for countries to connect
themselves to the international economy and develop is through international value chain. But
the effective involvement or contribution in value chain is largely based on compelling
capabilities both at domestic or regional level.
The African Countries is required to focus on strengthening regional economic
integration. Africa approach tp regional integration emphasizes on boosting regional trade
integration using digital globalisation without threatening to sovereignty of member states.
Increased Mobility due to emerging digital Globalisation has raised new challenges for Africa.
TASK 2
2. Impact of Brexit on trade and investment within finance sector in UK
Q2: The last 2 paras of your discussion seem irrelevant on the assessment of the
impact of Brexit on trade and investment within finance sector in the UK. Retail
and commercial banking analysis is evident and it’s better to discuss the impact of
Brexit on other segments including investment banking and asset management etc.
Finance industry has made contribution towards the economic development of UK. The
Brexit has made financial sector more sensitive to vulnerabilities. It poses short term risk to
financial stability. A period of uncertainty may lead to increase in sterling volatility, threat on
assets, cost as well as availability of various source of obtaining finance. The major challenges
faced by financial sectors are pass porting, talent drain and uncertainty.
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Pas sporting is defined as the procedure in which British based financial institution sells
their products as well as services to EU without obtaining the licence or permit and get easily
regulatory approval. But now, Brexit have great impact on the trade, growth, profitability as well
as sustainability of financial firm. The major effect of SEM programme in financial sector lead to
the establishment of single banking licence (Pitelis and Runde, 2017)
Brexit has great impact on various factors of financial services' infrastructure such as
clearing of payment or the provision of custody services to specific clients. It also has great
influence on transaction documentations. But these types of consequences can be prevented by
organisation by adopting effective as well as suitable strategies. Brexit also have great effect on
the legal environment in which final institution operates its business. It has great influence on
their clients and other stakeholders. Moreover, it also has impact on highly skilled and
multinational workforce. These types of consequences have great and long-term effect on
financial institution.
The direct effect of Brexit on financial sectors is the change to market access
arrangements that has led to increase in non-tariff barriers as an outcome of loss of passporting
rights and restriction on access to UK market. It has also resulted into reduction in migration in
UK. Broader impact of Brexit is that it has minimised the output and activity in other non-
financial industries that has adverse effect on financial sector.
1. Brexit has great consequences on the growth of financial industry. Also, various
regulation has greatly influenced the policies and decisions of financial companies. The
financial sector has small positive effect on the organisation as it has provided enterprise
an opportunity to reduce the regulatory cost. Regulations related to the industry has also
provided economic benefit to firm. Decline in economic activity and output has negative
effect on demand as well as investment in financial industry. Furthermore, Brexit has
great influence on business locations as well as decisions (Bauer, Eckhard and Knill,
2017)
Base rate are likely to remain lower for a longer period , which will keep net interest margins
under pressure. Higher inflation and decrease in consumer confidence has lead to deleveraging
and reducing loan growth. It has great impact on the revenue growth of financial institutions. The
negative GDP growth has great effect on corporate banking revenue. There was great decline in
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lending and payment volumes due to which corporate banks have to face financial instability that
has great effect on their growth and performance. In retail banking the major issues was loan
losses. There was decrease in trade volumes. Trade finance contributed less proportion of
aggregated corporate banking revenue. In asset management, the consequences of the Brexit vote
will likely lead to a reduction in AUM. It has also been analysed that investors shift to lower-risk
investments. These course of action would generate revenue pressure for asset management
divisions. There may be increase in rise in liquidity risk and increase with higher redemption
rates, coupled with specific risks to any illiquid asset classes. Several major players have already
been forced to freeze redemptions of assets after rapid outflows
TASK 3
3. Evaluating the possible challenges as well as opportunities of multinational
enterprise in financial sectors on pro Brexit
Q3: This is partly irrelevant and no discussion and coherent arguments given on the key
opportunities of MNE in the finance sector on post Brexit in the context of a changing global
trade landscape. See the slides attached for Q3. Same available on Canvas.
Lastly, try to weave more academic literature to support your arguments in the analysis.
Brexit is not only having negative effect but also have positive impact on multinational
companies. It provides these companies an opportunity to make investment worldwide. In
addition to this, it has allowed multinational financial institution to identify various sources of
obtaining finance. It enables business entity to increase their profitability and foster growth.
Favourable policies, administrative financial and commercial assistance from the legal authority
has played a significant role in expansion of multinational companies. Also, it provides
multinational financial organisation an opportunity to facilitate mergers and acquisitions. Brexit
has enabled many of these companies to access the market and become world leader in terms of
revenue among major industries. The benefit gained by them through Brexit is increase in
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profitability, market capitalisation and presence in international market (Kew and Stredwick,
2017). It has provided multinational companies a chance to develop new investment partnership
and increase its competitive strength as well as enhance competencies. Along with this, it has
allowed international enterprise to form strategic alliance in order to foster growth and
development. Investment and strategic partnership has encouraged business unit to support a
transition to higher values of financial products and services. The organisation has got
opportunities in resources and commodity sectors. It has provided business entity an opportunity
to diversify its business activities, make improvement in services. Brexit has allowed
multinational enterprise to increase their productivity and output. This has allowed global
financial firms to minimise the effect of various variables on their business activities. It has
provided business entity an opportunity to develop their financial structure. Further, this has
provided business entity an opportunity to increase the demand and supply of financial activities
by facilitating various marketing activities. Frequent changes to EU preferences, including the
list of qualifying countries and products could potentially deter exporting and importing
companies from using them. Multinational companies have been provided with sufficient time to
make adjustment in to their supply chains and communicating about changes to importers and
exporters in UK (Galati and Moessner, 2017).
The major economic challenges are faced by multinational cooperation dealing in
financial sector. Other factors that have created major challenges for financial sectors are social
as well as legal factors. As Economic variables has great impact on the profitability of firm.
Economic factors that has created major issues for multinational companies include economic
cricks, inflation , individual income etc. The social elements includes saving habit of individual
has forced the multinational organisation to make huge investment in the industry and policies
ion order to influence principle positively to buy financial products as well as services. This has
further lead to many global organisation has to face fiscal deficit and has to bear the burden of
high debts as well slow growth. The changes in various business environment factors have
negative impact on the growth, profitability and sustainability of small financial institutions. The
major issues related to trade and financial policies have been faced by international organisation
(Vedung, 2017).Successful global integration has provided financial institutions an opportunity
to foster growth and shared prosperity. International banking contributes to faster growth through
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two channels that is global banks make available much-needed capital, expertise, and new
technologies, assistance the competitiveness of domestic financial systems. Second, they enable
risk-sharing and diversification across borders. It provides evidence based policies that helps
financial sector to minimise the risk of global factors on growth and success of financial
institutions.
The decision taken by the banks for expanding their business dependent s on various
factors such as regulation, taxations, degree of desired penetration in domestic market, host
country economic and political risks. The financial institutions prefer to operate their business in
such country which have higher corporate taxes and lower regulatory restrictions on the bank
entry. Subsidiaries are preferred by financial; institutions that intends to penetrate in domestic
market developing more large retail operations.
A number of challenges are faced by Ecobank while operating their business operation in
Ghana. The various Financial institution in Ghana are making plan or strategies for troubling oil
prices remain low and electricity crisis continues, but cofe ivoire are set to keep growing on the
back of economy post conflict boom. The cedi's depreciation, the government's recourse to an
International Monetary Fund bailout and low prices for oil and gold exports all create a gloomy
picture. The international rating agency downgraded leading locally Owned GCB banks deposits
and gave it a negative outlook as half of its assets are tied up in loans , treasury bills and other
instruments linked to the central government.
Chinese bank assets have been increased from last decades. It has been marked as approx.
50 percent rise in U.S , Euro Area and Japanese bank assets. The strong growth in balance sheet
of Chinese banks represents not only domestic leading but also notable expansion in Chinese
bank lending to organisation activeness in international market. There was high growth in
syndicated loan market during 2011.The consumer or service user base for Chinese vbanks
oversea include increasing number of multinational or global organisation in both mature and
emerging market.
The supervisory cooperation between New Zealand and Australia. The big banks in
Australia dominate the final system of New Zealand. It has great effect on the relationship
between both the countries. The cooperation and sharing of information between Reserve balk of
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New Zealand and Australian Prudential regulation Authority are extensive. The changes made in
this agreement or Act has created legal obligation for the Bank in New Zealand to cooperate and
consult Financial supervisory authority in Australia in order to reduce the negative impact on
financial performance or stability in Australia.
Cross border banking has been increased in Africa. The recent growth of banks in
African countries has transferred the risk and advantages of cross border banking from European
to African policy maker.
The West African Monitory banking commission was established in 19901 that is
governed by the governor of Central bank of West African States. The focus of WAEMU is the
banking sector. The objective of West African Monitory banking commission is to maintain a
common legal and regulatory framework for the regional banking system. Member countries of
WAEMU has been badly impacted by idiosyncratic shocks that is natural disaster or political
insatiability. This Environmental factors have great effect on the financial stability of banking
sector.
Mc Kinsey and the report provided by World bank states that Increase in digital
globalisation, Global banking sector has suffers a set back after the intentional financial crisis. It
is required by banks to remain open in order to gain continuous advantage from international
flow of funds, opportunity and knowledge. It has highlighted the significant role of policy maker
in increasing the benefit and reducing the cost of Global banking. The report has also
demonstrated that Regulation as well as supervision of international banking is complex and
should include the extensive cross border coordination.
Islamic finance is term that involve a wide range of financial products and services.
During 2000 the Legal authority in Uk has taken interest in Islamic Finance and developed a
work programme to make The Uk financial service regulation compatible with the growth of
Islamic finance. The government has taken high initiative to modify the taxation system in order
to ensure that conventional and Islamic financial transactions with an equivalent purpose resulted
in equivalent tax bills that has allowed Islamic bank to achieve as well as foster growth. There
has been high growth in retail Islamic financial services .
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