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Students Zone - Answers to Case Study Questions
CASE STUDY 12.2: EU ENLARGEMENT AND THE SME SECTOR
1. Why do some SMEs not share the government’s enthusiasm for enlargement?
The expansion of the EU in 2004 to include a number of Central and Eastern European countries into the EU offers a number of opportunities and threats to the EU15’s SMEs. The removal of trade barriers to the new EU10 members is compensated for by the removal of barriers within the EU15 for the SMEs in the new EU10 countries. The newly enlarged market might provide new trading opportunities and access to labour but SMEs in the EU15 fear the increased level of competition in their own domestic markets from the EU10 SMEs through their use of lower cost labour. UK SMEs may also see export markets within the EU15 lost to SMEs from the new EU10 (the same process would apply to other EU15 countries' SMEs). The case study also reveals that many SMEs see more threats than opportunities from the enlargement process in particular pointing to the issue of increased taxes and red tape. Part of their negative feelings about enlargement comes from their lack of preparation for enlargement. The answer to this question might also consider which sector(s) might be the major beneficiaries or losers of the enlargement process
2. What opportunities does an enlarged European Union offer for the SME sector?
Enlarging the EU provides new markets for SMEs and access to skilled labour, an area of great concern for EU15 SMEs. The extent of the opportunities depends upon the sector in which the organisation exists and the size of the SME. It is likely that medium sized firms will benefit more than small firms, which themselves may benefit more than micro firms. The SMEs that are likely to benefit the most will be those that operate in the more liberated trade sectors. The threat of increased competition in the EU15's domestic market following enlargement can also be seen as an opportunity for SMEs to improve their products/services, productivity and management. Pages 365 and 367 of the text indicate the SME sectors that are likely to benefit more from enlargement.
Other chapter answers >>
- Case Study 1.2 Karstadt Undertakes Investment for Survival
- Case study 1.3 Europe's International Trading Future
- Case Study 2.1 Porter's Diamond
- Case Study 2.2 The Coffee Market
- Case Study 3.1 Sugar Industry
- Case Study 3.2 FSC Dispute
- Case Study 3.3 Beef Hormones
- Case Study 4.1 SEM Effects of Business
- Case Study 4.2 Africa's Economic Integration
- Case study 5.1 The Effect of Exchange Rates on Businesses – The Us Dollar
- Case Study 5 2 Real Exchange Rates in the Euro-Zone
- Case Study 6.1 SEC to Rethink Post-Enron Rules
- Case Study 6.2 A Controversial New European Directive
- Case Study 8.1 Cross-Border Banking Bids in Italy
- Case Study 8.2 The Future of the London Stock Exchange (LSE)
- Case Study 9.1 Back to Bread and Butter for Europe
- Case Study 9.2 Poductivity in European and International Labour Markets
- Case Study 11.1 Poorer EU Areas Lose Funding
- Case Study 11.2 A Diverse Approach to Curbing Greenhouse Gases
- Case Study 12.1 European and US Entrepreneurship Activity
