The Business Environment of Europe Dr. Jeffrey Johnson

European Experience Lived and taught in Scotland for six years Lived and taught in Scotland for six years Conducted several research projects in the U.K., Germany and Greece Conducted several research projects in the U.K., Germany and Greece Managed four business consultancy projects in Europe Managed four business consultancy projects in Europe Traveled extensively through 23 European countries Traveled extensively through 23 European countries Taught the Business Environment of Europe in U.S. and Innsbruck, Austria Taught the Business Environment of Europe in U.S. and Innsbruck, Austria

Single European Market Free movement of: Free movement of: GoodsGoods ServicesServices PeoplePeople CapitalCapital Mutual recognition of standards Mutual recognition of standards

Benefits of the EU Single Market Trade within the EU much easier Trade within the EU much easier No border bureaucracyNo border bureaucracy No tariffs or trade restrictionsNo tariffs or trade restrictions Mutual recognition principle eliminates need for expensive/ lengthy retesting in each country Mutual recognition principle eliminates need for expensive/ lengthy retesting in each country Creation of a single market encompassing 27 countries and 494 million people Creation of a single market encompassing 27 countries and 494 million people Achieve economies of scaleAchieve economies of scale

Benefits of the Euro (€) Elimination of exchange rate fluctuations Elimination of exchange rate fluctuations Reduced risk and uncertainties for importers and exportersReduced risk and uncertainties for importers and exporters Elimination of transaction costs Elimination of transaction costs Foreign exchangeForeign exchange HedgingHedging Management of multiple currenciesManagement of multiple currencies

Costs of the Euro (€) Price transparency Price transparency Consumers can more easily compare prices, putting downward pressure on price points and squeezing marginsConsumers can more easily compare prices, putting downward pressure on price points and squeezing margins Enhanced competition Enhanced competition Stemming from price comparisons and fostering competitionStemming from price comparisons and fostering competition However, creates opportunity for lower cost sourcingHowever, creates opportunity for lower cost sourcing

European Marketing Single European market provides opportunities for standardized products and economies of scale Single European market provides opportunities for standardized products and economies of scale However, legal, economic, technical, social, and cultural differences may necessitate product differentiation and segmenting into clusters However, legal, economic, technical, social, and cultural differences may necessitate product differentiation and segmenting into clusters

Strategic Issues Fortress Europe Fortress Europe Circumvent trade barriers through foreign direct investmentCircumvent trade barriers through foreign direct investment Rationalization of production across Europe to reduce costs (due to lower prices) Rationalization of production across Europe to reduce costs (due to lower prices) Competitive environment Competitive environment Large, stable, growing economy represents great opportunity Large, stable, growing economy represents great opportunity

Strategic Issues (cont.) Low value of the dollar relative to the Euro creates export opportunities Low value of the dollar relative to the Euro creates export opportunities Competitive environment of Europe (SEM, Euro) has stimulated efficiency and created stronger competitors Competitive environment of Europe (SEM, Euro) has stimulated efficiency and created stronger competitors Diversity creates challenges Diversity creates challenges 23 official languages, cultural differences, economic differences23 official languages, cultural differences, economic differences

Thank You! Questions?