The Uk Business Strategy
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According to the EIU Country Commerce, the U.K is home to thousands of Foreign Direct Investments (FDIs) and is considered one of the largest markets for FDIs globally. The National Office of Statistics for 2008 indicates that net direct investment by international companies in the U.K totaled £49.8 billion in 2008, with the U.S as the largest foreign investor, followed by the Netherlands and Germany. Some of the major FDI includes Ford Motor which invested £1.5 billion over 5 years in environmentally friendly technology, General Electric which invested approximately £280 million in the wind-turbine operations and help to expand the renewable energy sector in the U.K. The Office for National Statistics reported that the GDP for the U.K increased by 1.2% quarters on quarter from April to June of 2010. The Economist Intelligence Unit further predicts that the countrys GDP will grow by 0.7% annually. This means that the economy in the U.K is booming and it will be the right time for U.S companies to take this golden opportunity and make smart investment decisions. Britain is also a member in most major international agreements relating to the conduct of business, finance and trade. This means that the U.K fosters friendly relationships with the Western Europe and this will enhance its own business environment and in turn, attract foreign investors to invest in Britain. What makes Britain more attractive to foreign companies, especially the U.S is that trade-union membership has dropped by 40 percent since the Margaret Thatchers administration in 1979. The number of unions is further reduced in the recent years due to mergers and acquisitions (EIU Country Commerce). This means that U.S companies can expect lesser strikes and protests from the labor unions, which will be beneficial for the business as day-to-day operations of the companies will not be delayed and intervened. U.S. companies should increase their level of Foreign Direct Investments (FDI) in the U.K because of its friendly non-discriminatory environment towards foreign companies, its simple basic investment procedure, and its attractive business incentives.
Although the government has its own discretion in preventing foreign acquisitions (under the Industry Act 1975) and force disinvestments, it rarely discriminate foreign companies as they enjoy the same benefits and rights that U.K based companies are endowed with. Some of the exceptions however include privatized companies such as Rolls Royce, BAE Systems, and British Airways in which the government will still hold majority of the shares in those companies to protect its own nationalism and sovereignty. This means that foreigners can only hold a total of 15 percent of share in any of these entities, with the government owning the rest. Even if there are some regulatory hazards for direct investors, they are not determined by the U.K, but rather from the European Union (EU). Therefore, U.S. companies should feel at ease with regards to the business policies that are established due to the absence of hostility against them, which allow the U.S companies to compete on an equal standing against the local companies. Because there is no known hostility towards foreign companies, U.S companies should acknowledge the fact that Britain has a perfect lucrative environment for their business to thrive in (EIU Country Commerce).
Basic investment procedure can be extremely time-consuming and capital straining if the country in question poses restrictive measures or barriers towards foreign investments. It is inevitable for U.S. companies to worry about the basic investment procedure and approval because of the capital and time they must invest before even operating the FDIs there. Fortunately for them, the procedure for establishing a company is the same