Case Scenario:
Given the fall in the economy in USA, many companies had to make the hard choice of expansion to European Union in order to survive. the process of this report is to highlight both the advantages and disadvantages of expanding to Europe, It will clearly show the benefits of the European expansion. The process is clear and simple. One has to make a decision if that is possible, thus thorugh research is critical. A full market research is critical to see if the company is a good fit in a different culture and also if it would survive the change. The steps taken has to be carefully planned as there can be barriers and what can be done to overcome them. /the plan has to be transparent so that all parties have clear directives of their work to be done for the success of the company. Thorough research has to be made on Governmental policies and rules and regulations. Frequent site visits has to be made to actually get things done and understand the economy and how things are done in that country. In other words understanding the culture. The findings are clear as there is a great benefit for the European expansion. Jobs will be created locally thus improving the company image. That is a great start. The easiest way to infiltrate the EU market is to purchase a firm so that one would not have to start from scratch. This way a merger will be beneficial andthe company can outsource some of its work at a cheaper cost. The office extension would be great as now the company would have a subsidiary office, which will cater to that sideof the world thus increasing profits. The findings are clear and simple as investors like expansion into other countries. It is a fact given the findings that MNC do invest in other countries given the investors ease of entry. In the EU it is a less restricted process and the tax structure is less complicated. The economy is better and financing would be easier given the less complicated structure. The financial industry is less complicated thus loans are easier to achieve. It will be a win win scenario. Getting a company in Europe is highly beneficial given the financial benefit. It has to be carefully planned as it is a different culture and understanding the culture and rules and regulations are critical, in order for the transition to be a success.
The most popular way for international expansion is for a local firm to acquire foreign companies. One of the most benefits for international expansion is global distribution capability that helps expanding the market share.
There are different implications of running a company that is within or outside of the European Union. If you were the head of a firm based in the United States, please answer the following questions, providing the rationale behind your answers:
- Would you seek to acquire a company within the European Union or outside of it? Why?
- Describe the advantages and disadvantages of the choice you made.
- Describe the advantages and disadvantages inherent in the option you did not choose.
- Explain why an MNC may invest funds in a financial market outside its own country.
- Explain why some financial institutions prefer to provide credit in financial markets outside their own country.