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This report provides the analysis of how the multinational retail companies have affected employment rate in the UK. Whilst outlining the benefits, disadvantages and the main concerns it has become whether multinationals

Extracts from this essay...

Introduction

CONTENTS Page Numbers 1. Executive Summary 2 2. Introduction 3 3. Overview: Retail industry 3 4. Company profile 4 5. Changing in the retail environment 5 * Relocation 5 * Acquisition/ mergers 5 * Expansion 6 * Operation controls 6 * Re-structuring 7 * Outsourcing/ offshoring 7 6. SWOT Analysis 7-8 7. Conclusion 9 8. Bibliography 10 9. Appendices 11 Executive Summary This report provides the analysis of how the multinational retail companies have affected employment rate in the UK. Whilst outlining the benefits, disadvantages and the main concerns it has become whether multinationals companies can or cannot afford to employ the number of people they do today. Due to the changing retail environment, large companies are being forced to adapt to the environment and therefore companies are changing their strategies and operations such as; merging, relocation, re-structuring, expansions, tighter operational controls, out sourcing, competition, and etc... Today multinational retailers are looking for ways to gain compete competitive advantage, by doing this they need to produce high quality products at low prices, therefore companies are looking for cheap resources including cheap labour. Today the winners and drivers have changed as Boots, M&S, Woolworths and others retailers are faced with strong competition from supermarkets and it is being difficult to emulate. Introduction The main structure of this report would be outlining the benefits and disadvantages of my few selected UK operating retail companies. The companies included in this report are; Boots, GSK, Marks & Spencer and Ikea. This report would help us to understand why the employment/unemployment rate has effected the UK retail sector on a large scale. With regards to the above companies I would be highlighting some of the key areas of concern, such as; companies merging, national and international relocation, re-structuring, expansions, tighter operational controls, out sourcing, competition, etc.

Middle

Glaxo Smith Kline (GSK) employs 25,000 people in UK factories. In 2001 it announced GSK plans to cut more than 2,000 jobs (see appendix) due to Glaxo Wellcome and Smith Kline Beecham merging. A factory producing asthma inhalers in northwest England will close with the loss of up to 500 jobs because the company wanted to eliminate duplication and rationalise operations and would be able to make savings of £750m a year. This would enable the company's manufacturing network to be more flexible and adapt to the constant changing environment in which the company operates as this one of the reason why some plants in the UK is being closed Another 400 jobs will be lost in County Durham plants because operations will be transferred to other sites. Another 720 employees will be cut in Scotland as they plan to sell the plant due to duplication. GSK also will close the healthcare-manufacturing site in Plymouth and Devon, which will add another loss 170 jobs. Although this acquisitions would eventually create more jobs in Ireland and the UK as the jobs will go in drug and consumer product manufacturing plants, it has also been enable to secured over 10,000 UK manufacturing jobs. Expansion The main purpose of expansion is to increase existing commercial activity based on modernization, replacement, upgrade, or increased workload and at the same time increase operating cost. An expansion of an existing commercial activity is an increase of 30 percent or more in the activity's operating costs or total capital investment. (www.emissary.com) The UK retail sector has supported the growth of international retail operations () that way the giant Swedish company Ikea decided to expand their retail outlets through the UK over the next 10 years, as they believe there is still a high demand for its goods.

Conclusion

For retailers to survive and to gain repeated success it must respond to the current levels of competition and that's why companies are relocating, restructuring, expanding, creating tighter operation controls, outsourcing/ offshoring, merging and etc... As competition is providing consumers with high quality products at low prices and wider product range, retailers have started looking at ways in which they can cut cost and find cheap resources to develop/ manufacture goods. Including cheap labour. One of companies main and long running cost is labour, as companies are finding it hard to keep up with the cost of UK workforce without the help of high sales and profits it is restricting them to be competitive. Reducing the number of employees in the UK and using labour outside the UK such as India, China, Eastern Europe and other countries with cheap labour and resources has enable them to gain competitive advantage while the UK employment rate is suffering. Consumers buying habits is another factor, with the increase of household bills and a average earned income, it is weakening consumer's retail spending as they are only buying essentials products, which is a major issue to UK employment. The basic cost of living has doubled in the last two years and people are spending more time working to gain a better earning whilst it is affecting the High Streets. Online shopping has increase as retailers are advertising their products and promotions on the Internet, allowing consumers to enjoy and relax without any time restrictions, which relates to low demand of staff on the High Streets Therefore it is true, today the UK employment has been effected from multinational retailers companies because they are forced to change due to the conditions in the environment and retailers cannot afford to employ the number of people they do today.

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