I would choose to acquire a company within the European Union. The EU is a single market and it is known as the largest market platform. Thus, choosing to do business with a company within the EU will reap more benefits comparing to a company that is outside the EU. One of the benefits is that since the EU is a single market there are no trade barriers.
Hence, it will be easy to expand the company to various countries without restrictions. In addition to this, since there is no additional taxation, the price of food and goods within the EU countries is relatively cheap; thus, giving the EU companies a competitive advantage. Secondly, the EU provides a large market which leads to a greater competition; thus, this will result to the improvement of the business as well as increase the number of consumers. The EU enhances standardization of businesses and eliminates cartels and monopoly companies. Therefore, choosing to work with a company within the EU will protect the business from exploitation and enhances a fair marketing platform.
Additionally, some of the reforms by the EU makes it easier for countries to trade without border limitation. For example, the introduction of the euro allows companies to trade with a single currency. The EU has also reduced the paperwork for companies by harmonizing safety and technical standards. Therefore, acquiring a company within the EU caters for most of the employees’ requirements, enhancing the business partners to have a smooth start. The EU enhances open and free movement between countries for all citizens. Hence, this opens education and job opportunities for most individuals which makes it possible for company to hire skilled professionals from all over the globe.
The has set aside strict guidelines that prevent countries from getting into economic and political problems within one another. Thus, the business operations are protected from unforeseen conflicts and the company runs smoothly throghout the continent.One of the advantages of acquiring a company within the EU is the EU company law. The EU harmonizes the company law across Europe making it easier for companies to access funding, and to have effective and clear legislation. The EU company law also protects the employees, creditors, and shareholders reducing the burden of administration on the business. Another advantage of working with a company within the EU is that there the anti-corruption and anti-bribery compliance. Countries managed by the EU enhances transparency in all their business dealings.
While working with the EU a company has a right to select a business-friendly environment based on the country of origin. Therefore, if a company is situated in one of the EU member countries, the firm can leverage the opportunity of using it preferable regulation to trade with other members of the EU. Companies within the EU are assured of long-term stability and strong institutional framework. The EU has preset policy arrangements which guarantees security for the investors making them aware of what to expect before joining or investing in the EU member state. One of the disadvantages of a company within the EU is the recent financial crisis.
In 2008, there were financial crashes in the core members of the EU, Portugal, Italy, Germany, and Greece and the EU is yet to recover from those crises. Due to the severe financial problems, the EU governments have been constantly changing causing political instability and financial uncertainty. Another challenge the nationalistic tendencies caused by the rise of populism. Most parties within the EU have shown signs of withdrawing for the trade agreements set aside by the EU, which might affect the stability of the EU nations. The decisions, rules, and policies set by the EU also set by the EU aim at improving the union and the individual countries. Thus, people who invest in smaller countries often suffer as their left unheard with no one to cater for their business demands.Acquiring a company outside the EU is advantageous as it gives one an opportunity to exploit their target market with flexibility and control of the expansion operation.
Unlike acquiring a company within the EU whose regulations target specific trading countries, this option is effective in enhancing diversification and opportunities to new market share. Expanding a local firm internationally protects its bottom line and enhances diversification of assets. Another advantage of a company outside the EU is that there is no discrimination in choosing trade partners. The EU dictates over members who should join the union, therefore, the market share is restricted within the borders of the countries selected. Hence operating in an individual company is advantageous and gives one opportunity to access talents from various countries within their capability and expand their market share. One of the disadvantages of doing business outside the EU is political risks.
Most countries have political instability, and there is uncertainty on whether the government will later on interfere or upheaval one’s business causing harm to the operations carried out within the country. Secondly, it is expensive to venture into new markets outside the EU due to varying foreign policies and the existing trade barriers in some countries. Venturing into a company outside the EU also requires one to use a local specialist who is familiar with the tax, employment, and corporate law applied in the new region, which is risk as it is difficult to find a trustworthy person. Working with a company outside the EU also increases the business risks due to lack of knowledge on regulatory and non-payment compliance problems. MNC invest in financial markets outside its own country due to transactional financial leveraging, taxes and exchange rate, and political change. For instance, one of the reasons why an MNC may invest funds outside its own country is that most of them most of the MNC believe that the value of that country’s currency might appreciate in future which will increase their profitability.
