Managing_Business_Risks

BSc. OCCUPATIONAL SAFETY AND HEALTH CEWM 09005 – Managing Business Risks ASSIGNMENT – ZEH 2008-09 Tutor: Zaki El Hassan Plagiarism: “I certify that all material in this assignment which is not my own is duly acknowledged. I have read and understand the section in the course handbook dealing with plagiarism” TABLE OF CONTENTS CONTENTS INTRODUCTION: 3 Geography 3 Climate 3 Population 3 Government 4 LAND USE: 4 Primary Sector 4 Farming 4 Mining and Extraction 4 Fishing 5 Secondary Sector 5 Industrial 5 Tertiary Sector 5 Banking and Finance 5 Tourism 5 Disputes 6 THE UK ECONOMY: 6 2008 Gross Domestic Product (GDP) 6 UK GDP World Statistics 7 Economic Overview 8 Economic Relations 9 Exchange Rate Trends 9 Economic Growth 9 Inflation 10 Investments and Trends 10 ECONOMIC FORECASTS 11 Averaged forecast Graphs 11 UK Economic forecasts 2009 12 UK Economic forecasts 2010 12 Income levels 12 Poverty 12 Communications 13 Transportation 13 BIBLIOGRAPHY: 15 INTRODUCTION: Geography: Great Britain is made from England, Scotland, Wales and Northern Ireland. The group of countries, which form Great Britain is a group of islands (Northern Ireland forming the northern section of the Island of Eire) located to the north of France and to the west of Belgium and the Netherlands on the mainland of Western Europe. To the North are Norway and Sweden and to the north-west Iceland. Climate: The country’s climate is generally ‘changeable’ the more north you travel with a sizeable amount of the year, particularly spring and autumn and a significant part of the summer months, overcast and encountering precipitation. Winter is generally frosty with snow mostly on the high ground. In the southern part of the country the climate is generally warmer, approximately 3 or 4 degrees difference, with less precipitation by comparison to that of the north. Population: The approximate population is around the 62 million mark. This figure is made up of about 51.5 million in England, 5.5 million in Scotland, 3 million in Wales and 2 million in Northern Ireland. The 2001 census put the ethnic population spread at 92.1% white, 2% black, 1.8% Indian, 1.3% Pakistani, 1.2% mixed and 1.6% other. The same census puts the Religious spread at Christian 71.6%, Muslim 2.7%, Hindu 1%, other 1.6% and unspecified or none 23.1%. During the 1950’s and 60’s there was a significant influx of Asian and West Indian immigrants to bolster the working population and to fill less attractive (to the then population) jobs. These immigrants settled mainly in the London and northwest England areas, with some settling in Glasgow and the North east of England. With the forming and newly integrated countries that are the EU another significant influx of workers have come to Britain. These workers have come mainly from Poland and the Slovac communities of Eastern Europe. Government: The system of government is Democratic, with royal assent. The Royal family having limited powers, their duties mainly acting as figureheads to promote the country’s talents and aptitudes. Free elections are held at least every 5 years contested by a number of main political parties. The government is formed by the Houses of Lords and Parliament. Parliament will produce new laws or amendments to existing laws and send them to the Lords for approval. Lords can send the new or amendment proposals back to Parliament for further amendments. But, it is Parliament who holds significant power to implement law and fiscal legislation. New laws and fiscal proposals are given Royal assent usually at state readings. LAND USE: Primary Sector: Farming: Agriculture is intensive, highly mechanized, and efficient by European standards, producing about 60% of food needs with less than 2% of the labour force. Land use is mostly arable and livestock (cattle (milk and beef) and sheep) farming to the south, the ‘home counties’ and to the west region of England and southern Scotland. There is a considerable amount of sheep breeding throughout the north of England and Scotland and in the main part of Wales Mining and Extraction: The UK has large coal, natural gas, and oil resources, however, its oil and natural gas reserves are declining and the UK became a net importer of energy in 2005 (gas from Russia and Scandinavia). Coal mining formed a significant part of the economy particularly the north east of England and southern and central Scotland for a number of years but this was almost completely finished in the 1980’s with the closure of all but a few of the mines. Some coal is still produced but mainly in open cast mines in Southern Scotland. Energy industries contribute about 4% to GDP. Fishing: With the country being an island then it is only natural that fishing would be a major industry. Decimation of fish stocks and the influence of Europe in apportioning quotas this industry too has all but disappeared. Secondary Sector: Industrial: To the north of England, central belt of Scotland and the east of Northern Ireland the historical activity was in industrial land use, mainly shipbuilding and steel works with manufacturing and supply to those industries. This has generally been in decline over a period of about fifty years Tertiary Sector; Banking and finance: As a result of previous downturns and the demise of manufacturing in the UK; Great Britain has become a leading player in the banking and service industry. It has been for some time now and has been a market leader in Western Europe with an economy worth in excess of $US 2.5 trillion. Tourism: Tourism has contributed, though less than those above, to the country’s economy particularly in the Southwest of England, Northern Scotland and Wales relying to tourists to boost their incomes. With most of the above industries diminishing and the demise of manufacturing Great Britain turned to the service sector and financial services in particular as the main focus of the country’s economy. Disputes: In 2002, the residents of Gibraltar held a referendum and voted overwhelmingly to reject any "shared sovereignty" arrangement between the UK and Spain. Spain disapproves of UK plans to grant Gibraltar greater autonomy. Mauritius and Seychelles claim the Chagos Archipelago (British Indian Ocean Territory) and its former inhabitants since their eviction in 1965. Most Chagossians reside in Mauritius, and in 2001 were granted UK citizenship, where some have since resettled. In May 2006, the High Court of London reversed the UK Government's 2004 orders of council that banned habitation on the islands. UK has rejected Argentina’s claims on the sovereignty of the Falkland Islands, South Georgia and the South Sandwich Islands. The UK’s territorial claim in Antarctica (British Antarctic Territory) overlaps Argentine claim and partially overlaps Chilean claim. The UK, Iceland and Ireland dispute Denmark's claim that the Faroe Islands' continental shelf extends beyond 200 nautical miles. THE UK ECONOMY: 2008 Gross Domestic Product (GDP): The 2008 report on GDP Growth from: http://www.statistics.gov.uk shows that GDP contracted by 1.6% in the 4th quarter of 2008 (2% lower that 2007 quarter 4 report). Economy contracts by 1.6% in Q4 2008 (see graph below). On the whole GDP rose in 2008 by 0.7%. Production Industry output fell 4.5%, Construction Industry by 4.9% and Service Industry output fell (across all main service sector groups) by 0.8%. Household expenditure fell by 1.0%. There was a rise of 1.3% in Government final consumption expenditure which is 4.4% higher than that of Q4 of 2007 In real terms the trade deficit decreased from £9.9 billion in the third quarter of 2008 to £7.6 billion in the fourth quarter. Exports of goods and services fell 3.9% but imports fell by 5.9%. The GDP expenditure deflator rose by 2.0% compared with the fourth quarter of 2007, down from 2.1% in the previous quarter. UK GDP - World Statistics According to IMF and World Bank 2007 GDP leagues Great Britain was 5th highest in the world with a GDP of $2,804m and $2,728m respectively. The CIA World Factbook placed the UK at 6th in 2008 with a GDP of $2, 787. GDP 2006 ($) GDP 2007 ($) GDP growth Population GDP per capita 2,395,484,709,836 2,767,982,477,683 15.55% 60,768,942 45,549 The CIA World Factbook GDP Nominal sector composition placed GB at 5th in January 2008. Composition in percentages Composition in $millions GDP Agriculture Industrial Service Agriculture Industrial Service 2,341,000 1% 27.6% 73.4% 23,410 599,296 1,718,294 In April 2008 the IMF placed the UK at 7th in league of countries by future GDP (PPP) estimates. 2008 2009 2010 2011 2012 2013 2,231 2,261 2,358 2,490 2,625 2,765 The UK is placed at 69th in the CIA World Factbook list of countries sorted by their GDP (real) growth rate (1.1%) which shows the estimated increase in value of all goods and services produced, not taking into account PPP but taking inflation into account. Economic Overview: Great Britain (UK) is a leading trading power and financial centre and one of only five countries in Western Europe that can boast to have trillion dollar economies. Over the last twenty years, it has substantially reduced public ownership (although one could argue that due to the current recession and investment into the banking system that this has reversed) and contained the growth of social welfare programs. As industry continues to decline, the Service markets and in particular; banking, insurance, and business services account for the largest proportion of UK GDP. Since the last recession in 1992 and up to 2008 the UK economy outpaced most of Europe enjoying the longest period of expansion on record. However, the current economic situation, credit restrictions and property prices collapsing have pushed Britain back into recession and have prompted the government to implement a number of measures to stimulate the economy and stabilize the financial markets; these include part nationalisation of the banks, reducing some taxes, suspending public sector borrowing, and releasing funds for capital projects. Economic relations: The Bank of England periodically coordinates interest rate moves with the European Central Bank, but remains out of the European Economic and Monetary Union. Opinion polls repeatedly show a majority of the population oppose joining the Euro. As parity between the Pound and the Euro creeps closer it may be that the UK will be forced to join the Euro, but forecasts predict that the gap may again widen as pressure is put upon the Euro in the coming period. Exchange Rate Trends: Exchange rate trends as at 7 April 2009 for the £, $US, Japanese ¥ and the Euro € are in the table below courtesy of: http://www.oanda.com/channels/forex-trader/fxtrends.shtml Pair Current Rate Previous Day Last Week Last Month Last Year EUR/USD 1.3324 -1.30 % 0.35 % 5.25 % -15.17 % GBP/USD 1.4705 -1.05 % 2.74 % 4.31 % -26.04 % USD/JPY 100.525 -0.29 % 1.92 % 2.26 % -1.91 % EUR/GBP 0.9064 -0.24 % -2.34 % 0.89 % 14.69 % EUR/JPY 133.948 -1.58 % 2.29 % 7.69 % -16.78 % GBP/JPY 147.830 -1.34 % 4.66 % 6.68 % -27.45 % Economic Growth: The UK economy is currently in an official recession. The UK economy is almost universally predicted to stay in recession until at least, and hopefully recovering in, the last 2 quarters of this year. Last month a report from; the Organisation for Economic Co-operation and Development said that the economy would shrink by 3.7 percent this year, its fastest pace of decline since World War Two. The economy shrank by 1.6 percent in the last quarter of 2008 and Treasury officials are saying the fall for the first three months of this year could be at least as big. Last month; the International Monetary Fund forecast the British economy will contract by 3.8 % this year, making it one of the worst hit in the world. The Government's Pre-Budget Report in November last year predicted a decline of between 0.75 % and 1.25 % for 2009. Public borrowing is also expected to balloon this year from the £118billion predicted in November. One forecast indicated the UK's public-sector debt would reach £180billion this financial year - or 12.6 % of the country's economic output. However there is some good news emanating from the housing markets. House prices have risen for the first time in 16 months with the cost of a home in the UK increasing by 0.9%. An article in; the Daily Mail said that the Bank of England reported a 19 % jump in the number of new loans for house purchase agreed in February. However there are still warnings that it was too early to call an end to the house price slump. It is still forecast by Nationwide’s chief economist that it will take time before a sustained recovery in house prices is seen. Inflation: As unemployment rises, the inflation rate reduces. Higher unemployment will make it more difficult for workers to bargain for higher wages. Therefore, wage inflation is likely to be muted during the period of rising unemployment. The higher unemployment is also a reflection of the decline in economic output. Therefore, firms are seeing an increase in spare capacity and increase in volume of unsold goods. In a recession, there will be greater price competition. There is another reason inflation will fall. Earlier this year, inflation was caused by food prices increases, rising oil and electricity prices. However, all these factors are no longer occurring. Utility and oil prices are falling. Therefore, inflation may continue to fall and even go into negative inflation (deflation). There are some fears that this will be the case by the end of 2009. Investments and Trends: Gross fixed Investments, according to: https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html 2008 estimates were at 16.7% of GDP. These estimates accounts for total business spending on fixed assets, such as factories, machinery, equipment, housing and raw materials, which provide the basis for future production. A report from: http://www.roxby-media.com/innovationuk/190.php says that the UK remains dominant in Europe and is second only to the US. It is estimated that the UK had inflows of US$171 billion in 2007, an increase of nearly 23%. For the financial year to March 2008 UK Trade & Investment reported growth of inward investment. The United States continues to be the main source of investment projects into the UK with 30% of the total. There were increases in projects from Germany and Japan. Projects from India and China continued to grow. Among the industry sectors that are currently dominating are energy, ICT, electronics, telecoms, pharmaceuticals and financial services. There is still a decline in primary and manufacturing investment and a rise in the proportion of service based investment. Services now represent two thirds of total global FDI flows. The UK focus is on sectors where it has clear competitive advantages: ICT, life sciences, financial and business services, creative industries, environmental technologies and advanced engineering. Trying to predict which sectors will rise and fall over the next five years is not an exact science. But plainly the single most influential factor is the growth of economies and consumers in the developing world. The need for efficient communication will mean that ICT and telecoms will continue to rank highly. Economic Forecasts: The following tables and graphs, courtesy of HM Treasury website: Http/www/hm-treasury.gov.uk/d/20093forecamp.pdf are displayed below showing average 2009 forecasts for; GDP growth, RPI and CPI inflation and claimant unemployment projections: UK Economic Forecasts 2009 Averages March Average of new forecasts March February Lowest Highest GDP growth (%) -3.1 -2.7 -4.1 -1.2 -3.2 Inflation rate (Q4; %) CPI RPI 0.4 0.4 -0.8 1.8 0.3 -1.8 -1.9 -3.7 1.0 -2.1 Claimant unemployment (Q4: millions) 1.93 1.88 1.34 2.30 1.97 Current account (£bn) -32.3 -32.6 -74.9 -3.3 -31.9 PSNB (2009-10: £bn) 135.3 127.9 85.7 180.0 141.6 UK Economic Forecast 2010 Averages March Average of new forecasts March February Lowest Highest GDP growth (%) 0.4 0.5 -1.2 2.4 1.3 Inflation rate (Q4; %) CPI RPI 1.6 1.8 0.1 3.7 1.7 2.4 2.6 0.1 5.4 2.6 Claimant unemployment (Q4: millions) 2.27 2.23 1.21 2.8 2.32 Current account (£bn) -29.0 -27.8 -120.0 29.7 -30.1 PSNB (2009-10: £bn) 138.6 131.6 94.7 189.0 142.4 Income levels: The 2008 Annual Survey of Hours and Earnings from http://www.statistics.gov.uk show that the average weekly pay for full-time employees in the UK was £479.00p. The average earnings of full-time male employees was £521.00p while for women the average was £412.00p. The top 10 per cent of the earnings distribution earned more than £946.00p per week, while the bottom 10 per cent earned less than £262.00p. Poverty: The most commonly used threshold of low income is a household income that is 60% or less of the average (median) British household income in that year. Data provided by Poverty Line indicates that 13 million people (22% of the population) are below the low income threshold. GB is joint 5th of 27 European countries assessed in terms of population percentage in low income households. It is estimated that there are 3.9 million children (30% of child population) and approximately 2 million pensioners (19% of pensioner population) living in low income households. Communications: It is estimated that there is over 34 million land line telephone units in use. In addition it is estimated that there are over 72 million mobile phone users. The telephone system is rated as being a technologically advanced domestic and international system. The domestic system is fed by a mix of buried cable and fibre optic cables and microwave relay stations. The international system is relayed by submarine cables providing links throughout Europe, Asia, the Middle East and the United States of America. Satellite stations and international switching centres also feed the international telecom service. There are over 900 radio broadcast stations and 940 television stations in the UK. The Radio station frequency modes are made up of 206 AM, 696 FM and 3 Shortwave. Internet hosts are in the range of 8.3 million and users approximately 41 million Transportation: Airports: There are 449 Airports, 310 with paved runways. Each major city is fed by at least one major international airport. A network of minor airports is spread throughout the country with local flights and private use and training their main use. A number of military establishments throughout the country are also serviced by military airports. There are 11 heliports also in place. Pipelines: A network of above and below ground pipelines feed the country with gas, LPG, oil, condensate and refined products. Approximately 12,750 kilometres of pipeline distribute these products around the country. Railways: 16,567 kilometres of railway connects to all areas of the country. The railway system is mainly standard gauge (16,264km) for the national passenger and freight rail system, with some broad gauge systems (303km) in place in N. Ireland. Some major cities fed by electrified rails which is approximately 5,361km of the national network. Roads: Roads are approximately 393,366 km in length of which is made up from 3,520km motorway systems. As well as private use the roadway system is a main network for delivery and distribution of supplies throughout the country. Waterways: 3,200 km of waterways are in use mainly for pleasure these days but was a major arterial network for distribution of raw materials to the industrialised parts of the country. Merchant Shipping: Approximately 518 ships are registered in the UK and are a mixture of freight, bulk carriers, passenger, roll on/off, tankers. About 264 foreign owned vessels are based in the UK and around 390 ships registered in other countries in UK ports. Major ports and terminals include: Dover, Felixtowe, Immingham, Liverpool, London, Southampton, Teesport, Hound Point and Milford Haven. BIBLIOGRAPHY: UWS, ZEH course notes http://www.statistics.gov.uk International Monetary Fund 2007 GDP leagues World Bank 2007 GDP leagues Central Intelligence Agency: World Fact Book The Organisation for Economic Co-operation and Development The Daily Mail: http://www.dailymail.co.uk/news/article-1167603 http://www.hm-treasury.gov.uk/d/20093forecamp.pdf http://www.businesstimesonline.co.uk/tol/business/economics/article6067167 http://www.statistics.gov.uk https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html http://www.oanda.com/channels/forex-trader/fxtrends.shtml http://www.roxby-media.com/innovationuk/190.php