Why the European Union enlargement represents a major strategic point for the european companies? Focus on the Volkswagen Group (october 2008)

Résumé du document

The European Union currently includes 27 member-states. In only three years, between May 1st 2004 and January 1st 2007, the Union integrated twelve new countries from Central and Eastern Europe. This is the most ambitious European project since the signature of the Treaty of Rome in 1957. The European Union wants to enforce its weight and its legitimacy on the international stage. This enlargement of the borders brings a new economic dimension to the European Union. The member-states present before 2004 saw the arrival of twelve new emergent countries, which knew a rapid economic growth. These countries, such as Romania, Republic-Czech, Hungary and Slovenia, offer indisputable economic and commercial opportunities, passage from 370 million to 480 million consumers, abundant material resources, low-cost and qualified labor. This is also an opening of markets which share the same community rules as the former European Union countries. The International investors have not forgotten, however, that they are foreign countries. It is necessary to develop an elaborate implementation strategy in these various countries.

Extraits

[...] Social: More easily accessible resources because of the enlargement of the European Union Abundance of human resources: Well-populated markets (Hungary: 10 million) An effective education system An active work population Consumption habits close to those of the Western Countries Positive changes to the environment due to the enlargement of the European Union Improvement of the living conditions due to the economic growth, the wages increase, and the European financial aids. Example: European Union financial aids: In order to help the social development of the new countries, the European Union provided more than 540 million euro between 2004 and 2006. This sum was allocated to education, cultural and research development. [...]

[...] Table of Appendices: Strategy Analysis in Western Europe: The application of the Ansoff's Matrix The application of Porter's Generic Options Prescriptive approach: 19 II- Strategy Analysis in Eastern and Central Europe The application of the Ansoff's Matrix The application of Porter's Generic Options Prescriptive Approach Strategic Recommendations for the Volkswagen business model: 23 Strategy Analysis in Western Europe: 1.1 The application of the Ansoff's Matrix helps us to understand the Volkswagen strategy in Western Europe. The company is on existing and mature markets. Thus, they seek to increase their sales by launching new products adapted to the customer needs: A car, a product for each profile. In addition, the Western car market is hyper competitive. Volkswagen must have an elaborate marketing and communication strategy. [...]

[...] On a long term basis, the enlargement of the European Union can have negative impacts on Volkswagen's results. The first concern of the company relates to competition. The entry of these emergent countries in the European Union naturally attracts international investors. All the work completed by Volkswagen, spanning over the last twenty years, to create a strong commercial link with the Central and Eastern European countries is called into question. The Group must now face a strong degree of rivalry. [...]

[...] The second is that the Group chose and set up their strategy by thoroughly taking into account their competitive resources and the stages of market growth. Volkswagen's competitive resources have been developed over many years and are therefore, difficult for competitors to copy (sustainable advantage). Volkswagen also adopted a prescriptive approach in both cases. The automobile market is a hyper competitive market. It would be difficult for Volkswagen to not define precise objectives, known by the customer. It would be a waste of time for the Group to try out several strategic options and to adjust in permance its business model. [...]

[...] The European Union Enlargement did not eliminate all the threats which exist in these markets. For Volkswagen, it is important to identify and integrate them in its expansion strategy. The new members are working hard to reduce these risks and to remain attractive: Opening of anticorruption offices; development of anti- inflations plans The European Union has provided the new countries more than 33 billion euro between 2004 and 2006 to support their economic, political and social integration. *Bulgaria: Because of their inability to put an end to corruption and criminality, the Bulgarian Government will not perceive the Union European Financial aid. [...]