Student Name: ABDUL RAHEEM MOHAMED IMRAN JAMZEETH

University ID: 4014230

Module Name: BUSINESS RESEARCH IN CONTEXT: STRATEGY – BM6172

BA(Hons) Business Management and Strategy – Level 6

IDM
University of Gloucestershire
Import/ Export Future Scenario Forecast

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 Table of Contents
1. Introduction............................................................................................................................3
2. Political & Legal Landscape..................................................................................................5
3. Economic Forecast.................................................................................................................6
4. Key Customer Trends............................................................................................................6
5. Environmental Considerations...............................................................................................7
6. Business Operating Environment...........................................................................................9
7. References............................................................................................................................11
8. Appendix..............................................................................................................................15

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1. Introduction
The goods and services that a country's citizens want to buy rather than those produced in
that country are known as imports. As part of import operations, payments are made to
merchants who've been situated outside, resulting in a comparable inflow of money from the
country (Aykol et al., 2013). Exports are goods and services that are manufactured locally
and made available to customers abroad. Export transactions bring in money into the seller's
country since they include selling local products and services to clients abroad (Kahiya,
2018). Gross domestic product, or GDP, is the total gross market value of all goods and
services produced inside a country's domestic boundaries within a particular time period. It is
also known as National Income (Y). A country's total imports and exports must be taken into
account when calculating its GDP. These are regarded as Net Exports (Divya and Devi,
2014).

GDP = C + I + G + X – M

C = Consumer expenditure

I = Investment expenditure

G = Government expenditure

X = Total exports

M = Total imports

In the equation above, net exports are denoted by (X-M). A country's net exports are
calculated as its estimated total exports minus its estimated total imports. An increase in net
exports points to a trade surplus. A negative net exports statistic, on the other hand, denotes a
trade imbalance. The balance of commerce of a nation is represented by its trade surplus or
deficit (Dynan and Sheiner, 2018).

Governments discourage unsustainable import operations by enacting tariffs and restrictions

on trade. Taxes make purchasing goods and services internationally more costly than locally.

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Raising tariffs is one method a country may employ to improve its balance of trade. (Hassan,
Kausar and Arshed, 2022).

Governments offer incentives to domestic businesses to cut down on operational costs. By

bringing down the cost of local products and services, this should encourage consumers to
buy local instead of imported goods and services. By enabling domestic businesses to
produce items at a lower cost and, as a result, cut their prices as the cheap imports get more
appealing to foreign consumers, incentives may increase exports (Turan and Karamanaj,
2014). The equation still needs to take into account the quality of the commodities.
Customers may continue buying a product from manufacturers in country "X" even if
government subsidies to manufacturers in country "Y" have made it significantly less
expensive to buy from country "Y" if they are persuaded that a particular product made in
country "X" is of significantly higher quality than the same product made in country "Y"
(Tivatyi, Shou and N’Souvi, 2022). To ensure a consistent international flow of trade, that is,
a large quantity of both imports and exports, countries occasionally engage into deals with
other countries. These deals aim to advance trade and aid the economic development of both
member countries. (Panta, Devkota and Banjade, 2022). Imports are discouraged by the
increase in import costs brought on by the currency devaluation. (Sulaiman, Baharin and Al-
Hadi, 2019).

Due to a surplus of imports over exports, Sri Lanka has a trade deficit economy. Our database
shows that Sri Lanka sold US$15 billion worth of goods in 2017 while importing US$17
billion worth of goods in 2021. The value of Sri Lanka's imports in 2020 was $15 billion and
the value of its exports was $10 billion. In 2021, Sri Lanka's imports and exports fell in
comparison to the figures from 2020.As on the Jan. and Feb. 2022 data that is currently
accessible, Sri Lanka exported goods worth $1 billion and imported goods worth $3 billion.
Thus, Sri Lanka's reliance on outside nations for imports is high. Petroleum, gold, non-alloy
steel, semi-finished iron products, textiles, and automobiles are the main imports into Sri
Lanka. The main source of income for Sri Lanka is the export of agricultural products. The
two main export items are clothes and apparel as well as tea (Trendeconomy.com, 2021).

This essay will discuss Sri Lankan export and import operations in 2050, as well as the
political and legal climate, the economic outlook, significant consumer trends, environmental
factors, and general commercial operating circumstances.

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2. Political & Legal Landscape

Many of the most important external elements and some of the immediate consequences of
political and legal changes in the sourcing and procurement sector are included in a PESTEL
analysis (de Sousa and Castañeda-Ayarza, 2022; Calderon and Butler, 2019).

Political Changes

Economic & Financial Environment

Social or Cultural Shifts

Technological Advancement

Environmental Fluctuations

Legal & regulatory factors

The traits that appear in every area of Sri Lankan jurisprudence define the legal landscape.
The legal environment frequently changes in unanticipated ways as laws change. Attorneys
everywhere are keeping a tight eye on any significant developments, especially since it's an
election year. Changes in the political climate, however, are not the only factors that affect
how the legal system operates. To account for advancements in technology and innovation,
the law also changes (Listiyani and Said, 2018). Therefore, how law firms respond to changes
in the law is more important than whether they are prepared for them. (Sklansky, 2016).

The capital of the United Kingdom, London, is a significant financial and cultural hub on a
global scale. The nation's political stability is one of its greatest assets, but Brexit has sparked
uncertainty and political discussion. While some observers contend that Brexit has already
wreaked havoc, others assert that it has also given the nation access to tremendous prospects.
The UK has a thriving political culture, and its people actively participate in its democratic

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process. The United States and many other nations throughout the world have excellent
connections with the United Kingdom. However, it has come under heavy fire for its
interactions with several totalitarian governments. The country's recent increase in crime and
violence has also raised serious worries (HowandWhat.net, 2018).

3. Economic Forecast
Economic forecasting is the process of predicting the health of the economy utilising a
variety of important and well-respected indicators. Economic predictions are designed to
anticipate quarterly or annual GDP growth rates, the best macronumber on which many
companies and governments base their choices regarding investments, employment,
expenditure, and other crucial decisions that have an impact on the overall economy (World
Bank, 2022).

Analysts and Trading Markets' global macro models predict that Sri Lankan imports may
reach 1950.00 USD Million at the end of this quarter. According to the regression analysis,
Sri Lankan imports could show a consistent trend of about $2500,000,000 USD in 2050.

The economy of the UK is based on markets and is very advanced. It plays a significant part
in world trade. The London Stock Exchange is located in London, one of the top financial
hubs in the planet.

The worldwide quarantines in 2020 and 2021, however, put a tremendous amount of strain on
the Government and ruined many enterprises in a variety of industries. The Bank of England
was forced to inject an additional £100 billion into the economy as a result. The National
Living Wage often rises each year, which is highly helpful in assisting those who are low-
income. For business profits, the current corporate tax rate is 19%. (PwC, 2022). For the
fiscal year beginning on 1 April 2023, the rate will be 25% (HowandWhat.net, 2018).

4. Key Customer Trends

Customers are increasingly demanding more openness. Lengthy misuse of client trust by big
businesses. There have been numerous scandals in a variety of industries, from either the
food to the car. The customers of nowadays expect transparency throughout the supply chain,
the goods, the procedures, and other aspects (ZDNET, 2022). The social environment is the
second topic examined in the PESTEL analysis of the UK. The consumer market in the UK is
substantial. Over 68.7 million people live there as of now. By 2039, the population is
projected to reach 74 million as births continue to outpace deaths. The idea of social class has

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historically had an impact on the UK, despite the cosmopolitan nature of its population. To
meet the requirements of various racial and religious groups, businesses have created a wide
range of new products and marketplaces over the years. Organizations still have a lot of
opportunities to investigate (HowandWhat.net, 2018).

5. Environmental Considerations
Similar to all other industry, the production of goods for importing and exporting often does
have a negative environmental impact. (OECD, 2019; Buturac, Mikulić and Palić, 2019).
Take a look at Figure 3, which uses cars as an example to illustrate the welfare impacts of an
imported commodity. In contrast to S', which depicts societal costs that include both
externalities and private costs, the supply curve S accounts for private costs. While Pw is the
world price, which will also represent the domestic price in the event of free trade, P* is the
domestic price in the absence of trade (Qiang et al., 2021;Sun et al., 2018).

When trade is free, Q1 is domestically produced while (Q2 - Q1) is imported, resulting in Q2
of total domestic consumption. Q* is the amount produced domestically when trade is not
allowed. How does the state of the domestic economy impact trade? Since they are now
selling fewer cars for less money, domestic automakers lose the darkened area A. Domestic
consumers benefit in areas A and B since they can now purchase more cars for the same
price. As a result, (A+B) - A = B represents the net gain from trading. However, this ignores
any trade-related environmental externalities. If the manufacture of cars results in
environmental harm, then reducing production will benefit the nation in cross-hatched region
C through decreased environmental costs, which are transferred to nations making cars for
export. However, if environmental degradation is associated with the use and consumption of
automobiles, business reduces the real marginal returns from usage by increasing the
ecological expenses of usage by the shaded region D (Ouyang, 2020).

Important repercussions for trade theory follow from this. Without externalities, we can
declare categorically that there are overall gains from trade in the basic trade situation. Even
if one group loses, consumers benefit more than makes up for this. However, once
externalities are considered, we can no longer be so certain that trade results in net profits.
According to the type and extent of the environmental harms C and D. Of course, some
measures, like environmental levies, permits, or regulations, can internalise these external
costs. However, we cannot be certain that there will be a net gain from trade unless we have
confidence that such measures will be implemented. Analysis of trade's consequences on an

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exporting nation must take environmental concerns into account as well. Figure 4 displays
this. Here, we'll utilise timber exports as an illustration. Since trade allows them to produce
and sell more timber at the higher world price Pw, producers of wood gain in areas A'+B' in
the standard theory of trade without externalities (Sankaran, Krishna and Vadivel, 2021).

Domestic wood consumers suffer loss A' because they can buy less wood at the higher global
price. The nation as a whole benefits B'. The area of C' represents the external costs of
increased wood production, which may include user charges, option values, and ecological
costs in addition to possible land and watershed degradation. The size comparison between B'
and C' is uncertain. Therefore, we are unable to state categorically that trade favours this
exporting nation net. In more straightforward words, it is unclear whether the economic gains
from higher exports outweigh the environmental harm brought on by increasing logging
(Sultanuzzaman et al., 2019).

Economic activity has an influence on the environment, but the UK has made great strides in
minimising the harm. To raise environmental awareness and lessen the detrimental effects of
economic expansion on the environment, the government, local councils, media, charities,
and many other organisations have undertaken a number of initiatives. The UK occasionally
experiences difficult weather conditions. However, the weather continues to be crucial to
tourism. The UK receives millions of visitors each year, especially during the summer. In
actuality, tourism makes a sizable annual economic contribution (HowandWhat.net, 2018).

6. Business Operating Environment

Customers, suppliers, and rival businesses make up the for-profit sector's business operational
environment. Interest groups including trade unions, consumer nongovernmental
organizations, regional, local, or federal government organisations, and other regulatory
authorities may also be taken into account. The laws and regulations that apply to all small
and medium-sized businesses must be followed, despite the fact that each one may be diverse
and unique. The legal and regulatory framework for imports and exports must be understood
by businesses involved in international trade. Since global value chains now make up roughly
70% of international trade, raw materials, parts, components, and services frequently travel
across borders before being used to create finished goods. Trade agreements are reached and
trickle down on three levels: international, bilateral, and unilateral, to establish principles and
standards (Ash, 2021; Aykol and Leonidou, 2018).

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The Trans-Pacific Partnership is an example of such a contract. The USA, a significant
member state, left, and negotiations are underway to welcome the UK as a replacement. In
relation to the UK, history has demonstrated that contracts can be broken. (Nam and Bao
Tram, 2019; Abdalla, 2022). The UK officially left the European Union and the trade accords
that regulate its 27 members after Brexit, only to negotiate a brand-new bilateral agreement:
the EU-UK Trade and Cooperation Agreement (TCA). There is a large network of players
involved in getting products and services from point A to point B. The supply chain, which
comprises of the many steps and logistical flows engaged directly or indirectly in bringing
goods and services to their clients, serves as a link between the supplier's supplier and the
client's client (Alessandria and Choi, 2017).

The three main links in the chain are sourcing, planning, and distribution. It might be
challenging to import and export commodities in today’s highly globalised economy. Some
businesses employ specialised import/export staff who are adept at negotiating the intricate
kinks of a supply chain, while others contract out the work to outside logistics organisations.
To streamline the process as effectively as possible, a clear supply chain management plan
must be adopted. It depends on handling the chain's main flows correctly. Being at optimum,
a solid strategy for supply chain management may help businesses save money, guarantee
client satisfaction, and improve their competitive position (Qiang et al., 2021;
www.hindawi.com, 2022).

US$0.76 billion worth of foreign direct investment (FDI) entered Sri Lanka in 2019. Sri
Lanka's imports of goods and services are anticipated to increase by 4.49% in 2025.
According to projections, Sri Lanka's exports of goods and services will increase by 4.30% in
2025. In Sri Lanka, there will be 0 registered businesses in 2025.

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8. Appendix

Figure 1.

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Figure 2.

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Figure 3.

Figure 4

Figure 5

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Figure 6.

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