European Business - European Business Introduction This...

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European Business Introduction This assignment has been split into two parts, Part A and Part B. Part A of the assignment I have been asked to produce a report for Eurotown on the general trading conditions that exist between the UK and France, Germany and Italy. Part B of the assignment I have been asked to write a report on one of the new countries joining the European Union about its economic profile, the impact of enlargement on UK businesses and the implications for the EU Single Market. Part A As a local industrial journalist I feel I have invaluable information in which I can offer to Eurotown involving the general trading conditions that exist between the UK, France, Germany and Italy. When a company from the UK or any other country, is thinking off trading with another company from another country, there are many factors that are too be considered. These factors are the balance of payment of their own country and off the country they are trading with, the exchange rate of their own country compared to the country they are trading with, the interest
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rates between the companies and countries and the current account of each country. As we are aware, the countries we are dealing with are the UK and France, Germany and Italy. As all four countries are in the European Union, there is a free trade area for importing and exporting that exists between each of the four countries. A free trade area exists when there is no restriction on the movement of goods and services between the four countries. This also applies to the remaining eleven countries in the European Union. However, if one of the four countries decided to operate with another country that was outside the European Union, say the USA, and then there would be International Trade Barriers. We need to take into consideration the balance of payment of each of the four countries. The balance of payment is a measure of whether the country is selling (exporting) more abroad than it is buying (importing) from abroad (a surplus) or the other way round (a deficit). If the UK has a surplus, this will tend to make the pound worth more to the Euro, so that imports become cheaper, for example a UK dealer in German cars. A deficit will have the reverse effect. Basically if a company wishes to operate with another company in a different country they will have to look at the balance of payment very carefully. This can be done by looking at the exchange rate. Even though the UK is in the European Union, it still operates by using the £ Stirling. Unlike France, Germany and Italy who have all now adopted the single currency the Euro. This means France, Germany and Italy do not have their own balance of payment. When
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