Evaluative Performance
Acquiring companies in the European Union is an expensive move since several rules and regulations apply accordingly but have a regulated bigger market than many others so I would acquire a company inside the European Union. There are several procedures that a company has to undergo when acquiring such a company that is within the European Union. These rules will include ensuring that the minimum standard of the company in terms of the annual profit capability (Quaglia, 2014). Joining with a company within the European Union can be challenging even for a multinational company with interest of going into the European Union market. Certain rules such as having a common and predefined system of taxation for the cross-border restructuring, the company being acquired will not be liquidated but will be wind up into the major company. Acquisitions within the European Union are in every sense regulated in order to reduce the effects which might be caused by the company being a monopoly. The European Union must be notified in case the companies which are joining have an annual turnover that exceeds a certain amount of money (Rugraff & Hansen, 2011). Bringing in new competition in the market is keenly looked into to ensure that there are no monopolies.
Advantages and disadvantages of acquisitions
There are very many reasons as to why a company would chose to acquire another company but in this case in the European Union. Once a company has acquired a company in the European Union, there is tax free trading in between the member states. This is one of the major benefits of joining the European Union market. Basically the cost of commodities between the countries or the companies within the Union is down and at a controllable manner according to the demand in food and goods. Once a company has entered into the European Union market, it opens up bigger opportunities which were never present there before. Movement along the countries in this market is free even for the citizens thereby opening up of new job opportunities and education for the young people. There are less or no conflicts between the member countries (Millett, 2011). The European Union has set standard rules and regulations to govern any issues which might arise in between the market. Rules and regulations are meant to reduce the idea of countries ever fighting over an issue. These rules are strict and need to be followed by every member therefore restricting the countries against having political and or the economic crisis which can interfere with the normal running of businesses in this market.
Disadvantages of being in the European Union market
Different languages present different cultural backgrounds and this creates language barrier making it difficult for the union to communicate effectively with all the citizens in this market. This is a challenge for a United States company to conduct business freely and fairly without these challenges. In the United States, only several languages are understood whereas the others are new to most of them. Growth of the company is assured but the money obtained will only be shared amongst the member countries since the union does not encourage poverty among its member states. Shared wealth is a good way to allow for the development of the members in this way the reduction in poverty level. It is a bad move for the company but beneficial for all. Once a company or a member country has joined the market, it is very difficult to get out of this agreement (Quaglia, 2014). The European Union controls both the market and the governments of the member countries. It is also very difficult for a country that is not in the Europe to join this diverse market.
It is a disadvantage joining the European Union market since the entry point is easy but the exits are far much wider that they actually are in the real sense. Countries like the Britain have been battling up and down trying to leave this market but with no luck since the strict rules put in place cannot allow the cheap exit. The Union has a policy of all the countries promoting other minor countries meaning that even the United States will start getting less of what they want and more of what the European Union wants. This in a way will reduce the capability of the company making more profits like they wish. Dealing now with the euro is very difficult making it very impossible for the dollar to survive in this European market. it is also advantageous to be in business in the European market since the wide market allows for the development of the minor sectors of the economy. Small companies which chose to acquire the companies in the European Union are assured of success in the market as the monopolies experienced in the home country will be much more (Quaglia, 2014). Purchasing an enterprise is the best experience but comes at a cost of not being free from the strict rules outlined during the entry of the market. Readily available market is of benefit since the company will not struggle finding where o sell but will now start enjoying a regulated new updated market.
In most cases, multination companies invest in outside markets with an aim of increasing the profit income for the company. Key benefits include the seeking of a new market which is not available in the home country. Companies have the tendency of jumping into new markets in search of buyers and sellers of their goods and services (Millett, 2011). The executives of certain companies may get the impression that the goods or the services offered by a particular company are way lower in quality that what they offer and that’s an opportunity to strike the market and take over it creating immense competition in that market. Firms may also have the interest of broadening the financial capability and seeking a market outside is the best alternative that will be a success for the company. In the outside market, the multinational company is assured of new technology and improved level of marketing.
There are several reasons as to why financial institutions would chose to offer credits outside their how country. These reasons may include the availability to higher income. Higher incomes are assured once a financial institution has invested abroad since the exchange rate of the currencies is very different. The financial institutions in many ways is trying to market its presence into the country with a view of jumping into the market soon enough (Millett, 2011). Growth and diversification is assured for the financial institution. Some countries are basically rich that other countries and if a financial institution can be able to venture into this market quick enough, then eventually there will be growth. Certain financial institutions which belong to the developed countries offer credits to third world countries in order to fund some developments which will create revenue for the financial institution in the end.
References
In Wouters, J., In Defraigne, J.-C., & In Burnay, M. (2015). China, the European Union and the developing world: A triangular relationship.
Millett, S. M. (2011). Managing the future: A guide to forecasting and strategic planning in the 21st century. Axminster: Triarchy.
Quaglia, L. (2014). European union and global financial regulation. Oxford [u.a.: Oxford University Press.
Rugraff, E., & Hansen, M. W. (2011). Multinational corporations and local firms in emerging economies. Amsterdam: Amsterdam University Press.
