International Trading and Financial Systems Essay

International Trading and Financial Systems - Essay Example presence in the UK. In 1998, it became the first British retailer to reach a pre-tax profit of over one billion pounds. After peaking in 1997-98, a slump in profits began to take place around 1999 which started while Sir Richard Greenbury was the Chairman. Profit margins were pushed to untenable levels and customer loyalty was seriously eroded. In an increasingly competitive and more globally outsourced retail business, the aging and bureaucratic Marks and Spencer which had based its image on being a traditional British retailer, was no longer able to compete with its business rivals. There was a belated switch to overseas suppliers as rival retailers increasingly imported their goods from low cost countries. This undermined a core part of its appeal to the British public. Its refusal to accept credit cards in its stores apart from the company's own charge card played a part in falling profits. It failed to analyze the market needs of the younger customer and cater to a more diverse section of the public. As a result of these shortsighted policies, its profits fell from 1 billion pounds to 145 million pounds by 31st March 2001. The share price fell by more than two-thirds. In 2004, the Arcadia Group tried to take over Marks and Spencer (Wikipedia 2008). A major corporate restructuring plan was announced on 29th March, 2001. This included a total focus on UK retail, expansion of home, food and beauty products, recovery plan for clothing, modernization of stores, improving pricing for value and longer store hours. Financial measures were implemented to bring about sustained growth and enhanced profitability in the company's future. These included renting store space instead of owning the property in the sale and... This paper analyzes the general economic factors that affect the market from which finance will be drawn also need to be considered. There has been an increased trend among economists to favour a finance system based model of macroeconomics.A strong financial system leads to overall growth of the economy, via domestic markets as well as international. Governments should have an effective monetary policy regarding exchange rates which affect international trade, as well as judicious policies regarding interest rates, taxation and the budget which will affect the investment and credit activities of banks and corporates. These will in turn affect the primary and secondary financial markets from which finance is being drawn. The government needs to monitor the economy, not through excessive deregulation or liberalization, but by exercising caution and some restraint, if needed. International capital flows via multinationals and foreign direct investment will benefit the international market. Short term loans and capital flows should not be used as a trade-off for long term financing which will bring about a stronger economy in the long run. It concluded that The UK Government can also educate the individual consumer about personal and public finance issues, thereby producing more financially capable individuals who can then play a more informed role in the financial future of the UK.