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The report is based on an UK based fuel and gas production sector, needed to run industries and transportations. This sector was chosen since it is directly associated with the war, associated with the current report. Evidences of this war have been described in (Ozili et al., 2022). In this report, there will be a vivid and detailed discussion of a few of the important matters that are related to the flourishing of the business even in such a war society. There is a thorough discussion of the effect that the war in Ukraine will have on the controlling of the inflation in the market of UK. It states how finding ways that are cheaper to market their respective business can be a great help. It also states that analysis of the margins of profit and consideration of new streams for revenue can prove to be important for the market (Khudaykulova, Yuanqiong and Khudaykulov., 2022). It also describes how the war in Ukraine can stimulate the economic growth in the UK market. The various ways of managing the employment issues like regulation of the labour market and income support for the unemployed is also explained (Kupets, 2016). There is also a great detailing of the achievement and maintaining of the balance of payments that is mentioned. The report also suggests and evaluates three options that can be taken by the manager of the company to deal with the impact that the war in Ukraine has created on the company. Most importantly, it needs to be mentioned that each and every industry is usually affected by the ongoing war. One of the industries that is usually very affected is that of the fuel industry. This report explains the effect that the war in Ukraine has on the fuel industry.
The inflation in the fuel industry is tremendous. Often due to the war,the fuel supply gets disrupted thus increasing the price of the fuel creating inflation in the fuel industry. Inflation is one of the very serious problems that are faced by a company or business. It is especially high during an ongoing war or just after a war. The huge economic loss that is faced by the nation or the businesses that are associated with war is tremendous.The average price increase of a basket of selected goods and services over time might show the rate at which buying power declines. The increase in pricing, which is frequently stated as a percentage, signifies that a unit of money buys less than it did previously. Inflation is distinguished from deflation, which happens when prices fall but buying power rises.While specific product price increases are easy to track over time, human needs extend beyond just one or two things. Individuals require a wide range of items and services in order to live a pleasant existence.
The Ukraine war also has a very similar effect on the economy of the UK. The UK companies are suffering to a great deal to fight the ongoing inflation in the economy. The question is how it is affecting. The inflation that UK is facing for the war in Ukraine is responsible for the reduction of the spending capacity of the consumers (Caldara et al. 2022). The main reason for this is that the wages of the employees who are involved in various companies or businesses are not increasing as the companies are facing huge loss in the atmosphere of distress. Thus, they are in return incapable to add to the economy of a company. Unless, a company is selling very important and absolute necessary commodities like fuel or food, it is seen that the demand for the various products in the UK market is strictly declining in the context of the war in Ukraine. People at the present moment are not at all interested in spending in any commodities that belong to the luxuries or are considered to be non-essential including clothes (Chernysh et al. 2023).
In the context of the war in Ukraine, it is seen that the companies are facing many difficulties in term of business. Due to the war, there is a loss of funds that is leading to the companies being incapable of paying the necessary wages to the employees. Their demand for higher wages to meet with the market price is responsible for dissatisfaction and thus very experienced employees moving out to find better job opportunities (SIDDIQUI 2022).As prices grow, one unit of money buys fewer products and services. This loss of buying power affects the cost of living for the general people, resulting in a slowing of economic growth. Economists generally agree that persistent inflation develops when a country's money supply expansion outpaces economic growth. Some of the ways that can be opted by a company in order to control the inflation that is caused by the war in Ukraine are the following:
In the atmosphere of inflation, it is seen that higher marketing strategies can be a huge cost to the company. As a result, there will be more expenditure than that of profit. However, marketing is absolutely important for the benefit of the company. Therefore, the company should always concentrate on finding ways that are cheaper. In today’s age, social media can prove to be a very important way in which the company can not only reach the local audience but also, to the global audience. The conflict has directly impacted the global supply and cost of food commodities. Russia and Ukraine collectively account for 29% of global wheat exports and 17% of global corn exports. Chicago wheat prices experienced a significant increase, surging from under $8.00 per bushel on February 21 to a record-breaking high of $13.50 per bushel during the initial week of March. This represents an over 90% difference compared to the previous year.
Since the war in Ukraine has a direct effect on the market of UK; the company must consider the fact that they must consider certain newer streams or ways from which they can consider to collect revenue. In todays age one of the most important and effective way in which the company can consider to collect revenue is that of using the online marketplace (Ozili 2022). Through this way, they can reach to a larger audience group.
Figure 1: Overall impact of the work
(Source: Kpmg, 2024)
Another very important step that the company needs to take is that on considering analysing the margin of profit that they have for a particular product. In the market of inflation, the company must concentrate on streaming the various products that they sell in the market (Yeoman 2022). The company must only concentrate on the products that have a very high rate of profit and streamline all the other products that are irrelevant or have very little profit.
Expanding the number of suppliers can often prove to be a very important step in the controlling the inflation in the market (Canuto 2022). With the increase in the number of suppliers, it is seen that the company will be left with a lot of options, therefore, they can easily bargain for the best price among the range of suppliers.
The war is considered to be a great and significant factor that has a great effect in stimulating the economic growth of a nation. Post war there is a great effect that can be seen in the economy of the nation. The war in Ukraine is also supposed to have a very immense effect on the economy of UK and also the whole world. The various companies in UK are suffering huge loss economically due to the war in the Ukraine. The company has to think of the different way in which the economic growth can be stimulated in the backdrop of the Ukraine war (Iwański,2014). Further pressures will be exerted on nations with direct trade, tourism, and financial ties, in addition to those that have global repercussions. Oil-importing nations will confront escalating fiscal and trade deficits, in addition to intensified inflationary pressures. Nevertheless, specific oil-exporting countries, especially those situated in Africa and the Middle East, might benefit from increased oil prices.
Increased food and petroleum prices have the potential to heighten the probability of social unrest in specific regions, such as Sub-Saharan Africa, Central Asia, the Caucasus, and Latin America. Moreover, it is anticipated that food insecurity will become more severe in certain regions of Africa and the Middle East. Evaluating these consequences presents a formidable task; however, we foresee a downward adjustment in our growth projections the following month, when we furnish a more exhaustive analysis in our World Economic Outlook and regional assessments.Over time, the conflict has the potential to profoundly influence the worldwide economic and geopolitical framework should countries reassess their reserve currency holdings, reconfigure supply chains, fragment payment networks, or alter crude trade. Economic fragmentation becomes more probable as geopolitical tensions escalate, specifically concerning commerce and technology.
Though UK is comparatively less exposed to the direct effects of the war, it can never be said that the country is completely left free from the various effects of the war. The primary concern that any of the business companies are facing right now in the United Kingdom post the invasion of Ukraine by Russia, is that the prices for fuel especially oil andgas has increased tremendously. It is reported that the global oil prices have been increased by almost a huge number of 11 percent (Guenette, Kenworthy and Wheeler, 2022). The wholesale market of gas in UK has reported a much higher increase. They have claimed that the wholesale prices for gas have increased by a whopping 40 percent! This is extremely alarming for the economy of UK. Naturally, all the trade systems in the UK are suffering due to the lack of fuel and the ongoing inflation all around it. Therefore, to recover from such a situation, the company has to take a few steps in order to stimulate the economic growth of the company.
Integrating various advanced technologies in the business sector has the capacity to greatly enhance economic growth. Technological advancements will lead to improved production quality. In addition, labor costs are often reduced, leading to lower material expenses. Consequently, the profit margin is improved. Wars invariably lead to a significant increase in the demand for products related to the armed conflict, especially in nations deeply engaged in the fight. In such situations, there is a potential for products related to alternative hobbies, such as luxury goods or home furnishings, to suffer substantial financial losses for both the corporation and society as a whole. Hence, to enhance the company's economic growth, it should take into account supplementary elements, such as the feasibility of temporarily modifying its manufacturing scale to guarantee the availability of crucial wartime products.
Tax cuts and rebates can prove to be a very important and smart step that can be taken by any company so that they can easily make the necessary profit out of the current ongoing situation of inflation. If the company provides discounts to their customers on the various products that they make, then there are chances that the customers will get some cash in their hands. This in return, will motivate them to spend their money in the buying of the different products that is manufactured by the company (Heinonen and Korhonen, 2023). This money can then be further utilised for the better production of the different things for sale.
The problem of employment and unemployment is considered to be a very huge issue in the scenario that is related to the war. Due to the war in Ukraine, it is seen that the labour market in general is extremely affected. There is a chance that a lot of people are suffering from the problem of inflation and unemployment. This is extremely disturbing for a nation as a whole. In business scenario also, unemployment is considered to be a very big threat. There are multiple consequences that can be faced due to unemployment. For example, it will be seen that the economy of the country is not operating in the full force that it is supposed to. Also, this proves to be a huge effect on the government funding as the government has to pay benefits. There is also a situation of unrest that is seen (Lukianenko et al.2022). Therefore, the company must take certain steps to manage the problem of unemployment in the nation. Some of the ways in which the company can manage unemployment are as follows:
By investing in certain newer fields of production can help the company to hire the different employees who are capable of such an activity. That means that there should be new hiring made who are capable of the new fields of production.
The bargaining of the wage should be made centralised. That is to say that the employees who are working in a particular rank all across the departments should be given the same type of payment or salary (Stukalo and Simakhova, 2018). There should not be any distinction that should be made between employees belonging to the similar rank.
The labour market after any war is supposed to be hampered in a great way. There is often a lack of labour in the market that is seen. Also, it is seen that there should be a lack of proper job options that are open for many of the labours (Prohorovs 2022). Therefore, in order to control that there is a necessity of regulating the labour market post war. In order to regulate the market certain things, need to be taken care of. They are as follows:
The working time of the employees should be made standardised. Then that will often leave the employees with opportunities to work double shift. Also, many jobs will become available double shifts thus increasing the option of employment.
The global economy is volatile. It is an up-and-down wave that has weathered politics, recessions, pandemics, and other calamities. It behaves as it should: it strives to defend and recover whatever is still salvageable. While the economy is robust now, history teaches us that it is never constantly steady. It may generate tremendous stress in terms of job security and stability for us humans. Creating more opportunities for job in the market will increase the level of job protection among the people (Korriku and TARTARAJ,2023). Therefore, the performance level can be better as there will be a lack of stress among the employees regarding the finding of a new job. Therefore, there is a scope that the labour market become regularised.
Making the minimum wage fixed is also considered to be a great way in making the labour market more regularised. There will be a better scope for the employees to join the job.
Providing a support of income for the unemployed can prove to be a very effective way of managing the unemployment issue after a war. Since huge number of people becomes unemployed after the war scenario for various reasons, it is seen that providing a support can have a great effect(Kupets 2022). In order to provide income support to the unemployed the following measures can be taken:
The duration for which the support will be provided can be made clear. This will give the opportunity to the unemployed employees to find some way in which they can find some alternative income options.
Providing the conditions in details for the support that is given to the people, it is extremely important. There is a chance that the ones whose conditions do not match try to get a job as soon as they can.
The war scenario is extremely harmful for the business environment to flourish. Therefore, often the problem that is faced is that the payments of the various people involved at the different strata of the business get hampered. Therefore, often the task of maintaining a balance of the payments cannot be achieved. Certain steps that can be taken in order to achieve and maintain the balance of the payments are stated below:
Creating a shift in the supply and the demand can prove to be a very effective way of achieving and maintaining the balance of the payments.
Intervention of the government proves to be a very useful way in which the task of achieving and maintaining a balance of payments made by the business. The government can do this by the help of the following activities:
The taxes for the harmful products that are produced such as alcohol and cigarettes can be increased by the government which will increase the income of the government thus giving a rise in the general income of the nation (Khudaykulova, Yuanqiong and Khudaykulov, 2022). Also, it gets significantly important to mention the fact that the situation in the bordering nation might have a huge impact on the individuals who work for the UK corporation. They may also have relatives or loved ones in Ukraine who have been directly impacted by the conflict. As a result, there is a potential that the employees will experience significant stress.
Controlling the prices of certain products directly even if they are private also proves to be a very effective way in which the balance of the payments can be maintained and achieved (Makarenko and Ponomarenko, 2014).
Some variables influence the exchange rate, which might be economic, political, or psychological. Inflation, trade balances, and government policies are all established economic variables that affect fluctuations in foreign currency values.Political unrest or instability in the country, as well as any type of political conflict, can cause a shift in the foreign exchange rate.There is a critical discussion about the methods obtained for the achievement and maintenance of the balance of payments.The foreign exchange rates in a market post war should be even more managed by the government. This helps in achievement of the target of maintaining a balance of payments.
FIG 2: The Concept of Foreign Exchange
The manager of a company plays a very vital role in the managing of the impact that is created by the war in Ukraine in the company. The general employees often look up to the manager in this extreme time of distress and chaos.The value of a foreign currency fluctuates. Any sort of political dispute, as well as political unrest or instability in the country, can cause a fluctuation in the foreign exchange rate. Foreign currency rates in a post-war market should be more tightly controlled by the government. Some of the most effective and immediate ways in which a manager can help the employees of the company are the following:
During the time of war, it is seen that the employees suffering from stress is considered to be a great problem. The condition of war in the neighbouring country can have an overwhelming effect on the people working in the company of UK (Yemelyanov et al. 2018). They may also have some relatives or loved ones in Ukraine who are directly affected by the war. Therefore, there is a chance that the employees will suffer from huge stress. This can lead to the lack of performance among the employees. It is the duty of the manager in such a situation to manage the stress that is suffered by the employees helping them to bring out the most important quality that is of production.
It is seen that the increase in the prices of the gas is inevitable. This means that the employees will face a problem in the daily commuting to and fro from the office. It may be seen that they will gradually lack the interest in joining back or will want to drop off due to the rise of the gases. This can be a tough situation for the employees and the company (Versal et al 2023). Therefore, the manager has to provide ways in which they can achieve the relief from the inflated prices of the gases or the commodity.
FIG 1: Hike in Gas Prices in U.K. The picture shows an increase in gas price as well as fuel price considering the situation of Ukraine war. The extreme right hand side of the graphical representation has shown the evidence of price hike. Peaks of price hikes have been shown before that in the middle of the graphical representation also
It is the role of the manager to help the distressed. Be it in the organisation or the nation. A manager must always be supportive in his behaviour. The employees of the organisation will be impressed and influenced with this behaviour of the manager. In such a case, if an employee sees that the manager is being proactive in the helping of the distressed, that is the ones who are affected by war then the employees will also consider the fact that they might also work towards the betterment of the economic growth or support in any other form for the distressed.
The war has had far-reaching and varied impacts on human beings. An astonishing eight million folks have been relocated in the past year. Organizations depend on their workforce as crucial resources and often serve as the face of the firm to stakeholders, such as customers, partners, and the wider community. Leaders may promote openness and foster a sense of stability among employees by establishing and maintaining a consistent method of communication. At present, organizations are confronted with a global environment marked by persistent disruptions, escalating inflationary forces, and the potential for further unpredictability. This phenomenon challenges the traditional understanding of what constitutes "business as usual." From a singular occurrence, business continuity planning has undergone a transformation into an ongoing and cohesive procedure that incorporates every facet of the establishment, such as its workforce, tactics, and overarching ecosystem (Canuto, 2022)
All of these three ways mentioned above is very directly responsible for the betterment of the economic state of the company and the country as a whole.
Therefore, to conclude the essay, it may be stated that the war in Ukraine is supposed to have a very deep effect in the economy of the other neighbouring countries that are directly or indirectly related to the country of Ukraine. The war in Ukraine is posing a great danger in the growth of economy in UK and also is predominantly affecting the development of the environment of business in UK.
As Russia invaded Ukraine, there will likely be problems in the supply chain, which will make inflation worse. However, these networks were already under a lot of stress from the virus. According to many sources, supply chain-driven inflation is not likely to rise. These include rising freight shipping costs due to crowded ports, a lack of workers in key logistics areas, and the general unpredictability surrounding new waves of COVID-19 and their lockdown protocols. Because global distribution routes are still vulnerable, businesses need to think of ways to protect themselves. Some ideas are to use on-shoring and near-shoring production, get materials from a variety of places, and use big data technologies. As the effects of the pandemic fade and inflation stays low until 2024, businesses may start building more resilient supply lines and inventories.
Therefore, this report is written to analyse the various factors of business that are being affected by the war in the Ukraine. The report clearly mentions that how the war in Ukraine is responsible for controlling the inflation that is faced in the market. It also, clearly states that the different ways that can be taken for the purpose of stimulating the economic growth of the UK based companies.Usually, managing employment is also a big threat. The reason is that due to the increase in the prices and lesser supply;many fuel companies have to lay down their employees to manage the price. The various methods of managing employment and unemployment are also discussed with thorough details. There is a critical discussion about the methods obtained for the achievement and maintenance of the balance of payments. The report also, proposes and further evaluates three options that the managers of the company can take to deal with the problems of the ongoing war situation.
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