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A2 Business Studies Unit 6 - Political Change

A2 Business Studies Unit 6 - Political Change. Opportunities and constraints created by changes in UK and Central and Eastern Europe (CEE). The impact of political change in the UK.

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A2 Business Studies Unit 6 - Political Change

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  1. A2 Business Studies Unit 6 - Political Change Opportunities and constraints created by changes in UK and Central and Eastern Europe (CEE)

  2. The impact of political change in the UK • Conservative government (led by Margaret Thatcher in 80s & 90s) introduced a policy of deregulation and privatisation which created competition in markets : • E.g. Telecoms (BT), airlines, utilities, financial services etc • Laws introduced to reduce the power of trade unions and make the labour market more flexible • Flexible = easier to hire and fire workers Picture sourced from http://www.rte.ie/news/features/westminster_election/images/thatcher.jpg

  3. The Fall of Communism • Eastern European countries such as Hungary, Poland, Bulgaria etc were controlled by the USSR • Products and services were provided by state- owned monopolies (little choice, no competition, thought to be inefficient) • A move from planned to free market economy • This has led to privatisation with a move of assets from the public to private sector Picture sourced from http://en.wikipedia.org/wiki/USSR

  4. Opportunities in Central and Eastern Europe (CEE) • UK firms can sell to 100 million people who want Western brands • Rent, land, and labour is cheaper • Less controls on health and safety and pollution • Planning permission for factory is easier • Grants and low taxation to attract foreign firms

  5. EU Businesses in CEE markets • EU Businesses have taken advantage of the CEE market through: • Joint ventures - EU firms provide cash, machinery skills, Host firm provides staff, land, buildings • Technical co-operation - allows co-production and joint assembly • Selling technology and expertise - often licenses to produce particular products e.g. Coca-Cola in Bulgaria

  6. Constraints in Central and Eastern Europe • Average incomes are low so consumers cannot afford many luxuries • Economic and political instability makes trading conditions unpredictable • Excessive bureaucracy – too much paperwork. CEE countries are working hard to improve this. • Poor infrastructure – transport links, communication and distribution systems • Under-developed financial sector (banks, insurance, stock market) • Weaker legal systems (fraud, bad debts)

  7. Gross National Income • Bulgaria - GNI per capita: US $2,740 • Turkey - GNI per capita: US $3,750 • Slovakia - GNI per capita: US $6,480 • United Kingdom - GNI per capita: US $33,940

  8. Student Activity • Complete the Political Change case study on Slovakia • Answer all questions using full exam technique (Content, Application, Analysis and Evaluation.) Pictures sourced from http://www.aeroflight.co.uk/waf/slovak/slovakia.gif and http://www.anadigics.com/pics/map-Europe.gif

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