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Table of Contents
Political Environment and Risk.
The report includes the analysis of economic, political, and business environments of two countries i.e., Singapore and the United Kingdom, and the potential of their markets for honey and its products. QL Honey works with a chain of trustworthy and authentic beekeepers across Australia who provide the best quality honey from more than 500 different sources. The huge variety of indigenous Australian trees and shrubs allow QL Honey to supply a great variety of honey, from eucalyptus and yellow box, and ironbark and our rainforest blend, to our 100% pure, raw Manuka honey. All the products offered by the company are and will always be 100%, real Australian honey.
Singapore is among high-income economies of the world and in 2017, it had a gross national income of US$54,530 per capita (Kong & Woods, 2018). The country is recognized among most competitive countries of the world and it offers most friendly business environments in the world (Adedoyin & Zakari, 2020). After independence, the country gradually transformed from low economy to high economy by generating high incomes. The country has observed the highest GDP growth in the world which was at an average of 7.7% since the time of independence and then it topped after that in the first 25 years at 9.2% (Bean, 2016). In 2018, the overall growth in the economy of Singapore was 3.2% (Bean, 2016). The country was ranked as a topmost nation in Human capital development according to The World Bank Human capital Index. It’s freedom score is 89.4 and it has one of world’s freest economy(Saari, 2017). The GDP is $565.8 billion with a growth rate of 3.2 %, while the population of the country is 5.6 million. The rate of unemployment is 3.8% and the inflation rate is 0.4% (Yeo, 2018).
The United Kingdom is ranked in the sixth position among the largest economies of the world. Since the referendum of 2016 on leaving the European Union (Brexit), the growth of the British economy has slowed down(James, Bradshaw, Coe & Faulconbridge, 2018). In 2019, the increase in the UK's GDP was only 1.4% while it was 1.3% in 2018 (James, Bradshaw, Coe & Faulconbridge, 2018). It is further expected to fall to -6.5% in 2020 due to the outbreak of COVID-19 pandemic and now it is expected to grow to 4% in 2021 after the recovery from pandemic (James, Bradshaw, Coe & Faulconbridge, 2018). However, there are uncertainties in the process of negotiation around Brexit which affect the country’s economy. There is a slow potential growth because of the slow accumulation of capital and fall in net migration from the European Union (EU) and the continuing low productivity.
The government of Singapore plays an important role in knowing the Foreign Direct Investment (FDI) flow and hence also the globalization level through the policies of trade and investment, legal systems, and other political roles. The political risks have been posed due to the impact of Globalization (Loi & Le Ng, 2018). There have been unstable governments and eruptive socio-political environments in developing countries (Lee & Lin, 2017). Due to globalization, the world has become a global village having various cultures and desires which lead to the creation of political conflicts. However, there is a relatively low political risks associated with businesses in Singapore. The country has the lowest political risk in Asia as per the Political and Economic Risk Consultancy (PERC).
For any firms that are either based in the UK or the companies which have invested in businesses in the UK, Brexit always comes at the top of the list of political issues in business (Nawaz, 2017). Probably a year ago, none of the businesses came forward for taking up the responsibility that the country might choose to leave the European Union (Khan & Qianli, 2017). However, that is what happened and after spending 40 years of making efforts to match the standards, integrate the markets and develop supply chains across the borders, the businesses still have the possibility of being ruined. Brexit can be seen as the starting point of a geopolitical story rather than the end of the story (Khan & Qianli, 2017). If the businesses leave behind the world's richest markets to do business in the UK then the UK will be full of impulsive trade deals. However, each business partner will certainly demand a place in the currently protected market for opening up its own business. Hence, each deal will be attached to its ticking time bomb of political risk (Khan & Qianli, 2017).
Singapore is a country which is oriented towards business and has got a powerful economy. It serves as a major hub for multinational businesses operating in Asia (Chahal, Jyoti & Wirtz, 2019). Australia and Singapore have a close relationship and have a lot of opportunities in industries such as healthcare, building and construction, technology, education, and food and beverages (Jain & Gupta, 2018). According to The World Bank, Singapore has got one of the world's most business-oriented and friendly business environment for entrepreneurs and it is also ranked among the most competitive economies in the world (Chahal, Jyoti & Wirtz, 2019). The companies of Australia are suggested to first do a complete investigation of the market and get advice from professionals before entering into any business relationships with Singapore (Saari, 2017). Bribery of officials has been declared as a crime in the country and if anyone tries to bribe the foreign officials, then the Australian companies can be prosecuted for such a crime (Hwang, Shan & Supa’at, 2017).
The United Kingdom (UK) is a member of the European Union (EU) and follows the trade regulatory requirements of the EU (Chen, 2020).
Involving in business with the UK is quite similar to carrying out business in Australia. However, UK’s business culture is more orthodox in comparison to the business culture of Australia (Chen, 2020). The business executives have a more formal approach towards the business. Most of the people involved in business prefer to wear suits. The fashion of smart casual is also spreading more in some sectors of industry and they refer to lounge suits on invitations which means the business attire and not smart casual (Yap, Sim & Thong, 2019). UK companies take an interest in new and innovative ideas and practice entrepreneurship (Nawaz, 2017). However, they don't agree with a cold meeting (Chen, 2020). It is advised to introduce your company and the proposal at least 3-4 weeks before the planned date of the meeting. The act of gifting is not involved in British business etiquette. UK has relatively low trade barriers and serves as the entry market for more than 43,000 US exporters (Hwang, Shan & Supa’at, 2017).
As per the country analysis done of Singapore and the UK based on economic, political, and business environments, the right choice of country for QL Honey to expand its business and start its exports is Singapore. The country's choice is based on the advantages and favorable conditions offered by Singapore. Singapore has better economic conditions as it has a high-income economy than the UK which has a relatively low-income economy. The UK had the sixth-largest economy but after the 2016 referendum, the economic growth of the UK slowed down and since then there has been a very slow rate of economic growth. Singapore is considered to have the world's most business-friendly environment and it was ranked as the world’s best country in terms of Human capital development by the World Bank Human capital index. It is the world’s freest economy in the 2020 index with freedom score as 89.4.
If we look at the political environment, in Singapore, the level of political risk is minimum as per the Political and Economic Risk Consultancy (PERC). Due to globalization, there have been some political risks in the country and there were times when the government was unstable. There were political conflicts too but the country still has the lowest political risk as compared to other countries. The UK has more political risks associated with the business and any company which enters the market of the UK comes with a political risk attached to it as it demands market share for its business.
Singapore offers more favorable conditions to the company to do business as the country has a great economy as well as a business-friendly environment. Australia and Singapore already share a close relationship and Singapore also offers good opportunities in various sectors of the market such as medicine, technology, and food and beverages. It is a country that is ranked by the World Bank as having a business-oriented environment and it also comes among the most competitive economies of the world. Singapore offers opportunities to the local entrepreneurs and it is interested in new ideas that can be beneficial for QL Honey as it can export more innovative and new products of honey to Singapore and earn more revenues. On the other hand, although doing business in the UK is quite similar to doing business in Australia yet there are some differences in the way, the business executives dress up and carry out business processes.
After considering different aspects of business, we can conclude that Singapore is a better choice for QL Honey to start exporting Honey products and expand its business. The country has favourable conditions to establish and grow the business.
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