Understanding the EU's impact on business in a global MBA program

October 09, 2018

The ‘single market’ has many potential benefits for businesses in the EU, but there are also some downsides. Here’s a closer look for students in MBA courses.

EU flags in front a glass building

The European Union’s influence on business among its member countries has come under the spotlight since the ‘Brexit’ vote in June 2016. The decision by the United Kingdom population to leave the EU, albeit by a very narrow margin, looks set to have a significant impact on the country’s trade. That’s because the EU has gradually developed a vast range of economic powers since its initial foundation as the six-member European Coal and Steel Community in 1952.

This ‘Single Market’ has created immense opportunity for businesses in each of the Union’s 28 member states, but concerns about its economic power is one of the reasons for increased Euroscepticism. Keep reading for an insight into the EU rules that aspiring MBA students should pay particular attention to.

The EU’s unique tariff system makes trade cheaper

The European Union is a single market allowing free movement of goods, capital, services, and people. It’s a trade bloc, meaning that there are no tariffs imposed on goods sold between member states. This puts EU-based companies at a distinct advantage when trying to sell its products, as other economic superpowers like the USA and China have to negotiate separate trade deals. Graduates of MBA courses recognize that this makes the cost of doing business within the European Union much cheaper, and opens up a large market of over 500 million people.

Corporation tax rates remain the responsibility of member states

The European Union has created some consistent rules relating to indirect taxation, including value-added tax and excise duties, but member states continue to hold responsibility for direct taxation. This means that corporation tax rates vary across the EU, from as low as 9 percent in Hungary to 33 percent in France.

Some countries with low tax rates, such as Ireland, want to maintain autonomy over these rules because it helps to attract jobs from multinational companies. However, the European Union continues to seek reforms that would create greater tax consistency between member states.

The EU creates a massive potential workforce for employers

A citizen of any of the 28 EU member states is also automatically an EU citizen. This means they are free to travel and work in any other member state, creating a huge potential workforce for companies. Employers can recruit from any other EU country without having to worry about delays with work permits. EU citizens also don’t need a passport, or encounter any border control, if they are crossing between the 26 EU countries that have signed up to the Schengen Agreement.

A border sign of Germany next to a highway
Free movement makes it possible to drive across European borders without a passport

Graduates of MBA courses could benefit from EU grants

The European Union also serves as an important source of direct revenue for businesses. The European Regional Development Fund aims to help companies prioritizing areas including innovation and research and the low-carbon economy.

This is, therefore, a potentially vital source of investment for graduates of business courses that are seeking to grow EU-based companies. The EU has also become a reliable source of income for the agriculture industry, with farmers able to access the Single Farm Payment subsidy to provide them with price and income stability.

The European Parliament chamber in Brussels
The European Parliament chamber in Brussels

How the EU can make doing business more difficult

One of the common reasons why so many people in the UK voted for Brexit was frustration at the amount of regulations imposed by the European Union. Executives must pay close attention to the rules set out by the EU for their business sector.

The large EU market also creates intense competition between businesses from all member states. Other than reduced transportation costs, native companies don’t have a significant advantage when trying to sell products within their own country.

Gain a broader business perspective by studying a Global MBA program.

Contact WU Executive Academy for more details.

Share this