U.S. MULTINATIONAL CORPORATIONS IN EUROPE
There are many issues that U.S. multinational corporations are facing throughout Europe and the world. There are many political and economic changes going on in Europe which United States multinational corporations must follow. Participation in international business has become a necessity for companies so companies need to realize these changes so they can be ethical and prosperous.
The European Union is the largest emerging issues that United States multinational corporations is facing right now, and in the future. It is so important because it is reshaping the way that business is being conducted in Europe. The European Union is the institutional framework for a united Europe. Under the European Union all the countries involved will share common institutions and policies, which will bring peace and prosperity to Western Europe. The European Union was created after World War II to prevent any more wars between the European countries. There are fifteen countries participating in the European Union which are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden, and the United Kingdom. The European Union brought together a market of 370 million consumers, which share common institutions and policies. The European Union made Europe one of the world’s trading powers. The European Union has also created a single market that took effect in 1993, and established a free trading environment between these countries, so there are no longer tariffs between each country. United States companies wishing to export goods throughout the Europe will now only have to worry about complying with one product standard in order to distribute with all of the fifteen European Union countries. United States businesses operating in Europe should grow because it is now easier to reach more markets within the Union. The budget for the European Union was comprised from a Value Added Tax collected by each member state. So, United States multinational corporations located in the European Union countries have helped, and will continue to help fund the budget for this project.The Treaty of Amsterdam is the latest treaty that was passed under the European Union. This policy set the policies and guidelines for people who are going to be living under the European Union. The treaty sets the rights for the peoples freedom, security, and justice. Under new laws actions can be taken on companies who breach citizens personal rights. An example of this was the regulations set on the Internet to make sure peoples personal data is not given away. There are also new laws on the protection of the environment which companies must follow or they are subject to be brought up by the European Union Commission. Many other new policies are coming into play from the passage of this treaty. United States companies need to make sure they implement these laws so no actions can be taken against them.
One other aspect of the European Union which will takes place in the future is the establishment of a single currency called the Euro. Right now only eleven of the fifteen countries are going to participate in the establishment of the Euro. On January 1, 1999 the Euro concept is going to be introduced into the banking system. Next, wholesale financial and capitol markets are going to switch to the Euro. Then, public administration is next in line to switch to the Euro to help its progression. All of the first steps are going to use electronic Euro money, no actual paper or coin currency. On January 1, 2002 actual currency is going to be implemented into the system. There are plans to produce 12 billion Euro notes, and 50 billion Euro coins. United Stated multinational corporations are going to have to work on the adoption of the Euro into their transactions along with the rest of Europe to ensure there are no problems between the two countries.
The European Union is going to have a large effect on United States multinational corporations, and may open the door for new issues which United States corporations need to be careful of. As stated before the Union is going to make it easier for the United States to export goods to countries within the European Union. United States multinational corporations operating within the European Union will not have to pay any tariffs on their goods, so it will be easier to distribute goods throughout the Union. Multi-million and multi-billion United States multinational firms that operate in high-tech goods and services are taking the largest advantage of the single market. Some examples of the companies are IBM, AT;T, ITT, Ford, GMC, Coca-Cola, Dow, Texas Instruments, and Black and Decker. The most favored strategy that these companies are using is “expansion through local production, acquisitions, and alliances.” These companies are buying small European companies to acquire a larger share of the market. These multinational corporations are going to have to make sure they follow the policies of the European Union in an ethical way that the united countries expect them to when conducting their business. They do not want to cause any ethical dilemmas by breaking the institutions and policies created by the European Union.
Labor is another issue that multinational corporations must face when doing business in Europe. There are a few issues in which European differs from the United States. One of the main issues is the refusal of union recognition. This has created hardening union attitudes and initiated wider criticisms over the years. A lot of European Unions feel that the United States corporations do not pay enough attention to the demands of the European Unions. These unions had little leverage in negotiations before the problem, but now they are targeting on the United States multinational corporations. Another issue that corporations must deal with is the membership of employers associations. Even though most of the United States corporations are members of their respective employer associations, Europeans still feel that U.S. companies tend to conduct their own industrial relations independent of local conditions. One last cause of tension between Europe and United States multinational corporations is decision making. Many Europeans feel that decisions concerning investment, production, and employment are established with little reference to national consideration. Companies looking to do business with counties need to keep these differences in mind in order not to upset the their workforce and cause any further problems.
If United States companies can learn to follow the policies and comply with any issues that may come up in the business place, they should be able to work well in this foreign land. These companies need to make sure that they are following the policies of the European Union, and are being ethical in their practices. There is a whole new system being created, and we need to make sure that we follow it.