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5 pages/≈1375 words
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6 Sources
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Harvard
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Business & Marketing
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Essay
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English (U.K.)
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International trade and investment patterns in Europe and UK (Essay Sample)

Instructions:
1. What are the potential opportunities and costs for companies based in the UK in outsourcing their operations to countries in the enlarged European Union? Please give example to illustrate your answer. 2. Explain the impact that membership of the following may bring to the UK economy: (a) The World Trade Organisation (WTO) (b) The World Bank (c) The International Monetary Fund (IMF) 3. Explain the currency risks facing UK companies with relation to global exchange rates if they were A) major exporter and B) a major importer. source..
Content:
INTERNATIONAL TRADE AND INVESTMENT PATTERNS
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Jain (2004) explains that each enlargement of the European brings both positive and negative experiences for both new entrants and existing member states. On 1st May, 2004 European Union went through its fifth round of enlargement that was the most complex in its history (Jain 2004). This Enlargement led to rise in the membership of the European Union to twenty five nations. Currently the membership has risen to twenty seven countries. With this high number companies can outsource business operations from an enlarged block with similar policies. Business outsourcing is a controversial issue for companies with (Jain 2004) noting that it affects all parts of the firm from manufacturing, financial management, customer support, logistics control and sales.
In the enlarging European Union, there are emerging new nations where UK companies can outsource the business. (Jain 2004) notes that outsourcing has several advantages including cost-effectiveness, efficiency, and increased productivity and is used as a strategic advantage by companies. (Jain 2004) explains that outsourcing by UK companies can lead to reduction of costs by about 50 to 60 per cent. He argues that European companies spend $19 trillion annually for sales and administration and this can be cut by half through outsourcing.
Most of the new members to the European Union have been given investments to accomplish outsourcing projects as observed by (Jain 2004). He observes that currently there are some reallocations of activities of large multinational companies from Central to Eastern Europe countries. New entrants in the European Union have relatively well educated populations and low local wage levels as explained by (Jain 2004). Consequently, this means that if companies in the UK outsourced business processes to them, they will cut down on operation cost.
(Bergen, 2004) observes that although production relocation and offshore outsourcing of jobs has been happening for decades, rapid technological development and trade liberation has seen rise in the outsourcing of services such as customer relations to countries where wages are lower. (Bergen, 2004) argues that service outsourcing is easier due new communication platforms such as internet. When companies in the UK outsource to new entrants to the EU for IT services, this leads to lower cost and efficiency since the work is done by highly specialized personnel but at a lower cost. The company which outsources has the strategic advantage since they are able to offer products and services at lower prices due to reduced costs of production.
When managers outsource non-core business processors they are able to provide conditions for the staff to focus on high value-added functions which leads to high customer satisfaction (Bergen, 2004).
Outsourcing carries the risk of creating delays in the supply chain, language and cultu...
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