Download Business Environment

HNC/HND Unit 1 2011-12
European Union policies &
global financial stability

Importance of International Trade
◦ What is it?

Importance for Nations

Importance for organisations




You are required to produce a presentation
which addresses the following:
•
Discuss the significance of international trade
to UK organisations.
• Analyse the impact on organisations operating
in the UK of the growing economic, social and
political influence of the BRIC countries as well as
other global factors such as global warming, third
world poverty and global financial stability.
• Evaluate the impact to UK based organisations
of two policies of the European Union one of which
must be the existence of the Eurozone.


What is globalisation ?
Globalization "is the closer integration of the countries
and peoples of the world ...brought about by the
enormous reduction of costs of transportation and
communication, and the breaking down of artificial
barriers to the flows of goods, services, capital,
knowledge, and people across borders." (Stiglitz, J. 2002,
Globalization and its Discontents, New York and London: Norton)

Worldwide movement toward economic, financial, trade,
and communications integration. (Business Dictionary.com)

Financial implications

Access to the global “free-market”

Instant communication

Economic implications
◦ Access to global finance markets to raise capital
◦ Global stock market variations can affect company value
◦ More opportunities for FDI (Foreign Direct Investment)
◦ Reduction in trade barriers between countries
◦ More markets for their products
◦ Opportunities for outsourcing globally
◦ The main argument is that globalisation leads to economic growth
◦ Is this true for all nations?

The 1929 crash.
◦
◦
◦
◦
What was the economic situation at the time?
What caused the crash?
How did the crash happen?
What were the consequences?

The 1987 crash. Read the BBC article on GOAL.

The 2007 crash (The love of money)
◦ What happened? And why?
◦ Key Questions
 How is the crisis described?
 What was the real threat to the economy?
 What happened to stock markets worldwide when Lehman Brothers
collapsed?
 Why were people confused with the US bailout policy?
 What were the consequences of the lending freeze?
◦ To find out more watch all 3 episodes of the BBC “Love of Money” series


EU was created in 1951
Treaty of Rome signed in 1957 to establish
the EEC:
◦ Belgium, France, Germany, Italy, Luxembourg,
Netherlands
◦ 1973: Denmark, Ireland and the UK
◦ 1981: Greece
◦ 1986: Portugal and Spain
◦ 1995: Austria, Finland and Sweden

In 2004 ten countries joined:

In 2007

On 1st July 2013 Croatia set to join

Macedonia, Montenegro, Serbia: now official
candidates

Iceland and Turkey and Croatia have also applied
for membership
◦ Cyprus, Czech Republic, Estonia, Hungary. Latvia,
Lithuania, Malta, Poland, Sloval Republic, Slovenia
◦ Bulgaria, Romania

“Copenhagen Criteria” for EU membership:
◦ A stable democracy, respecting human rights, the
rule of law, protection of minorities
◦ A functioning market economy
◦ Adopt the common rules, standards and policies
that make up the body of EU law

On 1 January 1999 eleven EU countries
started the Eurozone
◦ Exchange rates were fixed and Euro introduced

Greece joined in January 2002

UK, Sweden, Denmark did not join the Euro

Greece Financial Crisis

Price stability
◦ Inflation must be no more than 1.5% higher than best 3
performing states during the previous year

Government finances
◦ Annual deficit to be no more than 3% of previous year’s
GDP

Exchange rates
◦ Two years participation in EU exchange-rate mechanism
◦ Country must not have devalued its currency during that
period

Long term interest rates
◦ No more than 2% higher that of the three countries in EU
with best inflation records

Check out these links:
◦ http://www.bbc.co.uk/news/special_reports/global
_economy/
◦ http://freevideo.rt.com/search?q=eurozone
◦ Immediate risk is of a Greek exit and the knock-on
effects for Spain, Italy, Portugal and Ireland
◦ Greek exit will trigger exit of capital and savings
from banks of those nations at risk

The regulation on the Free Movement of
Workers within the European Community was
completed in 1968 and states:
◦ Any citizen of a member state is entitled to take up
work in the territory of another member state
without restriction
◦ Those migrant workers must be treated the same as
any of that country’s national workers
◦ Such workers have the same rights to training,
social benefits, trade union rights and tax benefits
as national workers

Key rules adopted within the Schengen
framework include:
◦ removal of checks on persons at the internal borders;
◦ a common set of rules applying to people crossing the
external borders of the EU Member States;
◦ harmonisation of the conditions of entry and of the rules
on visas for short stays;
◦ enhanced police cooperation (including rights of crossborder surveillance and hot pursuit);
◦ stronger judicial cooperation through a faster
extradition system and transfer of enforcement of
criminal judgments;
◦ establishment and development of the Schengen
Information System (SIS).
Source:
http://europa.eu/legislation_summaries/justice_freedom_security/fre
e_movement_of_persons_asylum_immigration/l33020_en.htm

Common Agricultural Policy

Environmental Policy

Transport Policy

Food Law programme

Trading standards

Check GOAL for further information on:
◦ Policy of European Monetary Union
◦ Free Movement of Labour within the EC

Watch videos on Eurozone crisis and conduct
further research




You are required to produce a presentation
which addresses the following:
•
Discuss the significance of international trade
to UK organisations.
• Analyse the impact on organisations operating
in the UK of the growing economic, social and
political influence of the BRIC countries as well as
other global factors such as global warming, third
world poverty and global financial stability.
• Evaluate the impact to UK based organisations
of two policies of the European Union one of which
must be the existence of the Eurozone.