1 continent

Worlds largest economy

One currency

500 million people

High buying power

GDP per capita: 31.600

Europe as Patchwork of Nations

Finland

Sweden

Ireland

Russia

Estonia
Lativa

United
Kingdom

Denmark

Lithuania
Belorus

Netherlands
Belgium
Luxembourg

France

Poland

Germany
Czech Rep.
Slovakia

Switzerland

Austria

Ukraine

Hungary
Romania

Portugal
Spain

Italy

Bulgaria
Turkey

Greece
Page 6

Cyprus

CMU-Presentation Hans-Andreas
Fein & Associates,
Stuttgart/Germany
www.andyfeinmarketing.com

The Benefit of Doing Business in Europe

Benefit from buying power of 450 million people
All types of industries and technologies established
Best platform to access to Eastern Europe / Russia
Compete/cooperate with tech drivers in many industries
Get know how on environmental / energy saving techs
Use your management skills (speed/flexibility/Internet)
Exchange business practices, processes and expertise
Get friends in the world of globalization on your side

Major Issues for Businesses in Europe

Standards, standards, standards EU Directives
Deregulation of telecom, energy, postal, railway etc.
Production moves to Eastern low wage locations
Strong competition by China imports (and from India)
IAS-Accounting standards / Group balance sheets
Basel II New rating standards by the banks
Shareholders versus stakeholders debate

The Daily Challenges for Businesses

Standards, standards, standards EU Directives
35 hours week / paid vacation (high productivity)
High labor costs, in particular social security costs
Corporate taxes, in particular for private companies
High lease for office space and private housing
High gasoline prices/airfares ( oil prices and eco-tax )
Relatively high fees for power, gas, sewage, postage
Traffic problems, in particular on the German roads
Costs for security (for IT and for buildings)

*EUROPEAN

SUBCONTINENT
PESTEL ANALYSIS

* In

Europe, companies are affected by legislation at EU

and national levels.
* The EU is similar to a confederation, where many policy
areas arefederalisedinto commoninstitutionscapable of
making law.
* However the EU does not, unlike most states, control
foreign policy,defence policyor the majority ofdirect
taxationpolicies.
* These areas are primarily under the control of theEU's
member statesalthough a certain amount of structured
co-operation and coordination takes place in these areas.

*POLITICAL & LEGAL

* The

constitutional basis and organisation of the European

Union is based onits treaties.
* The EU itself as alegal personalityand a set of governing
institutions empowered by the treaties. However sovereignty
is not invested in those institutions, it ispooledwith
ultimate sovereignty resting with the national governments.
* EU laws exist at two levels: (i) regulations that are binding
on member states and (ii) directives that are binding only
through enactment of a law within the member state in line
with the directive.
* The role of competition policy, then, is to encourage
competition in the EU by removing restrictive practices and
other anti-competitive activities.

* The

EU has established asingle marketacross the

territory of all its members.
* 17 member states have also joined a monetary union
known as the Eurozone, which uses theEuroas a single
currency.
* Structural Funds and Cohesion Fundsare supporting the
development of underdeveloped regions of the EU.

*ECONOMIC

Economic motives ofthe EU:

*Internal market
*Competition
*Monetary union
*Financial supervision
*Energy
*Infrastructure
*Agriculture
*Environment

*A

major demographic change that will continue to

affect the demand for products is the rising proportion
of people over the age of 45 in the EU, and the decline
in the younger age group.
*The rise in one-person households, households with no
children and the growth in dual-income families.
*More people are living alone by choice, through divorce
or bereavement.
*The proportion of couples who have no children has
also increased.
*The free movement of workers around the EU has also
encouraged the growth of subcultures.

*SOCIAL

* The

policy priorities in new EU members have been

increasingly devoted to research and development (R&D)
and innovation as the key drivers of productivity growth.
* Imitation and innovation are used as modes of
technological development in many instances.
* Most of the countries in EU are developed and have access
to latest technology.
* An increase in the size of the science-based
manufacturing industries leads to higher intra-industrial
trade between the countries.
* Some of the worlds best technical institutes are present in
European continent.

*TECHNOLOGICAL

Five environmental issues are of particular concern:

*Combating global warming

*Pollution control
*Conservation of energy and other scarce resources
*Use of environmentally friendly ingredients and
components
*Use of recyclable and non-wasteful packaging

*ENVIRONMENTAL

Globalization Strategy
from Viewpoint of a European
Manufacturer

build sales subsidiaries

in the key markets

follow key
customers
to US or China

shift less complex

manufacturing to
Eastern Europe

grow R & D center

and build start up factory

Figure 2: Almost half of the global goods

trade involves Europe
(merchandise trade in 2008, US$ billion)

Figure 2.19: India and the United States have more

sophisticated services exports than the European Union
members and candidates

(Service EXPY, 19902007, and shares in service exports EXPY,

2007)

Trade (services)

Note: In the right panel, traditional services are in blue shades, modern in yellow and brown.
Source: Lundstrom Gable and Mishra (2011)

20

Figure 2.9: Advanced and emerging Europe are trading more

sophisticated intermediate goods
(EXPY for intermediate goods, thousands of US$, 19962008)
Exports

Imports
17

16
15

16

14

15

13
14
12
11
1996

1998

2000

2002

13

Factory
2004 2006 Europe
2008
1996has
1998become
2000 2002 brainer
2004 2006

2008

Trade in intermediate goods of:

Note: Trade in intermediates
is defined
BEC nomenclature.
EU10
with by theEU15
World
Source: World Bank staffSEE
calculations,
basedEU15
on UN Comtrade,
and WDI
with
World

BGR+ROM with
World with

EU15
EU15

World

21

Figure 15: Europeans are less mobile, even within their own
countries
(labor mobility, share of working-age population that has moved,
2000-2005)

European workers are less mobile

22

European Convergence

Figure 5: European enterprises have delivered jobs,

productivity, and exports
(performance of European sub-regions and benchmark countries,
19952009)
EFTA

1.3

EU15

1.3

EU12

1.4
1.0

0.4

Bulgaria+Romania

50.2
49.4
3.0

-0.7

3.0

SEE

0.6

Eastern partnership

57.5
39.6
4.1

32.8

-0.1

6.6

United States

1.2

Japan

1.6

-0.1
1.0

East Asia

1.7

Latin America
0

11.2

1.2

China

-1

38.7

13.4
7.8

26.7

2.0
The making
of Brand Europe 64.0
2.4

0.4

23.2

20

40

60

Note: Growth rates in employment and productivity are compound annual growth rates. Average values by group are shown. China
Employment growth, percent
Productivity growth, percent
Exports, percentage of GDP, 2009
and Japan are also included in the calculation of East Asia regional average.
Source: World Bank staff calculations, based on WDI and ILO (2010);

24

Figure 7: Smaller firms contribute half of value added in the

EU15 South, but just a third elsewhere
(contributions to value added by size of enterprises, 2009)

Entrepreneurial structures must be

suitable for a big market

Note: The numbers in parentheses are the total value added expressed in billions of constant 2005 U.S. dollars. The EU15 comprises Denmark,
25
Finland, Sweden, and the United Kingdom (North); Austria, Belgium, France, Germany, and the Netherlands (Continental); and Greece, Italy,
Portugal, and Spain (South). The EU12 comprises Estonia, Latvia, and Lithuania (North); the Czech Republic, Hungary, Poland, the Slovak
Republic, and Slovenia (Continental); and Bulgaria and Romania (South).

Southern and Eastern Europe must make it easier to do

business
(principal components index of the ease of doing business in 2011,
scaled from 0 [poor] to 100 [excellent])

Doing business is now most difficult in

Note: Averages are computed using principal component analysis. EFTA here comprises Iceland, Norway, and Switzerland. The EU15
the EU15 South
comprises Denmark, Finland, Ireland, Sweden, and the United Kingdom (North); Austria, Belgium, France, Germany, Luxembourg,
and the Netherlands (Continental); and Greece, Italy, Portugal, and Spain (South). The EU12 comprises Estonia, Latvia, and
Lithuania (North); the Czech Republic, Hungary, Poland, the Slovak Republic, and Slovenia (Continental); and Bulgaria, Cyprus,
and Romania (South).
Source: World Bank staff calculations, based on Doing Business;

26