International trade and investment patterns in Europe and UK

INTERNATIONAL TRADE AND INVESTMENT PATTERNS
By:
Professor:
University:
City:
Date:
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 cultural problems and distant management. Outsourcing decisions can bring bad publicity for companies as noted by (Bergen, 2004) since such decisions results in weeks of hostile media coverage. He further argues that if companies handle business process outsourcing badly, this can damage corporate image, weaken the brand and low customer satisfaction. Outsourcing can also create lower quality products and services. This can greatly lead to loss of market share will customers switching over to other companies.
World Trade Organisation can help boost economic growth in UK since trade stimulates economic growth and this can in turn lead to more employment opportunities. World Trade Organisation creates lower barriers for trade which are beneficial for countries in creating employment. Increased trade boosts the national income of countries as observed by (World Trade Organisation 2008). They observe that the EU commission estimates that that the creation of a single market would result in the creation of 300,000 to 900,000 more jobs than without a single market. There will WTO creating favourable trading environment, more jobs are created.
World Trade Organisation (2008) argue that lowering of trade barriers leads to increased trade which leads to more incomes both for individuals and national incomes. World Trade organisation sets up principles that make trade system economically efficient and cut on costs. World Trade Organisation (2008) observes that world trade organisation that system allows for countries to specialize in division of labour. The organization harmonises trading rules and customs duty rates for imports from different trading partners. UK stands to benefit more with better terms of trading brought by WTO given that UK in 2005, 25 per cent of UK`s GDP came from exports of goods and services as noted by (Riley, 2006) and therefore it is evident that trade supports a bulk of the UK`s economy and its enhancement through WTO will ensure better sustained and economic growth.
Membership to World Bank off...