BUSINESS CULTURE OF UK

K2014
5/1/2014

EXECUTIVE SUMMARY

In this executive report, key cultural benefits of UK are evaluated. When we intend to start business in any country it is very crucial to have knowledge of business culture of the country. Culture defines the complex of distinct elements from a spiritual, material, intellectual and emotional point of view, which describes society or a social group. Furthermore, the culture includes not only art but literature as well as the community’s way of life, the fundamental human rights the values systems, the traditions and the beliefs.
A businessman or an entrepreneur must have knowledge about the business custom, legal and political issues to get competitive advantage. He must analyze economic, investment or market areas and also identify the customer preferences, living standards, income pattern, GNP, GDP, inflation rate and tariffs etc.
This country-specific research gives a comprehensive description of British business culture which will be helpful to interact more effectively with British clients and colleagues.

TABLE OF CONTENTS

Introduction ----------------------- 03
Culture objective ----------------------- 03 - 04
The Culture Analysis ----------------------- 04 - 07
The Political, Legal and Investment climate analysis ----------------------- 07 - 11
The Economic analysis ----------------------- 12 - 16
Market analysis ----------------------- 16 - 18
Recommendations ----------------------- 18 - 19
Conclusion ----------------------- 19 - 20
References ------------------------ 20 - 21

INTRODUCTION

When working in the global commercial environment, knowledge of the impact of cultural differences is one of the key to international business success. Each country profile contains information on a range of topics of immediate commercial relevance to anybody working in a global organization or studying international trade. Culture is just one perspective that can help us to understand more about a business. 'Business culture' is not just about how others see a business, but also about how the individuals within an organization understand it. In this research we explore how the concept of culture developed from research into differences between cultures at a national level. It is possible to see, or ‘feel’, that one business is different from another, and that this involves more than just how it presents itself to the outside world.
Attitudes and values form the basis of any culture. They reflect the ways people think and behave. Knowledge of attitudes and values can therefore be of significant importance if you wish to communicate with your counterparts effectively. Ignorance can result in a cultural barrier that may hinder the communication process and have a detrimental effect on the success of your activities in a given country.

CULTURAL OBJECTIVES

Culture defines the complex of distinct elements from a spiritual, material, intellectual and emotional point of view, which describes o society or a social group. The culture includes not only art but literature

as well as the community’s way of life, the fundamental human rights the values systems, the traditions and the beliefs.
This country-specific section gives a comprehensive description of British business culture which will help you to interact more effectively with your British clients and colleagues. Although each sub-section on the right focuses on one particular area of business culture in Britain, it is recommended that all of the sections are studied in the order they are shown.
The culture of UK is defined by the idiosyncratic cultural norms of England and the English people. Owing to England's dominant position within the United Kingdom it can be difficult to differentiate English culture from the culture of the United Kingdom as a whole.

THE CULTURAL ANALYSIS

LOCATION AND GEOGRAPHY
England covers 50,357 square miles (130,423 square kilometers) of the main island of the British Isles and lies off the northwestern coast of Europe, separated from the mainland by the English Channel. The Gulf Stream makes the climate mild and rainy.

LANGUAGE
English people traditionally speak the English language, a member of the West Germanic language family. The modern English language evolved from Old English, with lexical influence from Norman-

French, Latin, and Old Norse. There were once many different dialects in England - which were recorded in projects such as the English Dialect Dictionary and the Survey of English Dialects - but many of these have passed out of usage as Standard English has spread through education, the media and socioeconomic pressures. Cornish, a Celtic language originating in Cornwall, are currently spoken by about 3,500 people as a second language.

SPORTS
There are many sports which have been codified by the English, and then spread worldwide, including badminton, cricket, croquet, football, field, lawn tennis, rugby league, rugby union, table tennis and thoroughbred horse racing. In the late 18th century, the English game of rounder’s was transported to the American Colonies, where it evolved into baseball. Association football, cricket, rugby union and rugby are considered to be the national sports of England. Tennis is also a major sport, with one of the sport's most internationally prestigious tournaments being held at Wimbledon.

CLOTHING
Traditional dark grey and dark blue suits are less in evidence then in the past - except for sectors such as the law and banking and finance. If suits are worn, white, blue or pink shirts and reasonably sober ties are typical. In the more senior circles in the 'City', men will often wear cufflinks.

BUSINESS CUSTOMS

Meeting and Greeting
• The handshake is the common form of greeting.
• Avoid prolonged eye contact as it makes people feel uncomfortable.
• Introduce a younger person to an older person.
• Introduce a person of lower status to a person of higher status.
• When two people are of similar age and rank, introduce the one you know better to the other person.
Gift Giving Etiquette
• The British exchange gifts between family members and close friends for birthdays and Christmas.
• The gift need not be expensive, but it should usually demonstrate an attempt to find something that related to the recipient’s interests.

• If invited to someone's home, it is normal to take along a box of good chocolates, a good bottle of wine or flowers.

Dining Etiquette
• Unlike many European cultures, the British enjoy entertaining in people their homes.
• Although the British value punctuality, you may arrive 10-15 minutes later than invited to dinner. However, if going to a restaurant be on time.
• Table manners are Continental, i.e. the fork is held in the left hand and the knife in the right while eating.
• The fork is held tines down so food is scooped on to the back of the fork. This is a skill that takes time to master.
• Remain standing until invited to sit down. You may be shown to a particular seat.
• Do not rest your elbows on the table.

THE POLTICAL, LEGAL AND INVESTMENT CLIMATE ANALYSIS

THE POLTICAL SYSTEM

The UK political system is a multi-party system. Since the 1920s, the two largest political parties have been the conservative party and the labor party. Before the Labor Party rose in British politics, the liberal party was the other major political party along with the Conservatives. Though coalition and minority

governments have been an occasional feature of parliamentary politics, the first-past-the-post electoral system used for general elections tends to maintain the dominance of these two parties, though each has in the past century relied upon a third party such as the liberal democrats to deliver a working majority in Parliament. The current Conservative-Liberal Democrat coalition government is the first coalition since 1945.

THE QUEEN
Great Britain is a constitutional monarchy. This means that the official head of the State is the monarch (a king or a queen) but his or her powers are limited by the constitution. For years it has been Her Majesty Queen Elizabeth II
The Queen is only a formal and symbolic head of State. Her duties are e.g. - she holds receptions and State banquets, she visits various parts of Britain every year, she gives audiences to the Prime Minister and other important persons, she pays state visits and undertakes tours in other countries of the Commonwealth, she formally summons and dissolves Parliament. („The Queen´s speech“, with which the Queen opens each session of Parliament, is prepared by the government and read by the Queen). Besides she is commander-in-chief of all armed forces and the head of the Church of England. She also awards various titles and orders, etc.

THE U.K. GOVERNMENT
All Government Ministers have to be a member of either the House of Commons (most of them) or the House of Lords (the remainder of them) and every Government Department will have at least one

Minister in the Lords, so that the Department can speak in either House as necessary. The number of Ministers varies from administration to administration, but typically there will be around 90, the 20 or so most senior being Cabinet Ministers. In addition, there are around 20 whips that are on the Government payroll.
CIVIL SOCIETY
One cannot explain a liberal democracy such as the United Kingdom simply by talking about the formal political and governmental institutions, any more than one can understand fish without talking about water.
Democratic government cannot operate without a strong civil society to support it and hold political and governmental bodies to account. The special history of the UK - involving gradual changes over long periods - has created a subtle but effective civil society that outsiders often find a little difficult to understand. So it is useful to list some of the more important elements of such a civil society:
Bill of Rights - Although Britain does not have a written constitution, it does have a Bill of Rights because it is a signatory to the European Convention on Human Rights which was drawn up by a body called the Council of Europe. The European Convention is part of our domestic law so that it can be enforced in our domestic courts as well as in the European Court of Human Rights.
Independent judiciary - judges are appointed through an independent process and operate totally independently of government. They can find that a Government Minister has acted against a law of the UK Parliament or a Directive of the European Union or against the European Convention and require the Minister to change his actions.
Freedom of information legislation -They have a Freedom of Information Act which is a piece of legislation that obliges national government, local government and most public bodies to provide any

information requested by a citizen. The only exceptions are things like information which concern national security, commercial confidentiality or the private matters of citizens.
Trade unions - About a quarter of workers in Britain are members of trade unions representing different occupational groups or industries. These trade unions are totally independent of government and employers.
Pressure groups – They have lots and lots of organizations that campaign publicly on political issues such as poverty, pensions, and the environment. They perform an invaluable role in putting forward ideas and holding politicians to account.
Charities and voluntary groups - Similarly they have lots and lots of organizations that do some of the things that government does as well such as running schools and hospitals, looking after the poor and old, and cleaning up the environment.

OPENESS TO FOREIGN INVESTMENT
The United States remains the primary source of foreign direct investment (FDI) into the UK. In FY 2011-2012, the United States contributed 24% of all inward investment projects to the UK and over 30% of all inward investment-generated jobs. In 2011, the United States contributed FDI inflows of USD 227 billion, an increase of 15% from 2010. The UK was the world's seventh largest recipient of foreign direct investment in 2011, slipping from fifth position in 2012, receiving USD 53.9 billion, according to the United Nations Conference on Trade and Development (UNCTAD). Despite the drop in ranking, however, inflows increased 7 percent over 2011. The UK attracted 17 percent of all European Union (EU) FDI inflows, the highest percentage for a single EU country, but this position is being challenged, with Germany’s share of FDI rising for the fifth year in a row to reach 15 percent.

With a few exceptions, the UK does not discriminate between nationals and foreign individuals in the formation and operation of private companies. U.S. companies establishing British subsidiaries generally encounter no special nationality requirements on directors or shareholders, although at least one director of any company registered in the UK must be ordinarily resident in the UK. Once established in the UK, foreign-owned companies are treated no differently from UK firms. Within the EU, the British Government is a strong defender of the rights of any British- registered company, irrespective of its nationality of ownership.
Market entry for U.S. firms is greatly facilitated by a common language, legal heritage, and similar business institutions and practices. Long-term political, economic, and regulatory stability, coupled with relatively low rates of taxation and inflation make the UK particularly attractive to foreign investors. The Coalition Government, formed between Conservatives and Liberal Democrats in May 2010, is committed to economic reforms, including privatization, deregulation, and support for competition. Both political parties in the coalition believe in a liberal economic policy.
The UK imposes few impediments to foreign ownership. The UK subscribes to the OECD Codes of Liberalization of Capital Movements and of Current Invisible Operations, as well as the OECD National Treatment Instrument.

THE ECONOMIC ANALYSIS

POPULATION
Current population of UK is 63.7 million. Office for National Statistics predicted that the UK will have 10 million more people within the next 25 years (Telegraph).

GNP, INCOME AND WEALTH
Gross National Product in the United Kingdom increased to 400795 GBP Million in the fourth quarter of 2013 from 398055 GBP Million in the third quarter of 2013. Gross National Product in the United Kingdom is reported by the Office for National Statistics. Gross National Product in the United Kingdom averaged 132108.97 GBP Million from 1955 until 2013, reaching an all-time high of 409331 GBP Million in the second quarter of 2013 and a record low of 4776 GBP Million in the first quarter of 1955 (Trading Economics).
Average Per Capita Income of UK in the period of 2009-2013 is $38,920 (World Bank).
Total household wealth in the UK has soared past the £7trn mark for the first time but society is becoming more divided, according to new research.
Net wealth - the value of residential buildings and financial assets less outstanding debts - is estimated to have hit £7.05trn at the end of 2012.
One in ten households in the UK is sitting on assets of around £1m, according to research from the London School of Economics. Researchers for Lloyds TSB Private Banking said that despite the current

tough state of the economy, there has been a £2.71trn increase over the past decade, equal to a gain of £86,000 per household since 2003 (Sky).

WORKING CONDITIONS
Workers' rights in the UK will depend on their general rights under the law and their contract of employment. The contract of employment can only give the worker more rights.
The National Minimum Wage rate per hour is £6.19 for workers aged 21 and over. This rate is to rise to £6.31 from October 1, 2013.Nearly all workers are also entitled to at least four weeks paid annual leave, sick pay, maternity and paternity leave. All employers have a duty to take care of the health and safety of all their employees. Salaries will vary greatly depending on the nature of the job, the industry and the location. Further, there are special rules about the employment of children and young people (Migration Expert).

FOREIGN INVESTMENT
The UK was the leading economy out of the 27 member states of the EU, with foreign investors spending $53bn in Britain last year. That kept the UK in the top ten globally for foreign investment, although it slipped from sixth position in 2012 last year (Telegraph). Foreign investment in UK rises despite slump across rest of Europe. UN figures suggest investors seeing Britain as haven for their money amid Eurozone crisis (The Guardian).

BALANCE OF PAYMENTS
• The United Kingdom’s current account deficit was £59.2 billion in 2012, up from a deficit of £22.5 billion in 2011. The deficit in 2012 equated to 3.8% of GDP at current market prices, the highest since 1989 (4.6%).
• The trade deficit widened to £33.9 billion in 2012, from £23.3 billion in 2011.
• The income balance switched to a deficit of £2.3 billion, from a surplus of £22.5 billion in 2011.
• The financial account recorded net inward investment of £48.2 billion during 2012, up from £11.5 billion in 2011.
• The international investment position recorded UK net liabilities of £141.6 billion at the end of 2012 (ONS.GOV.UK)

CURRENCY AND INFLATION
The currency of UK is British Pounds Sterling. The UK inflation rate as measured by the Consumer Prices Index (CPI) fell to 1.6% in March from 1.7% in February, according to the Office for National Statistics (ONS).

LABOR FORCE
Labor force total in the United Kingdom was last measured at 31831748.95 in 2010, according to the World Bank. Total labor force comprises people ages 15 and older who meet the International Labor

Organization definition of the economically active population: all people who supply labor for the production of goods and services during a specified period. It includes both the employed and the unemployed. While national practices vary in the treatment of such groups as the armed forces and seasonal or part-time workers, in general the labor force includes the armed forces, the unemployed and first-time job-seekers, but excludes homemakers and other unpaid caregivers and workers in the informal sector (Trading Economics).

CUSTOM REGULATIONS
If you are travelling to the UK from the EU, you can bring an unlimited amount of most goods for your own use without paying tax or duty. But when you travel to the UK from outside the EU, you can bring a certain amount of duty and tax-free goods for your own use. This is known as your allowance, and applies to alcohol, tobacco, perfume, souvenirs and other goods. If you go over this allowance, you may have to pay tax or duty. It is important to know about Customs and Excise regulations that apply to banned and special license goods. Banned goods are always confiscated and people could also face fines for trying to bring them into the UK.

IMPORT LICENSE REQUIREMENTS
Importing goods without the right license is a criminal offence in UK, so it’s important to have a import license. There are controls on imports including firearms, plants and animals, foods, medicines, textiles and chemicals. Whether you need a license can also depend on where the goods are coming from. You may need a license even if you are only importing goods temporarily.

MAJOR ECONOMIC TRENDS AND OUTLOOK
The UK economy has mounted a strong recovery over the past year and expects this to continue in 2014-15. Most sectors and regions of the economy are now showing positive growth trends, with recent signs that business investment is also starting to pick up. In the longer term, re-shoring could also boost output and employment in both manufacturing and services.
However, while the recovery has been rich in jobs, it has been poor in productivity and wages. Median real household incomes remain well below pre-recession peaks and can only be expected to recover gradually over the next few years.
Therefore, while the economy as a whole is firmly on the road to recovery, it may be some years before many low and middle earners feel the recession is really over (PWC).

MARKET ANALYSIS

MARKET RESEARCH
Market research is any organized effort to gather information about target markets or customers. Market research provides important information to identify and analyze the market need, market size and competition.
To be successful and to earn profit while doing business in UK it is necessary to find a gap in market to exploit. Whether to launch a new product idea or offer a new service to an unconquered area, the aim will be same – to stand out. Understanding their market will help to create a business strategy; Market

research will also help businessman to better understand the competition - and ultimately how to make your business perform better than others.
There are many different ways to conduct market research, if your business is on the smaller end of the scale, you will be able to collect most, if not all, of the necessary market data yourself. If you’re aiming for global domination, you might need some outside help.

CHANNELS OF DISTRIBUTION
Distribution channels are the methods that companies use to enter the consumer market with their product. While many methods exist, they have changed over the years because of the internet and global sales. In UK channels of distribution consist of distributors, wholesalers, retailers, direct sales agents and online networks. Most companies that produce goods and services do not sell them directly to their end consumers. Typically, firms rely on retailers to distribute their product. For example, a food manufacturer uses several retailers to display and sell its products. The retailer is considered to be an intermediary within the manufacturer's distribution channel.
The type of intermediaries that exist in channels of distribution include wholesalers and retailers, brokers, manufacturers' representatives, sales agents, transportation companies, independent warehouses, banks and advertising agencies.

MEDIA OF UK
Media of the UK consist of several different types of communications media: television, radio, newspapers, magazines, and Web sites. The country also has a strong music industry. UK has a diverse range of providers, the most prominent being the state-owned public service broadcaster, the BBC (British Broadcasting Corporation). Their media is free; newspapers, radio and television can say what they want about the Parliament, the Government and politicians.

RECOMMENDATIONS
The business culture is different from another and this involves more than just how it presents itself to the outside world.
Culture illustrates the accepted norms, values and traditional behavior of a group through each country should know the business culture their beliefs, values and attitudes of the other countries.
With this we can know about their market tastes, preferences and what distribution channel they mostly use. As a businessman you will find advantage in doing business in UK, because they treat foreign as well as local investor on same level.
For importing goods, getting an import license is extremely imperative. As importing without license can be a criminal offence. Therefore, great care should be taken by importers.
A businessman of luxury product can have a greater advantage of his product, as income shows prosperity among UK’s nation. So if one has intended to start business of luxury products, has a great opportunity of success in UK’s business environment.

There is no general etiquette with regard to business cards, though they are generally exchanged (sometimes even at the end of the meeting). It is recommended to exchange them at the start of the meeting; it can make it easier to remember who you are meeting, and your British hosts will appreciate the aid. Ensure your business cards have your name and title in English. Note your host may not have cards at the meeting and may need to get them.
Be on time for meetings. Whilst not strictly focused on nowadays, if you are late it will reflect badly on your host’s view of your company’s capabilities. Note your host may well be late. If travelling any distance or if driving yourself be aware that the roads are typically quite congested and ask for advice on travel times.

CONCLUSION
In this report it is concluded that understanding of a country’s culture is mandatory before starting the business. In order to gain competitive advantage of doing business in UK, knowledge of the region’s language, business custom, national culture, religion, business infrastructure are necessary. The knowledge will help in development of business strategies according to their specific culture and preferences.
Countries possess uniqueness in terms of their beliefs, values and cultural activities. Culture is a key component in business and has an immense impact on the strategic direction of business. It influences management decisions and all business functions from accounting to production.
Along many reasons that support the business investments in UK, one is that UK government doesn’t discriminate between national and foreign individuals in formation of private companies. One can assess the need of investment and can earn considerable profit. To earn revenue, evaluation of the business to

invest, economic policies and regulations are necessary. Once a company is established, no difference in the treatment of government will be felt from UK based local firms.
UK provides opportunity for manufactures of luxury products, as the income and wealth level of population is favorable in the environment.
Civil society also gives advantage to foreign businessman, in the form of bill of rights, free media and trade unions. Political, economic and legal stability attracts investors to enter in UK markets. Tax and inflation rate is also very low due to which many businessmen prefer UK markets.

REFRENCES: http://businessculture.org/northern-europe/uk-business-culture/business-etiquette/ http://www.executiveplanet.com/index.php?title=United_Kingdom:_Business_Dress_-_ http://www.ecomunitate.ro/en/Cultural_objectives http://www.thisismoney.co.uk/money/smallbusiness/article-2326043/Knowledge-power-How-market-research-new-business.html#ixzz2zdWjolRz http://www.marketingdonut.co.uk/marketing/marketing-strategy/exporting-and-distribution-strategy http://en.wikipedia.org/wiki/Media_of_the_United_Kingdom http://www.pwc.co.uk/the-economy/publications/uk-economic-outlook/ http://www.migrationexpert.co.uk/working_in_uk/uk_working_conditions/

http://www.telegraph.co.uk/finance/personalfinance/10073033/One-in-ten-UK-households-are-asset-millionaires.htm http://data.worldbank.org/indicator/NY.GDP.PCAP.CD http://news.sky.com/story/1075186/total-uk-wealth-tops-7trn-as-rich-get-richer http://www.tradingeconomics.com/united-kingdom/gross-national-product http://www.telegraph.co.uk/news/uknews/immigration/10509723/UK-population-could-hit-132-million-warn-official-figures.html https://www.gov.uk/export-and-import-licences-for-controlled-goods-and-trading-with-certain-countries http://www.visitlondon.com/traveller-information/travel-to-london/customs-and-visas/uk-customs-allowances