The Business Environment The Business Environment of Europeof Europe

Dr. Jeffrey JohnsonDr. Jeffrey Johnson

European ExperienceEuropean Experience Lived and taught in Scotland for six Lived and taught in Scotland for six

yearsyears Conducted several research projects Conducted several research projects

in the U.K., Germany and Greecein the U.K., Germany and Greece Managed four business consultancy Managed four business consultancy

projects in Europeprojects in Europe Traveled extensively through 23 Traveled extensively through 23

European countriesEuropean countries Taught the Business Environment of Taught the Business Environment of

Europe in U.S. and Innsbruck, AustriaEurope in U.S. and Innsbruck, Austria

Single European MarketSingle European Market

Free movement of:Free movement of:• GoodsGoods• ServicesServices• PeoplePeople• CapitalCapital

Mutual recognition of standardsMutual recognition of standards

Benefits of the EU Single MarketBenefits of the EU Single Market

Trade within the EU much easierTrade within the EU much easier• No border bureaucracyNo border bureaucracy• No tariffs or trade restrictionsNo tariffs or trade restrictions

Mutual recognition principle eliminates Mutual recognition principle eliminates need for expensive/ lengthy retesting in need for expensive/ lengthy retesting in each countryeach country

Creation of a single market encompassing Creation of a single market encompassing 27 countries and 494 million people27 countries and 494 million people• Achieve economies of scaleAchieve economies of scale

Benefits of the Euro (€)Benefits of the Euro (€)

Elimination of exchange rate Elimination of exchange rate fluctuationsfluctuations• Reduced risk and uncertainties for Reduced risk and uncertainties for

importers and exportersimporters and exporters Elimination of transaction costsElimination of transaction costs

• Foreign exchangeForeign exchange• Hedging Hedging • Management of multiple currenciesManagement of multiple currencies

Costs of the Euro (€)Costs of the Euro (€)

Price transparencyPrice transparency• Consumers can more easily compare Consumers can more easily compare

prices, putting downward pressure on prices, putting downward pressure on price points and squeezing marginsprice points and squeezing margins

Enhanced competitionEnhanced competition• Stemming from price comparisons and Stemming from price comparisons and

fostering competitionfostering competition• However, creates opportunity for lower However, creates opportunity for lower

cost sourcing cost sourcing

European MarketingEuropean Marketing

Single European market provides Single European market provides opportunities for standardized opportunities for standardized products and economies of scaleproducts and economies of scale

However, legal, economic, technical, However, legal, economic, technical, social, and cultural differences may social, and cultural differences may necessitate product differentiation necessitate product differentiation and segmenting into clustersand segmenting into clusters

Strategic IssuesStrategic Issues

Fortress EuropeFortress Europe• Circumvent trade barriers through Circumvent trade barriers through

foreign direct investmentforeign direct investment Rationalization of production across Rationalization of production across

Europe to reduce costs (due to lower Europe to reduce costs (due to lower prices)prices)

Competitive environmentCompetitive environment Large, stable, growing economy Large, stable, growing economy

represents great opportunityrepresents great opportunity

Strategic Issues (cont.)Strategic Issues (cont.)

Low value of the dollar relative to the Low value of the dollar relative to the Euro creates export opportunitiesEuro creates export opportunities

Competitive environment of Europe Competitive environment of Europe (SEM, Euro) has stimulated efficiency (SEM, Euro) has stimulated efficiency and created stronger competitorsand created stronger competitors

Diversity creates challenges Diversity creates challenges • 23 official languages, cultural 23 official languages, cultural

differences, economic differencesdifferences, economic differences

Thank You!Thank You!

Questions?Questions?