UK Business Sectors and Their Value to the Economy

Executive Summary

The following report consists of two parts. Part one of the report identifies three business sectors in the UK and explains their value to the UK economy. The chosen sectors are information technology, tourism, and financial services. The report details the industries which are connected to each of the identified sectors explore available statistical data and concludes on the dynamics of their development. All of the selected sectors are expected to further increase the economic performance of the country and stabilize its presence in the international arena. The report is made using reputable and reliable sources which are credited in the text. The second part of the report explores two policies that are widely presented in the modern corporate world. The identified policies are Health and Safety policy and Equality and Diversity policy, respectively. The review of policies includes their brief overview, reasons for their presence in a workplace environment, and a range of benefits resulting from their implementation, as well as selected consequences of their absence. The report also details the common misuses of policies, such as formal implementation without the support by workplace culture lack of transparency, and the absence of training to ensure proper understanding by employees.

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The three business sectors in the UK

Information technology is among the fastest-growing business sectors in the UK. According to the data from the Office for National Statistics (2016), the information and communication sector displayed the strongest annual growth rate of 6.9%. The main reason for such rapid growth is the phenomenon of digitalization and the increasing reliance on IT in many other business sectors. For instance, a visible shift to e-commerce and direct sales throughout the world inevitably results in an increasing number of retailers in need of IT services. Gradually more companies seek ways to decrease their dependence on retailers, which allows them to lower the prices of their products by eliminating unnecessary expenses. In addition, direct-to-customer sales allow for individual customization of products, which, in turn, requires modifications of companies’ web resources as well as internal software. Similarly, e-payments are becoming more popular each year. Importantly, while they offer unprecedented convenience and transparency, they also require significant effort to supply the necessary level of security and anonymity.

Thus financial sector also qualifies as a related industry and secures the stability of demand for IT services. It is important to note that the latter is also identified as a valuable and steadily growing sector, which further strengthens the role of IT in the country’s economy. It is also worth mentioning that a shift from manufacturing to services exhibited on the global scale creates the need for sufficient informational coverage possible through web resources. Finally, the growing popularity of the Internet as a powerful information source leads to a significant increase in demand for telecommunication services, which are directly connected to the IT industry. The combination of these factors already produces a combined share of business turnover of 19% by 2015 (ONS 2016). It also allows the analysts to predict a threefold increase in the employment share of the sector by the end of the decade (ONS 2016). Importantly, the nature of the IT allows for unprecedented scalability, with small and medium enterprises currently occupying 93% of the market, and significant capacity for self-employment, which allows for better flexibility and stability during financial crises.

Tourism is another business sector that influences the UK economy on a large scale. Its direct impact (i.e. economic influence created by goods and services directly related to tourism) comprises more than 4% of the country’s GDP (Deloitte 2013). In addition, several connected benefits can be identified that originate from tourist activities. For example, a report on employment and growth of tourism in Great Britain estimated the total number of jobs in the sector at 3.1 million – 9.6% share of the total UK job market (Deloitte 2013). The sector also exhibited a job growth rate of 4.7% in three recent years, which makes it responsible for a third of the total jobs created in the country (Deloitte 2013). Therefore, it is expected that the tourism business sector will grow by 3.8% each year in the nearest decade – a rate that supersedes the overall predicted rate of the UK’s overall economy annual growth of 3% (Deloitte 2013). As a result, by 2025 the sector is expected to be responsible for almost ten percent of the country’s GDP at £257 billion (Deloitte 2013).

However, the sector also has a considerable influence on the related industries, such as the investments by private and government organizations. The most prominent example of such addition to the tourist economy is the presence of visitor economies in the UK. Trade and knowledge exchange made possible by these economies create additional value and bring the total share of GDP generated by the industry to 9% of national GDP (Deloitte 2013). It is also important to recognize that a supply chain required for an efficient tourist network includes a multitude of other industries. The sector is fairly diverse and includes food and beverage services, transportation, and accommodation, among many others. When taken into account and added to induced effects such as employee spending, the collective revenue generated by tourist activities can potentially exceed 11% of the country’s GDP (Deloitte 2013). In conclusion, tourism serves as a powerful driving force for many related industries and serves as a background for the economic diversification of the country.

Finally, financial services comprise an important business sector. The role of the sector was particularly significant in the second half of the previous decade, with a 10% share of the country’s GDP (Monaghan 2014). Historically, the country has been one of the centers for international financial operations. This eventually led to the strong presence of consumer crediting and other financial services as sources of revenue on the national scale. It should be mentioned, however, that the dominance of the financial sector introduced a risk factor, best illustrated with the effect of the financial crisis on the economy of the UK.

While this aspect of financial performance remains a viable threat with the undergoing changes in the economic landscape, it also introduces a mitigation effect. This assertion can be illustrated by the growth rate demonstrated by the country between 2006 and 2009, immediately after a global-scale economic setback. In three years, the country was able to achieve the fastest growth rate among G7 countries, retaining a 10% share of GDP by 2009 (Monaghan 2014). Essentially, such dynamics suggest additional opportunities for overcoming future difficulties which may occur on an international scale. In fact, the UK economy has the greatest rebalancing capacity mostly due to the reliance on financial operations. One of the key factors responsible for such reliability is the fact that financial services comprise a major share of the country’s exports – an estimated 29% of the total amount (Monaghan 2014). Such global-scale diversification in the sector added to the speed of recovery, partially due to the fall in the pound, which resulted in more attractive costs of exported goods. While the effect is double-sided, it still can be considered a necessary precautionary measure used to mitigate the risks, especially in the light of the aftermath of Brexit. To conclude, the financial sector is essential both as a source of income and as a safeguard against economic setbacks.

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Health and Safety policy and Equality and Diversity policy

The importance of health and safety policy in a modern workplace goes beyond compliance with basic human rights. A sound health and safety policy is a comprehensive set of guidelines and rules which detail the manner in which the company intends to ensure the desired level of health of its employees and facilitate the workplace conditions which pose a minimal amount of risks for the staff. The policy usually contains the plan of achieving the desired level of health and safety, the responsibilities of stakeholders, and the liabilities of involved parties. Currently, its presence in every workplace is mandatory (HSE 2014).

Several reasons for this can be identified. First, health risks inherent to certain jobs (e.g. construction, transportation, and chemical industry) can lead to accidents and, by extension, financial damage to employees. In the case of legal action and without health and safety policy, common law would apply individually in each case, which would introduce significant complexity and expenses. Second, the presence of a transparent policy improves the reputation of the business and may aid recruiting practices as well as strengthen corporate social responsibility efforts undertaken by the firm. Finally, without a formulated health and safety policies there would be no simple way of determining the areas of employer’s responsibility. For instance, the transportation services of an independent contractor or a road adjacent to the workplace may or may not be considered within the scope of the company’s responsibilities if they are identified as a cause of the accident. The presence of a strong policy excludes these ambiguities.

A sound health and safety policy has a net effect of increased productivity and organizational performance through a wide array of factors. The most evident effect results from higher staff retention caused by improved safety at work. The employers who incorporate better safety policies are expected to have a more robust and stable team unaffected by the workplace incidents. Even more importantly, it prevents temporary absence from work due to sickness which disrupts the workflow and can create seasonal setbacks. Simultaneously, the reduction of sick leave allows business owners to eliminate additional expenses. Finally, it minimizes the possibility of legal actions against the organization resulting from unsafe practices and inappropriate workplace conditions. This, by extension, also means reduced expenses and a healthier public image. All of the above also contribute to the reputation of the organization. The employees who are subject to appropriate safety measures tend to exhibit greater trust both to the management and to fellow workers. The resulting increase in employee satisfaction contributes to more robust hiring practices, reduces turnover, and can create a healthier image of the company from the consumer’s perspective.

Equality and diversity policies comprise another important aspect of workplace integrity. In the UK, they are collectively represented with Equality Act 2010 (Home Office 2016). Their initial goal can be broadly described as ensuring the maintenance of basic human rights and elimination of discrimination by a variety of factors, including age, gender, race, and physical condition such as disability. It was established to specify the conditions under which regulations must be applied. In other words, prior to the existence of the policy, there was no clear distinction regarding the discrimination. For example, if an employer decides to fire an employee after the incident resulting in disability, the responsibility to prove the act of discrimination would be on the latter (since no clear connection between the physical condition of the individual and the conditions of employment existed in a single document).

With the policy in place, employers are subject to scrutiny regarding the reasons for the mistreatment of workers and the latter have better protection opportunities. Another reason for the implementation and revision of policies is the changes in the global economic landscape which introduce new phenomena. For example, the growing presence of information technologies and the involvement of complex machinery made many routine tasks unnecessary and allowed more jobs to be performed remotely or outsourced. This setting renders gender discrimination obsolete, decreases the role of age on many occasions, and contributes to a greater presence of international employees, and requires equality and diversity policies for improved efficiency under new conditions. Finally, the policies allow keeping up with changes in the legal landscape and avoid potential legal hazards for employers.

Equality and diversity policy has a range of positive effects on the performance of organizations. First, the diversification of the workforce created by the implementation of said policies creates a multi-faceted staff which on most occasions offers excellent flexibility and improves its creative capacity (Sloman and Jones 2011). In addition, it creates a better chance of adequately responding to a greater number of unforeseen risks. The diversified staff has a wider cultural and social knowledge, competencies, and skills, which leads to the creation of original solutions, ideas, and out-of-the-box thinking. Next, diversification benefits hiring practices. Diversity policy means the broader scope for the HR department which, in turn, decreases the chances of excluding valuable specialists based on a certain factor. Both factors are expected to contribute to the company’s performance – better employees and a broader scope of operations allow achieving higher results. Finally, the policies improve the reputation of the company, which is especially relevant in today’s informational environment where any slip by the organization can become immediately visible and have a lasting impact on consumer behavior.

It should be noted, however, that neither policy is sufficient for the described effect to take place. In addition to creating and adopting an appropriate policy, management must ensure that it is properly implemented, maintained, and revised. For example, the lack of adequate safety training for employees and managers can minimize the effect of the documentation to the point where it is non-existent. Besides, even with successful implementation, it is necessary to communicate the achievements associated with the improvements to stakeholders – otherwise, the successful performance will not transform into a good reputation. Finally, a policy may be ineffective without respective changes in workplace culture. Therefore, neither policy is sufficient to achieve the said benefits or even to protect the workers.

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Reference List

Deloitte, 2013. Tourism: Jobs and Growth [online]. Oxford: Oxford Economics. Web.

Health and Safety Executive, 2014. Writing a health and safety policy [online]. London: HSE. Web.

Home Office, 2016. Equality and diversity [online]. London: GOV.UK. Web.

Monaghan, A., 2014. Seven things you need to know about the UK economy. The Guardian. Web.

Office for National Statistics, 2016. IT and Internet Industry [online]. London: ONS. Web.

Sloman, J., and Jones, E., 2011. Economics and the Business Environment. 3rd Edition. Essex: Prentice Hall.

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StudyCorgi. (2021, April 29). UK Business Sectors and Their Value to the Economy. Retrieved from https://studycorgi.com/uk-business-sectors-and-their-value-to-the-economy/

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1. StudyCorgi. "UK Business Sectors and Their Value to the Economy." April 29, 2021. https://studycorgi.com/uk-business-sectors-and-their-value-to-the-economy/.


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StudyCorgi. "UK Business Sectors and Their Value to the Economy." April 29, 2021. https://studycorgi.com/uk-business-sectors-and-their-value-to-the-economy/.

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StudyCorgi. 2021. "UK Business Sectors and Their Value to the Economy." April 29, 2021. https://studycorgi.com/uk-business-sectors-and-their-value-to-the-economy/.

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StudyCorgi. (2021) 'UK Business Sectors and Their Value to the Economy'. 29 April.

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