Unit 1 Week 1:
The European Union, or EU, is an economic and political partnership between 27 European countries. Created after the Second World War, the partnership was to bring economic cooperation through trade and avoid conflict. The European Economic Community, or EEC, was created in 1958 which brought economic cooperation and a single market. The economic union developed into an organization spanning policy areas. The EEC changed names in 1993 to the EU. The EU bases its rules on a law that states everything it does has to be founded through treaties, voluntarily and democratically agreed by all member countries (How the EU works, 2013). By seeking to acquire a company in the EU, one would benefit from this union because it allows everyone within these countries to work and move freely within the countries and use a single form of currency, the euro, which saves the company from transactions costs. It will allow the company to expand its market.
The advantages of expanding into the EU are the single form of currency, saving transaction fees, and the expansion of the company's market. The disadvantages of expanding into the EU are the different cultures, customs, and languages of each country will vary, causing some people to become unaware when they are conducting business what is being said, what should be done, and how to conduct themselves. The best way to overcome this is to hire local translators in each country who can help conduct the business meetings with the locals and teach the company about the culture, customs, and languages.
A multinational corporation, or MNC, would invest funds into a financial market outside its own country for a number of reasons. One reason is that there may be an expected high economic growth in the other country which will help the MNC to gain profit from investing in that country. Another reason is that there may be