Examine the likely reasons Hanson chose to grow 'through a number of mergers, to become one of the world's biggest companies' ( extract C lines 18 and 19)
Extract B - Immigration and the labour market Immigration is partly to blame for low wages thanks to "unprecedented expansion of the labour supply", said one former government advisor. He believes that immigration "must have had some impact" on the labour market. Wage growth has fallen behind inflation since 2009. The issue is one of balance. Allow too little immigration, and businesses might find it 5 difficult to set up or continue without access to the affordable skills they need. Too much immigration, wages fall and it becomes more difficult for some unemployed UK citizens to find a job. However, the downward pressure on wages has helped lower labour costs and has made the UK's exports relatively cheaper. Firms in the UK can now recruit much needed staff 10 from Eastern Europe to fill job vacancies. Some sectors are also benefiting from skilled labour leading to rising productivity. (Source: adapted from 'Immigration suppresses wages, says Margaret Thatcher's former adviser' by Matthew Holehouse, The Telegraph, 9th January 2014 http://www.telegraph.co.uk ews/uknews/immigration/10560472/Immigration-suppresses-wages- says-Margaret-Thatchers-former-adviser.html) Copyright Pending Extract C - Europe's Shrinking Conglomerates Europe's conglomerates are demerging in order to reduce in size and to sell off parts of their business that either don't make enough money or don't fit with how they see the future. It makes sense to concentrate on fewer industries. Germany's Siemens AG has sold five businesses this year to focus on what it calls 'electrification, automation and digitalisation'. Siemens is selling 50% of its appliance 5 business to Bosch for $US3.75 billion. It is also selling a health company for $US1.3 billion, a clinical microbiology division, an alarms-and-video surveillance maker, and a hearing- aids business for $US2.75 billion. Philips is focusing on health-care and selling its lighting products business. Bayer has seen the revenue earned from its plastics division fall 2.3%, so they are selling this off 10 and focusing on healthcare and crop sciences, where revenues rose 3% and 5.25% respectively. As companies try to become more focused, workforces are also shrinking. Philips employed 117 000 people at the end of 2013, down from more than 121 000 in 2008. Bayer reduced its staffing by 3 000 in 2013, while Siemens has 362 000 workers, a fifth 15 fewer than in 2005. With unemployment at 11.5% in the eurozone, the additional job cuts which may result from these demergers could add to this. 20 years ago Hanson grew through a number of mergers, to become one of the world's biggest companies incorporating cigarettes, mining, toys and brickmaking. Since then it has gone through a number of demergers. Possibly the unfocused, unwieldy 20 conglomerate is a thing of the past. (Source: adapted from 'Europe's Shrinking Conglomerates' by Mark Gilbert, Bloomberg View, 3rd November 2014, http://www.bloombergview.com/ articles/2014-11-05/europe-s-shrinking-conglomerates?cmpid=yhoo) Copyright Pending
