The UK is recovering from the effects of the global financial crisis of 2009. This crisis affected most of the economic powerhouses of the world. The cause of the crisis was a credit crunch triggered by property prices. However, the entire Euro zone is in a crisis that is quite different from the 2009 financial crisis. Greece is the worst affected state in the current crisis. The UK is not a part of the Euro zone, but it is also feeling the impact of the crisis because of deep trade ties with Euro zone countries.
Apart from the economic circumstances of the UK, there is pressure on all countries in the world to take action to reverse climate change. Usually, this pressure takes the forms of encouragement to reduce emissions. Reducing emissions mean that the country may have to give up some manufacturing capacity to meet its emission targets.
The current UK government is a coalition of two parties. The relationship between the Conservative Party and the Liberal Democratic Party has been stable by the standards of a coalition. It does not mean that there has been no disagreement. It only means that the parties have not allowed their disputes to affect the perceived stability of the government. Having successfully hosted the Olympic Games in 2012, the UK seems stable and ready to take on more challenges.
PESTLE is a common tool used to determine the environmental conditions of a specific organization. Each of the letters in the acronym stands for one factor in the environment of the organization. P represents the political environment, E stands for the Economic environment, and S stands for the social environment. T represents technology, L stands for the legal and regulatory environment, and E represents the physical environment. This paper presents an analysis of three newspaper articles. The articles present situations involving the operating environment of specific companies in the UK, and the lessons that accrue based on the impact of the environmental factors on the operations of the companies.
Thousands of Jobs could be Created at Former Pfizer Site in Kent
A consortium named Discovery Park is set to create thousands of new jobs at Kent (Peacock 2012). This is in response to government incentives given to companies willing to set up shop in the area. The government granted the area an Enterprise Zone status (Peacock 2012). This status means that the companies setting up shot there have more flexibility in their planning because the government does not impose strict controls on planning. In addition, the government provides incentives such as superfast broadband (Peacock 2012). The site was the former home of Pfizer where research into drugs such as Viagra took place (Peacock 2012).
This article demonstrates how changes in the economic environment can attract investors. The government chose to make the area more attractive to investors by lifting planning restrictions and providing unlimited broadband as incentives for investors in the area. These changes are attractive to investors because they eliminate barriers to entry and improve the chances of the new business creating a favorable return on investment quickly. This initiative by the government will restore the economic productivity of the area, which was lost when Pfizer left the site. The new consortium will not only restore the jobs, but it will also increase the total number of people employed at the site.
The economic environment of a country or a specific business location plays a major role in the growth of the region. This article shows that even localized adjustments in the economic environment can stimulate growth. Adjusting the economic environment is a viable business strategy they regulators can use to stimulate growth in neglected regions.
Sharks Circling Apple after Success Story Heads off the Map
Apple is showing the first signs of trouble since the death of its founder. Apple took the lead in the phone market with its iPhone brand (The Observer 2012). Other manufacturers have followed the act and seem to be giving Apple a run for its money. For instance, in 2012, Samsung overtook Apple as the number one seller of smart phones in the third quarter of 2012 (The Observer 2012). The Galaxy smart phone from Samsung has sold more units than Apple’s iPhone 5. There is increasing competition from Google whose Android operating system is now in three out of four smart phones (The Observer 2012). On the other hand, Microsoft is working hard to release the Windows smart phone (The Observer 2012). Apple’s cart seemed to tip when it released Apple Maps as a replacement of Google Maps in its latest iPhone release.
The case of Apple’s loss of its leadership position in the smart phone market illustrates the impact of technological change. The company was unable to innovate successfully in its attempts to replace Google Maps with its in-house solution. The fiasco that ensued after the release of Apple’s iOS6 that did not come with Google Maps led to a loss of confidence in Apple’s products. On the other hand, there is growing competitions from other players in the smart phone industry seeking to become market leader in specific aspects. Windows is working to release a window smart phone while Google is already ahead since it is the supplier of the popular Android operating system. Samsung is in direct competition with Apple as a hardware manufacturer. It is producing the galaxy range of smart phones with a high degree of success. This article illustrates that despite technological leadership, failure to innovate successfully can lead to loss of market share.
BP Urged to Settle US Claim
The 2010 oil spill from one of BP’s offshore platforms caused a lot of damage in the Gulf of Mexico. Efforts to contain the effects of the spill are still ongoing. However, the focus is no longer on the environmental impacts of the spill, but on the legal issues surrounding the compensation needs of the affected parties (Blackden 2012). Negotiations with the people affected by the oil spill are almost complete. The only pending matter is a final approval by the presiding judge (Blackden 2012). However, there is a separate case over the same spill pitting the US government against BP (Blackden 2012). The chances of an out of court settlement are slim. The political changes in the US that culminated in the reelection of President Barack Obama will fuel the crisis further because of the strong political views on the issue.
In this article, the changes in the political landscape of the United States are having a direct influence on the outcome of this case. BP shareholders prefer an out of court settlement, even if it is expensive. However, the US government must consider the political implications of the settlement before making a decision. Politics play an important role in the operations of companies such as BP. The company has strong British roots. American nationalists would not accept a simple process towards the resolution of this case. Therefore, the US government will prefer taking BP to court for trial in order to meet the expectations of its citizens. The government will do whatever is necessary to demonstrate to the Americans that it has teeth to bite foreign owned companies that cause harm to the American environment. The just concluded process of political change (campaigns) in the US, led to an increase in the desire of Americans to see BP pay for its actions. Politically, this means taking BP to court regardless of its willingness to settle out of court.
Conclusion
The three articles reviewed in this research demonstrate the influence of environmental forces on businesses in the UK. In the first case, the article demonstrated that the economic environment could influence the decision to invest. The UK government designated the former Pfizer site as an Enterprise Zone, thereby increasing its attractiveness to investors. This area has better economic incentives compared to the adjacent zones.
In the second article, the lesson learnt is that technological change is an environmental factor in the operations of high tech companies. The fact that Apple invented the smart phone is not enough for it to retain market leadership. Activities in the industry require Apple to keep innovating to remain a market leader. Failures in innovation such as the Apple Maps fiasco can lead to market failure. All business executives must ensure that all the products they release compete well with their competitor’s products.
In the third article, political issues in the operating environment seem to be the key determinants in the BP oil spill case. The recent process of political change made it politically more desirable for the government to carry on with litigation in court, rather than opting for an out of court settlement. Politics can shape the fortunes of any company regardless of the wishes of its shareholders.
Reference List
Blackden, R 2012, The Telegraph, ‘BP Urged to Settle US Claim’. 2012. Web.
Peacock, L 2012, The Telegraph, ‘Thousands of Jobs could be Created at Former Pfizer Site in Kent’, 2012. Web.
The Observer 2012, ‘Sharks Circling Apple after Success Story Heads off the Map’. Web.