EUROPEAN BUSINESS
Introduction
European companies remain competitive in the global marketing platform due to its open economy, having a trade surplus. Current economic trends have induced fear into Europeans companies’ ability to top global supply and value chains. Economists argue that EU-based companies lack a strong platform to compete with other fast-growing economies, especially in Asian. As such, there is a need for Europe to develop a merger control and strengthen their companies’ portfolio to reach the realm of competition policy from a global perspective. Regardless of the success achieved by European firms, there are only 10 EU companies from the top 50 fortune 500 worldwide enterprises. 21 of the top 50 are from the US while 11 being China-based. Evidently, Europe lags behind compared to its global competitors who have diversified their business portfolio to accommodate for changes caused by current trends. However, European companies’ still possess a competitive advantage in the global marketplace, thanks to initiatives adopted by member countries.
European companies competitive advantage
The social model
The European social models provide a competitive advantage in the global marketplace over firms in china and the US. EU firms enjoy being in a social business environment where fundamental rights have been provided to promote social security, collective bargaining, and solidarity for organizations (Natri, 2019, pp. 1). The social model has strongly articulated stress factors resulting from globalization and intensifying competition from rival firms. Consequently, social Europe provides a framework that helps stakeholders come together and articulate changes based on their consequences (Elenurm and Alas, 2010, pp.41). EU companies offer globalization adjustment fund (GAF) to support their initiatives once affected by major industrial and economic restructuring. As such, GAF provides a competitive advantage to EU firms to avoid overlapping of its current marketing and bargaining measures. Workers in EU firms likely to face redundancy are well informed in advance to help them find other jobs. For instance, Sweden boosts being the country with the longest notification period of 6 months (Rohrbeck and Schwarz, 2013, pp. 1597). Also, Sweden has the highest employment rate globally, ensuring EU companies have a competitive advantage over firms in the US and Asia.
Besides, EU companies boost a high social standard, thus increasing their economic performance relative to firms in other regions. EU member states have a competent social protection policy with German’s labour productivity rate being close to the US average. EU companies have, therefore develop a competitive edge with most workers preferring to work in Europe. A research carried out by World Bank shows that 11 EU countries topped the list for 30 most competitive nations globally with Denmark leading the list with the highest economic fortune (Natri, 2019, pp. 1). Besides, EU companies benefit from Europe being the largest trading block, with its shares growing due to exports (Elenurm and Alas, 2010, pp.39). In the last half-decade, exports to China have increased to 87% to ensure the firms maintain a competitive edge in the global market. EU enterprises also possess a competitive advantage due to its quest to improve lives quality for their people (European Social Model, 2016, pp. 1). Women have, therefore played a critical role in achieving success compared to other regions where gender equality in the workforce is still an issue.
Moreover, EU companies have a competitive advantage since they redistribute wealth through the implementation of policies aimed at fighting poverty. Wealth redistribution leads to high equality in European companies’ context compared to any other part globally. OECD estimates show that Europe companies have the potential to reduce poverty risk to 10-15%, which is the lowest globally (European Social Model, 2016, pp. 1). So, workers would prefer to work in such companies, thus developing a competitive edge in the market. Firms in Europe have invested in research and innovation to achieve life-long learning to create a society that aligns to current trends. Social dialogue has, therefore, been utilized by EU companies as a productive factor to improve workers morale and control over tasks mandated to them (Natri, 2019, pp. 1). The European social model has been critical in developing a creative and innovative workforce compared to other regions, thus creating a competitive advantage.
Cost advantage
EU companies possess a competitive advantage since they are provided with cost-benefit during their early transition stage. EU governments help companies in their internationalization stage to meet the needs in transition economies (Guerreiro, Rodrigues and Craig, 2012, pp. 487). As such, EU companies achieve economic stabilization in during their early development to help achieve market sustainability. For instance, the UK supports its home-grown companies with inward internationalization to improve their production units to achieve set production goals in Europe (Petropoulos and Wolff, 2019, pp. 1). Consequently, European firms benefit from reduced production costs since their governments subsidize products to help companies grow despite increased competition overseas. For instance, central and east European countries have substantially reduced external tariffs to ensure EU companies compete with other firms in the US and Asia. Offering reduced tariffs increased the EU’s global competitiveness. Also, low tariffs have structured reshaped companies macro-levels ensuring firms in Europe gain a competitive edge.
Also, EU’s companies utilize value chain operation mod to enter new markets hence influencing their strategic choices to govern foreign customers. As such, Europe’s firms have developed a clear industrial policy to achieve technological and digital independence. Such companies have created a competitive edge over firms yet to actualize process automation in their portfolio (Albers and Rundshagen, 2020, pp. 87). Europe has spearheaded to interconnect their industrial process as a regional block to achieve continued growth and development. However, in terms of global competition, China is overtaking other countries to increased utilization and investment in technological sectors. Europe has therefore faced stiff competition, thus the need to address state subsidy distress. For instance, Europe needs to address concerns posed by merger control to maintain its competitive advantage in global markets (Zhang et al., 2018). Competition from China and the US calls for Europe to invest in research and innovation to continuously grow its processes.
Besides, European companies possess a competitive edge since they utilize a proactive investment agenda that bolsters innovation. The UK government has developed innovative approaches to create a single integrated market that utilizes a multidimensional approach to achieve market success. Thus, EU companies have a competitive edge over their competitors in other regions hence capable of expanding their operations to compete from a global perspective (Pedersen and Gwozdz, 2014, pp. 253). European governments have spearheaded to improve investment conditions making it easier to invest in European firms. Such initiatives have been undertaken to mitigate posed by globalization to ensure Europe maintains its market position despite increased global competition. European enterprises have utilized technological elements to articulate issues posed by globalization. Companies in Europe have gained a competitive advantage by installing global networks to link their processes regardless of national boundaries with neighbouring EU members. The development of multinationals in Europe has helped consolidate trade to achieve a competitive advantage. Production processes have, therefore, been re-localized to ensure EU companies benefit from economies of scale.
Europe has developed international inter-firm partnerships to create trade deals that help transfer technology within themselves. European companies have allowed for more cross-border deals to promote a collective competitive advantage against America and China. EU firms have benefited from the volatility of cash flows and exploit opportunities posed by financial turbulences in nations such as Russia and Asian countries (Komla, 2020, pp. 535). The use of Euro in Europe creates a competitive advantage for EU’s firms by creating monetary stability hence increasing internal growth and creates immense employment opportunities (Singh and Point, 2014, pp. 301). Consequently, Euro has been used as an economic tool to achieve stability within international monetary systems used by European enterprises. The dismantling of customs tariffs within Europe borders provide a competitive advantage for firms in the EU since it spearheads for increased economic growth. As such, the communication sector has grown to ensure goods and services move in and out of EU borders with ease evident in the increased exports to China.
European companies possess a competitive advantage in the global marketplace due to the region’s sustainable development. European countries produce more with minimal resources meaning their process are efficient. Eco-innovation initiatives have been developed to ensure the EU’s firms increase awareness through environmental protection (Deloitte Insights, 2018, pp. 1). European firms have been at the forefront to improve their competitiveness in the face of globalization. The organizations have therefore developed a competitive edge since they align to current trends, thus able to meet the needs of its customers. European companies have achieved competitiveness due to cross-border equity developed to ease organizational operations. Also, Europe has a strong culture to safeguard its value chain in separate market segments, thus providing competitiveness compared to organizations in other regions (Singh and Point, 2014, pp. 303). Hence, European companies have a competitive edge since they relocate their operations based on current trends. Besides, the use of electronic payments has evolved faster in Europe than in the US to ensure European firms have a competitive advantage in the global marketplace. For instance, the use of the Single Euro Payment Area (SEPA) has facilitated fast and cheap transactions across EU borders posing a competitive advantage.
Counterarguments
On the other hand, European companies have failed to achieve competitiveness in the global marketplace. For instance, the European Union is currently being faced by the financial crisis with member states facing problems caused by price volatilities, liquidity, and bankruptcy cases. As such, firms have been facing challenges to create a strong market presence, thus the need to involve all involved stakeholders to address the financial problems (Roberts, 2020, pp. 1). Besides, working in Europe has been characterized by a negative interest rate business environment mostly prevalent in Switzerland and Sweden. Customers in EU’s companies are being advised to move out their non-operational funds to avoid being compelled to adhere to unfriendly threshold policies. A recent survey on EU firms shows that many of them are now using the excess money to expand their product lines and entering a new market to spend the cash in a wiser way (Bris, 2013, pp. 1). Companies in Europe have resulted in moving their money to foreign currencies such as in the US because their competitive advantage has reduced due to the weakening of their own currencies. The recent tax changes in the US have been used by European companies to determine the cash being kept overseas.
The banking structure for EU–based companies, is dependent on short-term borrowing compared to those in the US hence reducing their competitive advantage in the global marketplace. Besides, the use of checks in most European companies have deemed over the last decade with an exemption of the UK and France. Instruments such as Giro are still being used by some companies thwarting business sustainability in the region. As a result, such firms need to align with current global marketplace trends to develop a competitive advantage for the less developed European countries (Roberts, 2020, pp. 1). UK’s Brexit may have a negative impact on the sustainability of EU-based companies hence impacting their competitiveness in Europe. Brexit may have an impact on SEPA and other financial systems utilized by European companies to make payments hence impacting their competitiveness in the global marketplace (Roberts, 2020, pp. 1). Negotiations are in process to protect European companies from being adversely affected by the UK’s Brexit. For instance, Brexit would increase cross-border costs since the UK’s exit from the European Union would disrupt supply chains with many companies now moving out their products from England.
EU establishment of capital accounts has affected the competitiveness of European companies in the global marketplace. Minimum capital injection threshold has been set by European nations and has negatively affected the sustainability of the EU’s compared to other countries. Small entity firms are required to work with legal counsels to govern the whole creation process making it expensive and unsustainable for most European companies (Pedersen and Gwozdz, 2014, pp. 252). Besides, European companies have low liquidity management compared to firms in the US, thus impacting their competitiveness from a global perspective. The current regulatory structures in Europe do not allow companies to pool their cash to help them manage global liquidity at lower costs (Bris, 2013, pp. 1). However, notional pooling is used by European companies but not effective compared to other strategies used in the US and Asia’s fast-growing economies like China and Singapore. The implementation of regulations from Basel III in Europe has made capital requirements for EU-based companies too expensive, thus negatively impacting their competitiveness in the global marketplace.
The great economic recession reduced the competitiveness of European companies in the global marketplace. The trade spectrum and investment activities were heavily affected hence the need to spearhead a significant rethinking of the sustainability of EU-based companies. For instance, in 2006, the US created low-interest rates for its companies with many firms shifting their operations from Europe to America. Besides, political crises in Europe have impacted the competitiveness of its firms globally with the European Commission pleading with their respective governments to spend to bail out their firms. The social and economic imbalances experienced in European countries have impacted on their companies’ ability to create a competitive edge. (Rombi, 2020, pp. 1) The global economic model currently being used in Europe have increased tensions between capitalism and democracy. The current tensions have been utilized by the Chinese economy as an exploitable opportunity to foster their relationship with developing economies, mostly in Africa. As such, EU-based companies find it hard to create a competitive advantage in the global marketplace.
Finally, inequality in European companies has reduced their competitiveness from a global perspective since other economies are utilizing it as a competitive advantage against Europe. The debt crisis in Europe has affected its companies, thus limiting their value creation initiatives compared to fast-growing economies like China. Political leadership is therefore required to bail out European companies from being overtaken from those in the US and the Asian region. Entrepreneurs in Europe are working together to find a long-lasting solution to problems affecting their firms to gain a competitive advantage in the global marketplace (Rombi, 2020, pp. 1). EU-based firms would therefore align to current market trends to compete with other growing economies, mostly in China.
Conclusion
The research shows how European companies have remained competitive thanks to current open trade practised in the region. However, EU-based firms have faced stiff competition from firms in the US and China; thus, the need to realign their processes to gain market competitiveness. The social model has ensured European companies maintain a competitive edge in the global marketplace. Cost advantage has ensured that EU-based firms use the value chain approach to enter new markets hence spearheading their competitiveness. Innovative agenda have ensured European firms create a competitive edge to achieve sustainability despite growing competition from the US and China. However, the counterarguments show how European companies have failed to maintain their competitiveness due to a number of factors such as the financial crisis with member countries. Also, banking structures have also influenced the companies’ ability to grow their portfolio to achieve sustainability from a global perspective.
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Appendix
Europe’s success is attributable to the region’s stable macroeconomic stable nature due to the value of their high shares in the international markets.