A2 Business Studies Unit 6 - Political Change Opportunities and constraints created by changes in UK and Central and Eastern Europe (CEE)

The impact of political change in the UK n Conservative government (led by Margaret Thatcher in 80s & 90s) introduced a policy of deregulation and privatisation which created competition in markets : n E.g. Telecoms (BT), airlines, utilities, financial services etc n Laws introduced to reduce the power of trade unions and make the labour market more flexible n Flexible = easier to hire and fire workers Picture sourced from

The Fall of Communism n Eastern European countries such as Hungary, Poland, Bulgaria etc were controlled by the USSR n Products and services were provided by state- owned monopolies (little choice, no competition, thought to be inefficient) n A move from planned to free market economy n This has led to privatisation with a move of assets from the public to private sector Picture sourced from

Opportunities in Central and Eastern Europe (CEE) n UK firms can sell to 100 million people who want Western brands n Rent, land, and labour is cheaper n Less controls on health and safety and pollution n Planning permission for factory is easier n Grants and low taxation to attract foreign firms

EU Businesses in CEE markets n EU Businesses have taken advantage of the CEE market through: n Joint ventures - EU firms provide cash, machinery skills, Host firm provides staff, land, buildings n Technical co-operation - allows co-production and joint assembly n Selling technology and expertise - often licenses to produce particular products e.g. Coca-Cola in Bulgaria

Constraints in Central and Eastern Europe n Average incomes are low so consumers cannot afford many luxuries n Economic and political instability makes trading conditions unpredictable n Excessive bureaucracy – too much paperwork. CEE countries are working hard to improve this. n Poor infrastructure – transport links, communication and distribution systems n Under-developed financial sector (banks, insurance, stock market) n Weaker legal systems (fraud, bad debts)

Gross National Income n Bulgaria - GNI per capita: US $2,740 n Turkey - GNI per capita: US $3,750 n Slovakia - GNI per capita: US $6,480 n United Kingdom - GNI per capita: US $33,940

Student Activity n Complete the Political Change case study on Slovakia n Answer all questions using full exam technique (Content, Application, Analysis and Evaluation.) Pictures sourced from and