Gaining Competitive Advantage Through International Expansion - Essay Sample

Paper Type:  Essay
Pages:  7
Wordcount:  1730 Words
Date:  2023-01-08


Companies are increasingly expanding their physical scope of international business activities across various countries and regions for a competitive advantage. The expansion beyond the domestic market enables companies to advance growth chances that are not present in the local market to spread risk through geographical dimension and to exploit brand and technology-associated intangible resources. The entry mode selected defines the governance mechanism and ownership percentage in a firm when MNEs operate in a foreign market; hence, it is necessary to the performance and existence of the MNEs. The purpose of this paper is to review EU laws and regulation to single market entry this comprise of review of SEM legislation and Regulation Activities, EU law of new Market Entry, and, mode of market entry

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SEM Legislation and Regulatory Activities

The objective of economic integration comprises the main focus of the 1957 Treaty of Rome, in the particular form of the formulation of a conventional internal market, accompanied by the freedom of movements of services, goods, and productive aspects Its unique aspect was in addition to being a free trade region and convention union with a standard external price, the intention of eradicating technical obstacles emerging from national rules for the safety, protection of health, and, the environment and to a restricted extent of tax challenge as well. According to Craig (2003), three elements stand out in this regard. First, integration comprising of the removal of barriers and the synchronisation of regulation which gives standards of safeguarding of essential goals of common interest applicable throughout the SEM. Second, the exclusion and inhibition of barriers concerns behaviours which may alter the standard playing filed in the SEM after the opening of the market, i.e. through means of public subsidies and protections in the local market to national layers or anti-competitive strategies by national players. These changes are addressed by competition policy and in specific nation aid policy- a rule distinctive to the European establishment which directly compels the member states. Third, market opening and liberalization do not prohibit public involvement, e.g. Environmental safety through the Common Agriculture Policy or solidity policies to assist weaker economies in surviving the effect of market opening. General policies will normally be overseen by the commission- under Council oversight through appropriate Council committees.

The European Court of Justice emerged as a central player in the amalgamation process through its resolution cases and preliminary verdicts on concerns raised by national courts about the treaty's comprehension. Its fundamental role in the advancements of the SEM came to frontage with early pronouncements setting the direct effect and the authority over national regulations of community rules in field of Community competency. The set ground for milestone decisions such Reyners, Dassonville and Cassis de Dijon, 6with supreme concerns on the successive progression of legislation.

In June 1985, is the time which the SEM programme was introduced by the Commission White Paper on implementing the internal market, certified by the European Council in Milan in the same month. Its key message, which established upon the Cassis de Dijon Jurisprudence was there was no necessity to pursue synchronisation when hindrances to free movements would happen under the policy of logic to equivalent safety. Therefore, harmonisation initiatives would be restricted to boundaries which could be vindicated under the compulsory grounds allowed by the Treaty, and, thus could be only be eradicated by regulations raised the general standard of protection in that specific areas, acknowledging the authentic concerns of members states and reestablishing movements.

The White Paper comprised suggestions for Treaty modifications which would have abridged and speed up the legislative process. In the subsequent months, an international conference rapidly reached a treaty on those plans, resulting in the Single European Act (SEA) which was signed in February 1986. After endorsement by member states, it entered into power on 1 July 1987. The SEA defined the SEM as a region without limits in which the free movements of services, persons, and, capital is guranteed" (now in Article 26 of TFEU) 6 and presented bulk voting in the Council for SEM procedures, together with a new co-operation practice with the European Parliament, that later under Maastrich Convection that resulted to complete co- decision. Under the new lawful ground for SEM initiatives (Article 100a TEEC,7 now 114 TFEU) The Commission established the New Approach to SEM regulation, restricting measures to situating the crucial necessity for safety while restricting technical stipulations to voluntary standard established by European Standard bodies. The economic rationale the SEM programme created an assumption that market opening would recover the fragile European economy by nurturing focus and the economies of scale in industry, enhancing the distribution of productive resources and increasing productivity. The 1998 Cecchini Report described at reasonable length the operational shortcomings of the European economy and its specialisation in segments with low advancement potential and vowing that accomplishment of the SEM programme would result to significant economic advantages (ranging from 4.25 to 6.5 per cent of GDP).

The White Paper tabled some 300 harmonisation measures, majorly in the areas of goods that by and large were permitted by the legislative deadline of 1992 (cf. Pelkmans 2008 and 2011); extra liberalisation directives were endorsed in the subsequent years for the opening to competition services- remarkably network industries and financial services

Further improvements in SEM policies were realised by reinforcing accompanying policies, e.g. with the endorsement of the Merger Regulation 9 On the other side, the new economic structures policies and R&D policies, sustained by budgetary resources on the other. These initiatives are complementary, as weaker economies are provided with extra resources to endure augmented competitive pressure originating from market opening and the anticipated focus of the industry. The single was generated to strengthen the assimilation and competition effects of the SEM by enhancing price transparency, minimizing the costs of cross- broader transactions and eradicating the exchange rate risk for reasons which are not wholly comprehended, whereas there has been a positive effect on advancements, market integration has been less defined than expected, with the productivity performance of many Euro Area members deteriorating rather than advancing

According to Pelkmans(2011), once the wave of legislation provoked by the White Paper was accomplished, it soon became evident that significant economic practices were not covered that in several respects prevailing legislation fell short of presenting real integration. The shifting economic environment comprises the advancement of new technology, globalisation, and the upsurged importance of environmental matters in public policy, also significantly joined to the regulation agenda, with new needs by the members and states and persistence need to assess and adapt current legislation. This is mirrored in the proliferation of strategies reviews and new strategies to accomplish the SEM (cf. Annex 1 in the High-Level Panel of Experts, 2016). The accomplishment of the SEM has become a moving aim demanding continuing adaptation. A review of the significant practices included in the White Paper and subsequent legislation The Monti Report (Monti, 2010) outlined a stand of notions which has been formulating SEM strategies over the previous decade which is the socio-political legitimacy challenges surrounding market opening and the desire to establish common consensus around SEM goal. The report emphasises zed the importance of yoking the SEM for the benefits of consumers, supporting green growth strategies and analysing the proper balance between SEM employees' rights, freedom, and, the anticipation that has been especially stressed by the SEM regulations on the posting of employees and associated ECJ decisions, e.g. Laval.Over time, these wider objectives found Treaty acknowledgement with new sections on purchaser protection, social policies and employment.12

Mode of Market Entry

The entry choice modes (internationalisation methods, instruments, forms) be determined endogenous elements (majorly business possible) also exogenous aspects (explaining the business state in the expected market or the organisation in tyhebmarke5tv works). The development for internationalisation of events shows an active role when considering the mode of entry. In the nonfiction, there are diverse models enlightening the internationalisation of the marketplace and the manner of admittance. The different entry methods in the foreign markets have dissimilar efficiency, but also a diversity of contribution costs. It appears that the utmost mutual taxonomy differentiates three critical groups known as exporting modes, investments modes, and contractual modes.

Exporting Mode

The major method of entry concerns the scope of interchange and is devoted to global trade, mainly through addressing imports and export events. Imports of underdone resources from overseas are frequently introductory to the export of products overseas. This segment is connected to too little risk. The firm solitary understands overseas orders, as they are conventional. In some cases, it is the solitary technique of appointment, in global action s. This phase is an ordinary significance of development and takes place when the firm afterwards attainment all its abilities in the local marketplace and occurs when the firm after reaching all its capabilities in the local market and attaining a suitable capacity of production, also much production, targets to enlarge its market and begin exporting. The reason for arriving overseas markets is the aptitude for creating incomes in these marketplaces, as the group advances excess returns in the home market. Exporting actions can take numerous methods, comprising indirect export, direct export; also take further exact methods of exporting. An alike outcome can be attained by exhausting universal mail checking (e-commerce), nevertheless, it is not a characteristic system of exporting (Czinkota and Ronkainen, 2007).

In subsidiary export styles, the producer uses free export mediators situated in its specific republic, so the producer does not have a straight connection with global partners or customers, and the business is preserved as a local one. The indirect export intermediaries' forms are as follows (Hollensen, 2007; Cullen and Parboteeah, 2010).

  1. The export commission house (ECH) which is illustrative of overseas purchasers who are situated in the home nation of the exporter's, providing facilities to the overseas purchasers like recognising the possible negotiating and sellers prices
  2. The importing and exporting broker as a professional in acting the prescribed purpose, also does not primarily manage the merchandises bought or sold, taking along a seller and buyer together.
  3. The export management company (EMC) which is an intermediate concentrating in specific forms of products or specific nations or areas
  4. The export trading company (ETC) which is an intermediate alike to EMC, but then again it frequently takes the statement to the merchandise before disseminating

Whereas applying direct disseminating, exporters yield on the responsibilities of mediators and create a straight connection with clienteles in the overseas market. Direct disseminati...

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