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The impact of globalisation on businesses - EduqasImpact of membership of the EU

In business, globalisation means operating on an international scale to provide or produce goods and services. Almost all of the goods we use are made of parts sourced from around the world.

Part of BusinessInfluences on business

The impact of membership of the EU to businesses and stakeholders

Membership of the EU has a huge impact on businesses and stakeholders. Whilst there a number of advantages, being part of the EU also provides some restrictions. Some of the main impacts to businesses of EU membership include:

  • free trade between member states
  • free movement of labour
  • regulations affecting businesses

Free trade between member states allows all businesses within the EU to buy and sell goods and services to each other with no additional taxes put in place by governments.

Free movement of labour allows any person that lives in an EU member state to freely move to other member countries to live or work.

There are a range of EU regulations that affect businesses. These pieces of legislation include laws that affect employee and consumers rights.

Stakeholder
Shareholders
  • Shareholders benefit through increased profits. This is due to having a larger target market, being able to sell more products, and being able to source cheaper products and raw materials.
  • Shareholders are able to distribute employees in a way that will increase the success of their business.
  • Shareholders have to ensure that all EU laws are fully enforced throughout their business.
Customers
  • Customers benefit from choice, as more businesses are able to operate here from around the EU.
  • Customers benefit from cheaper prices, they can purchase products easily from anywhere in the EU.
  • Customers benefit from consumer legislation, meaning they must be treated fairly by businesses.
Employees
  • Employees have better job security, as businesses have more chance of surviving with larger target market.
  • Employees benefit from having the freedom to move around to a range of countries.
  • Employees benefit from employment legislation, meaning they must be treated fairly by businesses.
Suppliers
  • Suppliers benefit through more potential customers. A supplier based in the France can receive tariff free orders from anywhere in the EU.
  • Suppliers may have to compete more on price, businesses have a large range of choice over which suppliers they use.
Government
  • Governments benefit through more spending and foreign investment in a country.
  • Governments are likely to receive more in taxes; however, the EU also means that some businesses can move their money to different countries.
StakeholderShareholders
  • Shareholders benefit through increased profits. This is due to having a larger target market, being able to sell more products, and being able to source cheaper products and raw materials.
  • Shareholders are able to distribute employees in a way that will increase the success of their business.
  • Shareholders have to ensure that all EU laws are fully enforced throughout their business.
StakeholderCustomers
  • Customers benefit from choice, as more businesses are able to operate here from around the EU.
  • Customers benefit from cheaper prices, they can purchase products easily from anywhere in the EU.
  • Customers benefit from consumer legislation, meaning they must be treated fairly by businesses.
StakeholderEmployees
  • Employees have better job security, as businesses have more chance of surviving with larger target market.
  • Employees benefit from having the freedom to move around to a range of countries.
  • Employees benefit from employment legislation, meaning they must be treated fairly by businesses.
StakeholderSuppliers
  • Suppliers benefit through more potential customers. A supplier based in the France can receive tariff free orders from anywhere in the EU.
  • Suppliers may have to compete more on price, businesses have a large range of choice over which suppliers they use.
StakeholderGovernment
  • Governments benefit through more spending and foreign investment in a country.
  • Governments are likely to receive more in taxes; however, the EU also means that some businesses can move their money to different countries.
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