External Influences Affecting the Firm and Its Activities

External Influences Affecting the Firm and Its Activities

admin / January 23, 2019

“British Chambers of Commerce Get Gloomier about Growth” by Phillip Inman and Michael Carolan

The main focus of this article is the eurozone debt crisis and how it affects Tesco, the UK largest supermarket chain. The problems in Europe connected with the mentioned problem managed to influence the company activities in the following way, the sales of the company are on the low level. Moreover, the same problem has affected the BCC Company, which has to cut forecast from 2.2% to 1.9% in 2011. The British Chambers of Commerce warnings “of fragility in household finances and tepid consumer spending as the coalition’s austerity measures begin to bite” (Inman & Carolan 2010, par. 1).

The employment is also predicted to be affected by the eurozone debt crisis, increasing on 8%. Fletcher (2010) writes in his report that “FTSE 100 ended 117.75 points lower at 5550.95, with Wall Street down 135 points by the time London closed” (par. 2). Thus, the UK economy is not subjected to the failures like Portugal and other countries of eurozone, still, the impact is great and Tesco is one of the companies which feet it.

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The main hazard is that the negative impact is so great, due to the fact that such big company appeared under stress, without mentioning what may happen with smaller companies. Oil and energy companies are affected at great extend. Thus, Cairn Energy and Petrofac appeared under the influence of the eurozone debt crisis (Fletcher 2010).

Thus, it may be concluded that having appeared on the threshold of the recovery from crisis, the UK companies may again stuck because of the complicated situation which is happening in the eurozone. The whole situation seems natural as being a part of the Euro Union the UK should be connected with the processes which take place there. The UK will not be able to recover from the crisis absolutely, till there are debt problems in Greece, Spain, Portugal, etc.

“UK Uncut Targets Topshop and Vodafone over Tax Arrangements” by Tracy McVeigh

Taxes is the most problematic question in any country. Considering the latest situation with taxes and regulations in the UK, it may be concluded that the problem is rather sharp for smaller companies rather than for big corporations. Having the problems, the government makes a decision to cut the budget rather than to tax the big companies. Such situation is rather convenient for the latest, still, it affects other members of the national economy.

The article focuses on the following companies, Vodafone, Barclays and Boots. The government plans a number of budget cuts which will influence all companies in the country except for such “tax dodgers” as the companies mentioned above. These companies are going to function within the same conditions. The taxation of those companies could bring at least ?25 bn a year.

Richard Murphy, director of Tax Research UK said, “Large businesses are paying a smaller proportion of their income in tax than many individuals and small businesses in the UK and that’s unacceptable” (McVeigh 2010, par. 11).

This is the problem, rich people and large companies do not pay taxes or pay the smallest portion being aware of the mechanisms to avoid taxation fees and small business has to pay more to fill in holes in the budget. The protests which took place all over the country made a number of shops shut.

The positive decision of the government to tax rich people and big corporation could bring the country great profit which could be directed at the help for small business to develop and flourish (Lewis, Gabbatt, Taylor & Jeffery 2010). Thus, the taxation policies and regulations influence the companies greatly. It is impossible to find a company which does not care of the budget cuts and increase of fees.

“FTSE Today: Market Report – as It Happened Nov 30, 2010” by Rachel Cooper

Here are some problems with the euro which may influence UK economy greatly. The main focus of the article is debt of Spain and Portugal and how it may influence the UK companies. The most crucial problem is that “FTSE 100 slipped 22.68 points to 5528.27 and the FTSE 250 fell 81.85 points to 10607.75” (Cooper 2010, par. 1). It is necessary to consider two issues, the reasons for such problems and the companies in the UK it has influenced.

The main reason for the appearance of such situation in the world is the possibility of the default. According to the information mentioned by Jeremy Warner (2010) “default now looks pretty much inevitable in some or all of the fringe economies of the eurozone” (par. 4). The problem is connected with the eurozone debt crisis and the inability to solve the problem faster. Returning to the indexes, it is possible to show the following information, Royal Bank of Scotland slid 0.93 to 37.59p. Almost the same situation is with Barclays which fell 6.8 to 256.15p.

It was impossible to avoid the situation as the investors nerve and do not hurry to finance different organizations in any country of the eurozone because “Sunday’s ˆ85bn bailout of Ireland by the European Union and the International Monetary Fund won’t stop Europe’s debt crisis from moving swiftly to another country” (Warner 2010, par. 41).

Thus, it may be concluded that the debt crisis in the European countries may lead to default and it is impossible to avoid the problem influence on any country. The British companies are influenced greatly as the investors are just waiting for the improvements in the situation and do not hurry up to invest their money in new projects.

“New Car Sales Fall for Fifth Month in a Row” by Graham Ruddick

According to Tim Moore, an economist at Markit, “household finances continue to suffer from a backdrop of squeezed disposable income, high inflation and ongoing public sector spending cuts” (Thompson 2010, par. 3). The article under discussion dwells upon car industry and the sales in the UK. The man problem which exists in the sector today is the low sales.

The problem became possible with the pressure on the households. The problem appears to be rather sharp as both private and public sector of the automotive industry suffer ad the country can do nothing as the pressure to the households may remain till the whole world recover from crisis.

Thus, being under the pressure on the households, the Society of Motor Manufacturers and Traders managed to show only the half of the predicted and expected sales (Ruddick 2010). People are unable to buy new cars as they do not trust the current situation. Both national and international factors influence human decisions.

The national problems may be considered as follows, low income from employment and rise of prices for some specific services as well as food (Thompson 2010). In the present situation cars are not the main problem which should be considered. Looking at the present situation it is impossible to state that something is going to change in the nearest future.

The government new tax policy leads to fees rise and cutbacks do not make people think optimistically. The statistical information shows that “Close to 47% of UK households expect finances to worsen in the year ahead, compared to 25% that anticipate an improvement” (Thompson 2010, par. 4).

This is the main reason for low sales in the automobile industry. So, it may be concluded that tax policies, government cutbacks, and the pressure on the households are some of the reasons for the low sales of cars among UK companies, and Society of Motor Manufacturers and Traders in particular.

Reference List

Cooper, R., 2010. FTSE today: market report – as it happened Nov 30, 2010. The Telegraph [internet] 1 December. Available at:
http://www.telegraph.co.uk/finance/markets/marketreport/8172494/FTSE-today-market-report-as-it-happened-Nov-30-2010.html [Accessed 6 December 2010].

Fletcher, N., 2010. FTSE falls 2% to its lowest level for two months on renewed Euro debt fears despite Irish bailout. The Guardian [internet] 29 November. Available at:
http://www.guardian.co.uk/business/marketforceslive/2010/nov/29/ftse-falls-euro-debt-fears [Accessed 6 December 2010].

Inman, P. & Carolan, M., 2010. British Chambers of Commerce get gloomier about growth. The Observer [internet] 5 December. Available at:
http://www.guardian.co.uk/business/2010/dec/05/british-chambers-commerce-gloomier-growth [Accessed 6 December 2010].

Lewis, P., Gabbatt, A., Taylor, M. & Jeffery, S., 2010. UK Uncut protesters spied upon by undercover police. The Guardian [internet] 3 December. Available at:
http://www.guardian.co.uk/uk/2010/dec/03/uk-uncut-protests-undercover-police [Accessed 6 December 2010].

McVeigh, T., 2010. UK Uncut targets Topshop and Vodafone over tax arrangements. The Guardian [internet] 4 December. Available at:
http://www.guardian.co.uk/politics/2010/dec/04/uk-uncut-protest-topshop-vodafone [Accessed 6 December 2010].

Ruddick, G., 2010. New car sales fall for fifth month in a row. The Telegraph [internet] 6 December 2010. Available at:
http://www.telegraph.co.uk/finance/newsbysector/industry/8183839/New-car-sales-fall-for-fifth-month-in-a-row.html [Accessed 6 December 2010].

Thompson, J., 2010. Households feel financial pressure. Money Market [internet] 23 August. Available at:
http://www.money-marketuk.com/index.php?option=com_content&view=article&id=990:households-feel-financial-pressure&catid=72:consumer&Itemid=320 [Accessed 6 December 2010].

Warner, J., 2010. Europe’s threat to UK economic recovery. The Telegraph [internet] 30 November. Available at:
http://www.telegraph.co.uk/finance/comment/jeremy-warner/8169012/Europes-threat-to-UK-economic-recovery.html
[Accessed 6 December 2010].

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