Unit 38 - Business and the Economic Environment P5 M3
P5 Describe the impact of international factors on a selected business.
M3 Assess the impact of changes in the global and European business environment on a selected business.
Case Study: Jaguar Land Rover -
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unit 38 business and the economic environment p5 m3
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Unit 38 - Business and the Economic Environment
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Abdulalah Al-Jobore
Unit 38 - Business and the economic environment
P5 M3
P5 Describe the impact of international factors on a selected business
M3 Assess the impact of changes in the global and European business environment on a
selected business
In this assignment, I will be describing the impact of international factors on Jaguar Land Rover, as
well as assessing the impact of changes in the global European business environment on the
company.
Jaguar Land Rover is a limited company that is not only trading within the UK, but it also across the
Europe and the rest of the world. This means it could be hugely impacted by the international
economy, as the UK economic environment is increasingly interlinked with the Europe economic due
to being a part of the European Union which is consist of 28 EU countries that together cover much
of the continent. However, so much of this about to changes, as the UK and in particular Jaguar Land
Rover are about to face a dramatic impact in terms of international and the European business
environment. As according to the European Union Official Website, On 23 June 2016 citizens of the
United Kingdom voted to leave the European Union. On 29 March 2017, the UK formally notified the
European council of its intention to leave the UK as a result of the UK’s citizen’s intention to leave for
many different reason. This is therefore is known as Brexit (UK leaving the EU), and whether the
United Kingdom has a deal or no-deal Brexit or whether it is a soft or hard deal Brexit, it will have a
huge effects on the whole economic of UK and in particle Jaguar Land rover as their trade across the
Europe and the rest of the world will be massively affected. Although, they UK is officially intending
to leave the EU, the UK remains a full member of the EU and rights and obligation continue to fully
apply in and to the UK.
European Factors
As a result of being a member of the EU, the UK’s economy is influenced massively by the European
Union (EU) itself and the rest individual EU countries that are affecting the way business trade in the
UK.
Role of European Union
The European Union has been establishes of a desire for peace in a war-torn and divided continent.
Five Years after the Second World War ended, France and Germany came up with a plan to ensure
their two countries would never got to war against each other again, as the war was so destructive.
The result was a deal signed by six nations to pool their coal and steel resources in 1950. These
resources were very important and essential natural resources for any grown economy such as
Germany and France. Seven years later, a treaty (agreement) signed in Rome created the European
Economic Community (EEC) in 1958 – which is the foundations of the today’s European Union. In
1973 the UK and other two new members have joined the European Union as the result of the first
wave of expansion in that year. Nowadays, the EU has 28 member states with total population of
more than 500 million citizens.
The European Union has delivered more than half a century of peace, stability and prosperity, which
helped to raise living standard and launched a single Eupnoeic Currency: the European , and as a
result the UK is also use their currency as a second currency alongside the sterling pound (£) to
enjoy its benefits across the EU countries. The EU allowed the UK and the rest of EU countries to
have a free movements of people, goods and services throughout member states. From business
1
,Abdulalah Al-Jobore
Unit 38 - Business and the economic environment
P5 M3
point of view, having a single market throughout the EU states, the UK and in practically Jaguar Land
Rover will be able to develop the huge resources to other areas like energy, knowledge and capital
markets to ensure that Europeans can drew the maximum benefit from it. It benefits Jaguar Land
Rover dramatically as the UK’s economy is increasingly linked to the Single market which means the
company will not have to pay any custom or exercise changes to other member’s states. Jaguar Land
Rover is also importing and exporting material, and their own products and service from and out the
US and China , which means if for example they brought manufacturing material form the US or
China for their car manufactures, the goods can be broken up and distributed to a number of
countries. This therefore benefits them, as again they do not have to pay any extra costs to the
individual states involved.
As the Single Market has been established, more than 1000
pieces of legislations have been passed as a part of
preparations for integration. As a result of this, UK’s
government has made clear for business in term of developing
ways for their businesses to deal with company law, business
rules and accounting principles as the UK’s company law is
quite different than the EU’s one. Jaguar Land Rover also need
to have a professional team to deal with the different
legislations and regulations provided by the EU to follow and
avoid being in an any legal issue in order to trade more
efficiently across the EU. The ultima aim of the European Union
and its single market is to make the trade between countries
more easier and allow businesses such as Jaguar Land Rover to
operate across the EU whiles given them the unlimited protection to them and customers with the
same EU laws regardless of which countries they are operating in.
However, Brexit (leaving the EU) seemed to draw out so much of the benefit that EU that could offer
for the businesses and in particular to Jaguar Land Rover in which they are based in. As of this
change, Jaguar Land Rover will have many positive and negative impacts in this issue. It is important
to be aware that UK is intending to leave the EU, and there is no other solutions except leaving with
a deal or no-deal Brexit. Leaving the EU is a sign of a great loss not only for UK’s economy but more
specifically for Jaguar Land Rover, as the disruption caused by tariff and non-tariff barriers could cost
the car industry £7.5bn a year, according to The Guardian. The car industry in general makes better
use of the free trade in term of goods and service, which is offered by the European’s single market
than almost any other sector within the UK. This because for example, Jaguar Land Rover’s cars that
are produced in their UK’s plant is made up of tens of thousands of parts that are traveling across
the EU’s members states. Finally, after all the raw material and car’s parts are assembled in UK’s
plant, Jaguar land Rover will re-export them for fitting into a vehicle at the company’s new facility in
Nitra, Slovakia. Therefore, as a result, the Guardian has state that ‘’if Britain leaves the EU without a
free trade agreement, would add 10% to the cost of assembling a car in the UK. This is a significant
sum in a low-margin business such as car manufacturing – enough to persuade some makers to
consider setting up elsewhere.’’ This means that Jaguar land Rover might have to pay extra money
which at the end means they will have less profit.
2
, Abdulalah Al-Jobore
Unit 38 - Business and the economic environment
P5 M3
Although, most of businesses and in particular Jaguar Land Rover might consider Brexit (UK leaving
the EU) as an extremely negative impact, however it might open many doors for business to make
their own deal with the countries or the UK to entre a new market rather than just the single market
(EU). The new developing and growing market such China and the US can bring many benefits for
UK’s economy, as for example the UK government can sign a new deal with them in order to
increase their trade and let the businesses such as Jaguar Land Rover do more business. Therefore,
having a new market to operate in, could bring many benefits such as paying less traffic barriers’
costs on individual states involved as well as providing them the legal protection in term of
importing and exporting their goods and services.
Having the EU single market in the continent, made EU countries including the UK extremely closer
to each other as it aims to make the EU’s continent to be a smaller world and as one whole country
in term of the free movement between people, goods and services. This has its unlimited objective
in which to help theses EU’s economies to move forward, grow and expand positively by helping
each other. The use of the same currency throughout the EU countries using the euro currency has
its great positive impact on the people and businesses, as this means no exchange rate fluctuations
between them and to make them more interlinked with each other. Although, the UK has it is own
currency, the sterling pound, it still uses EU in some of part of the states as many EU’s citizen are
coming to UK for different reasons such as study and tourisms.
3
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