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UNITED KINGDOM

-A Market Analysis

Deepak Joshi- I027

FACTS AND FIGURES


The United Kingdom of Great
Britain and Northern Ireland,
commonly known as the United
Kingdom (UK) is a sovereign
state in Europe

Largest Cities: (population %)


1. London:
25.3%
2. Birmingham: 5.4%
3. Manchester: 4.3%
4. Liverpool:
3.8%
5. Leeds:
3.5%

Statue of Britannia in Plymouth:


National personification of the UK

Those aged 65 will increase by 47.3%, a


rate over four times faster than total
population growth, in 2012-2030 to total
15.7m
This increasing population of Late-Lifers
and Mid-Lifers is going to pose a challenge
Source: Euromonitor

HISTORICAL ANALYSIS
Woven into the fabric of the United
Kingdom of Great Britain is a rich history
defined by wars, rebellions, royals, social
upheaval and the rise and fall of what was
once the biggest empire in the world

Wales was
formally united
with England
by the Acts of
Union of 1536
and 1542

Scotland ruled
from London
since 1603, was
joined with
England and
Wales in 1707 to
form The United
Kingdom of
Great Britain

Ireland came
under English
control during the
1600s and was
united with Act of
1800 to form
United
Kingdom of
Great Britain
and Ireland
The republic of
Ireland gained its
independence in
1922, but a part
remained as
Northern Ireland

UK joined
European Union on
1st January 1973
and recently it
decided to leave
EU

Henry VIII

Elizabeth I

Winston Churchill

CULTURAL ANALYSIS

LANGUAGE
First spoken in early medieval
England, the English language is
the de facto official language of the
UK, and is spoken monolingually by an
estimated 95% of the British
population
Welsh is also officially recognised and
is spoken mainly in Wales.
Gaelic is spoken in some parts of
Scotland

SOCIAL NORMS
Handshaking is customary when
introduced to someone for the first time
The British are very reserved and private
people
There is a proper way to act in most
situations and the British are sticklers for
adherence to protocol

RELIGION

ART & LITERATURE


SPORTS

Multi-faith society, although a majority


of 59% classed themselves as
Christian in the 2011 census
The second most prevalent religion is
Muslim which is practised by
approximately 5% of the population.

The most popular sport in the U.K.


is football (soccer). Other popular
sports include rugby, rowing, horse
racing, cricket, tennis and golf
Some major competitions are
English Premier League,
Wimbledon, Open Golf Tournament

There are numerous contribution in art,


literature and cinema by UK to world like
William Shakespeare, Alfred Hitchcock,
Charlie Chaplin and the famous music
band The Beatles among many

HOFSTEDEs CULTURAL DIMENSIONS

Power
Distance

Individualism

Masculinity

Uncertainty
Avoidance

Long term
orientation &
Indulgence

At 35 Britain sits in the lower rankings of PDI i.e.


a society that believes that inequalities amongst
people should be minimized
The PDI score seems incongruent with the well
established and historical British class system
At a score of 89 the UK is amongst the highest of
the Individualist scores
The British are a highly Individualist and private
people. Children are taught from an early age to
think for themselves
At 66, Britain is a Masculine society highly
success oriented and driven
In comparison to Feminine cultures such as the
Scandinavian countries, people in the UK live in
order to work and have a clear performance goal
At 35 the UK has a low score on Uncertainty
Avoidance which means that as a nation they are
quite happy to wake up not knowing what the day
brings
Goals are clear but flexible path to reach there
With an intermediate score of 51 in LTO, a
dominant preference in British culture cannot be
determined
A high score of 69 in indulgence indicates that the
British culture is highly optimistic, gives high
degree of importance on leisure time, act as they
please and spend money as they wish

GEOGRAPHY & NATURAL RESOURCES

Located in north-western coast of continental Europe with a total


area of approximately 241,930 sq kms

Consists of four regions- England, Scotland, Wales and northern


Ireland

The UK lies between the north Atlantic and north sea and
separated from France by English channel in the south

Landscape can be divided roughly into two kinds of terrainshighland and lowland

Location on the Atlantic ocean helps UK trade with the US

Mild climate with rainfall throughout the year. No section goes


without rain for more than 2 weeks

UK has 3 billion barrels of proven crude oil reserves


The country also has 0.2 trillion cubic metres of proven reserves of
natural gas
Other natural resource include deposits of coal, iron ore, zinc, lead,
gold, tin, limestone among majors
Nearly 25% of the country has arable land and location favours use
of tidal power and wind power for generating electricity

Source: Euromonitor

POLITICAL ANALYSIS
Type of Government

Devolved Governments

Scotland, Wales and Northern


Ireland have their own
assemblies and form their own
governments but with limited
power

Scottish referendum in 2014 for


independence was voted
against by 55.3% of the voters

Constitutional Monarchy in
which Monarch is the head of
the state and the PM of United
Kingdom is the head of the
government
Executive Power is exercised
by her Majestys government on
behalf of and by the consent of
Monarch

Political Parties and Houses

Conservative Party (currently in


power)
Labour Party
Scottish National Party
Liberal Democrats
Northern Ireland Party

House of Commons
House of Lords

Current Political Landscape

Coalition government was in


power from 2010-2015

Conservatives won in 2015 and


David Cameron became the PM

After Brexit, Cameron resigned


and Theresa May became PM

Theresa May

Queen Elizabeth II

ECONOMICAL ANALYSIS

Strengths

Weaknesses

Opportunities

Threats

GDP and global rankings out of 203 countries:


2015-16

The UK continued to be the fifth largest economy


globally (in $US terms) in 2015
Services sector is the major economic driver,
accounting for 78.7% of total GVA in 2015

GDP (USD trillion)


19 GDP per capita (USD)
Historical Real GDP growth (2010-15)
Forecast Real GDP growth (2016-20)

The UK is vulnerable to regional demand and


supply shocks, as most of its trade activities are
concentrated within Europe
An ageing population dampens the prospect of a
budget surplus in the long run
An increase in wages and low interest rates will
continue to spur consumer spending
The government plans to further cut the corporate
tax rate from 20% in 2015 to 17% in 2020
The country faces a risk of a property price bubble,
due to housing shortages
Uncertainty over the outcome of a Brexit deal will
weigh on the countrys future economic growth
Shrinking manufacturing sector

2.849
43700
2.0%
1.5%

GDP Growth (%)


3
2.5
2
1.5
1
0.5
0
2010

2011

2012

2013

2014

2015
Source:

Gross Value
Added by
Sector:
2005 & 2015

2005

2015

0%

100%

World Bank
Activities of Household
In 2015, Financial Intermediation
Euromonitor
Education, health, social work
and Education, health, social
Public administration
work were the largest sectors in
Financial intermediation
the UK, accounting for 35.1% &
Transport, storage & Communications
17.9% of total GVA, respectively
Hotels and restaurants
Wholesale and Retail trade
Construction
Electricity, gas & water supply
Manufacturing
Mining & quarrying

MONETARY INDICATORS
Inflation rate

GVA BY REGION

Long term interest rate

5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2010

2011

2012

2013

2014

2015

2016

Source: ONS UK

On the back of lower food and energy prices, as well as


exchange rate appreciation in the past, inflation in UK fell
to a record low in 2015
However the rise in the wage rate and a rebound in oil
prices will lead to rise in inflation in 2016
To support recovery in the UK economy, the BoE has kept
its key interest rate unchanged since 2009 at a record low
level which can go further down after Brexit
Being free-floating currency, British Pound strengthened
against Euro in 2015 owing to weak economic recovery in
the Eurozone (1 euro= 0.86 pound)
USD appreciated against pound in 2015 ($1=0.77 pound )

Source: ONS UK

REGULATORY ENVIRONMENT

In 2014, the UK stood as the largest recipient of FDI


inflows in the EU and the fourth largest in the world

This increase was due to improved economic activity in the


UK and the Eurozone along with the government initiatives
in improving the countrys overall business environment

IMPACT OF BREXIT ON ECONOMY


On 23th June 2016, the UK voted to leave the EU. Since then,
uncertainty over the UKs anticipated negotiation with the EU
stands as a chief threat to future economic growth. The major
repercussions can be:

Major attraction: UKs relatively low corporate tax rate of


20% which is the second lowest among advanced
economies. Further plans to cut it to 17% by 2020

London has eliminated red tape by scaling back things like


planning permission, environmental permits, information
checks and various forms of duplication.

IMPACT OF BREXIT ON CONSUMERS

Indicators of Business Environment: 2016


Ease of doing business

Global competitiveness Index

10

Index of economic freedom

10
4.5
10

Time taken to start a business (Days)


Corruption Perceptions Index

Depreciation in value of pound


Impact on economic growth due to decline in FDIs
Impact on Financial Services
Rise in unemployment which was 5.3% in 2015
Restriction on migration would increase costs and wages for
businesses
Restriction on migration will worsen public finances
Rapid contraction in manufacturing output
Impact on Trade Relations with EU

Source: Euromonitor

Lowering of housing prices which would impact home goods


and furniture retailers

Shrinking top segment with declining income and wealth will


impact businesses that specifically target the UKs high
earning individuals

Impact on both millenials and baby boomers

TOP FIVE CONSUMER TRENDS


GENERATION RENT

SILVER SURFERS

More and more consumers are


forgoing home ownership due to rising
house prices and years without realterms wage growth
Renting is seen as a more efficient
option, as consumers get to live closer
to work and schools, cutting down their
commute time as well as allowing
them to walk, run or cycle to work.

Older consumers those aged 50 and


above are increasingly going online for
social networking, shopping, banking
and to find out information
With a growing number of tech-savvy
senior citizens, the demand for digital
health services is also growing

CONVENIENCE
SHOPPING

WEBROOMING

A May 2014 study by Merchant


Warehouse revealed that 69% of 18to 36-year-old consumers practice
webrooming, compared to only 50%
who practice showrooming
The top reasons are to search if they
save on shipping, to try out and
evaluate a product before purchase

Consumers grocery shopping


habits have evolved since the prerecession years
consumers are now more likely to
engage in smaller but frequent trips
to nearby convenience stores
instead of the traditional big weekly
grocery shop at a supermarket

ETHICAL
CONSUMPTION

Consumers are increasingly making


their purchase decision based on a
brands reputation, with 50% having
chosen a product or service because
of a companys reputation for
responsibility and 48% having avoided
a product or service because of a poor
reputation in that area

Source: Euromonitor

TRADE PATTERNS
IMPORT PROFILE

EXPORT PROFILE

The UK is relatively reliant on imports with ratio of imports


to GDP being 22.1% in 2015
Major imports are from Europe- 60.9% and then Asia
Pacific- 18.6%
High per capita income levels and demand for
sophisticated electronic and non-electronic equipment from
Germany, China and the USA made Machinery and
Electrical the UKs largest import category in 2015
In the wake of Brexit UK is looking beyond EU now and
signed trade deals with Mexico, Thailand and Australia

Source: Euromonitor

The UK is a relatively open economy with ratio of exports to


GDP being 15.3% in 2015

In 2015, the UKs year-on-year exports contracted by 9.8%


(in US$ terms), due to a relatively stronger pound and weak
global demand, particularly in China

The UK's exports are relatively diverse with the main product
groups in 2015 being machinery and electrical equipment
(19.9%), transportation (14.4%) and chemicals (13.3%)

Source: Euromonitor

SUCCESS STORY: HEINZ

The H. J. Heinz Company, or Heinz, is an American food processing company with world
headquarters in Pittsburgh, Pennsylvania founded by Henry John Heinz in 1869

Heinz is the leading seller of baked beans in the UK, with its beans product lines referred to as Heinz
Baked Beans

The first Beanz were sold in the UK as a luxury item at London fine grocers Fortnum & Mason in
1901 and today it is among the top 10 FMCG brands in UK

Main reasons for the success of Heinz in UK apart from its image of being a global brand is the
adaption to local needs and unique campaigns

For UK markets, Heinz came out with 70 different flavour blends, with unusual ingredients like
beetroot, pomegranate and chilli in vogue

Heinz introduced Hot Sauces for UK market like Peri Peri, Hot Pepper which added to its success
there

To make the favourite convenience meal healthier Heinz introduced Reduced Sugar and Salt Baked
Beanz with 50 per cent less salt and 25 per cent less sugar than standard beans in UK market

Heinz adapted quickly to social media marketing and some of the campaigns like Red vs. Brown and
Grow your own campaign became viral and added to its brand equity

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