European union is a very good example of the merits of unification among countries. Through this article the history of formation of the European Union has not been elaborated, rather the focus is on the lucrative ness of the European union as a market for the rest of the world.
European Union was formed in 1957 and since then has evolved to form a conglomeration of large number of countries. European Union (EU) name was accepted by 25 member states in 1992. Key activity of the EU is the establishment and administration of single market consisting of a custom union, a single currency (which has been adopted by 12 member states till now), a common agriculture policy, trade policies and fisheries policy.
If we look from the international market perspective, EU seems to be a very lucrative market. This is the major reason that is encouraging more and more countries to join the union. The EU now contains 454 million consumers and accounts for 23 percent of the world’s export.
Policies of the EU encourage the development and maintenance of and effective single market. As far as international marketers are concerned, to sell a product in EU it is important for them to conform to the standards laid down by the EU. It is seen that once a nonmember countries factories, farmers and merchants conform to EU standards, much of the cost of joining the union has already been sunk.
If we consider EU as a single unit, it has the largest economy in the world with the 2004 GDP of $11,723,816 million, it is expected to grow further as more countries are expected to join the union. The formation of single market has resulted in wiping out the inefficient firms. This encourages the world marketer to be more efficient, hence the formation of the EU has led to the feeling among the international market that in order to survive in the new market the firms must show efficiency and good quality standards.
For the formation of the single market, four barriers of freedom were removed namely:
People, Goods, Service, Capital.
Formation has led to labour mobilization, the various resources are properly mobilized in the union hence the quality of goods has risen to new levels, also the goods are available everywhere in the union. The prices have also decreased. the EU businesses have reached new economies of scale which is worrying many leaders in the world market who are not the part of the EU, a very good example is the competition between the Europe’s Aircraft consortium and Boeing in United states, Perhaps an even bigger concern is that lower barriers inside will create thicker wall outside, as some observers vision European Union as the ‘fortress Europe’ that favours firms on the inside but hinders outsiders by imposing obstacles such as stiffer import quotas , local content requirements , and other nontariff barriers.
Another problem that the international marketer faces in the European Union is that on the outside the union has been created and it has been declared that there is a common currency and other aspects, but still the marketing environment is heterogeneous, the companies marketing in EU are facing 14 different languages, 2000 years of historical and cultural differences and a daunting mass of local rules.
Another major area of evaluation here is that who will benefit maximum from the formation of the union. In this consumer driven economy if we look at the current scenario in EU, it is the people who will benefit most. The open barriers, increased competition and increased economies of scale will lead to low priced products, greater choice for customers of goods as well as services, great job opportunity with the European Union.
It still remains a question ‘what EU has to offer the world marketer?’
World is open now, all firms are beginning to understand that they have to go global else they cannot survive. European Union seems to be one of the biggest markets in the world with unlimited opportunities. It is true that the barriers inside EU have been removed which will certainly benefit the firms inside, but then this fact has already been realized by most companies and they are ready to invade the markets with products which can give European union companies a tough time for survival. Its not that the companies of the rest of the world will win, but they will give the union companies a stiff competition all the time. This will benefit the customers, who will certainly be the winners in the end.