The Solution
Although the European community has come a long ways toward unity, it still has a long way to go. The countries of Europe need to relinquish more sovereignty as the Union grows in strength. Along with this, they need to begin to work with each other more directly as they begin to rely on each other not only for economic growth, but also for the common defense. An example of the fragmentation of sovereignty was the Anti-Immigrant platform of the Austrian Freedom Party, which was resolved without involving the Austrian government. The EU needs to resolve issues together, rather than separately or in cliques as they did with this issue.
The approach taken by the EU was to hear (sometimes third hand) about an issue within one of the member countries, in this case Austria, and begin to denounce the party and by implication the country. Other member countries began dialogues with each other condemning Austrian politics in general, and the Freedom Party in particular. This action developed a life of its own and the president of the EU speaking for the other 14 countries then “…effectively served notice they would politically isolate any Austrian government that includes…” the Freedom Party or the leader of the Freedom Party. Specifically, EU members stated they “… will not promote or accept any bilateral official contacts at a political level…” with an Austrian government that includes the Freedom Party or the leader of the Freedom Party. This warning was issued prior to any diplomatic efforts with Austria. This lack of cohesiveness points to a weakness in the political system, due in part to the growth of the EU.
A major platform of the Freedom Party favors cutting off all immigration to Austria possibly impeding further EU expansion to the east because the immigration would likely bring more Eastern Europeans over the Austrian border. Many Europeans share a fear of heavy influx of immigrants during the next EU expansion. Austria, however is the only country where a majority of the population doesn’t want the EU to expand eastward. They fear these immigrants would bring a higher crime rate, drug usage, and an increase in welfare, as well as an increased disease incidence in the school system.
Global companies must be very cognizant of political situations in countries or states in which they wish to expand. To be successful, companies must integrate themselves into multiple levels of the political system(s) not just the leadership, but also at the grass roots levels, before they invest heavily into fixed assets and other resources. This integration would provide insights into political direction as well as the current political situation. Failure to become extremely knowledgeable of the political situation can start a company on the road to failure.
Conclusion
The ramifications of a political misstep could have long term and tenacious results. Industry and labor leaders and the media are loud and have long memories. A misstep in any EU country could be heard throughout Europe, thus making it almost impossible for a company to regain its political composure, and continue with its expansion plans. This political distress could be detrimental even to companies established in other foreign countries (i.e., Exxon, Union Carbide, etc.). Although nationalization of corporate resources is now less of a threat, (Iraq, Iran, China and select other third world nations aside) political impropriety can at the very least result in heavy taxation or fines and negative press. These can result in a loss of customer confidence and therefore sales. The resulting detriment to the “bottom line” can be disastrous as Coke discovered with the debacle in Europe.
Appropriate knowledge and involvement in the political, media, and industry leadership of the country or regions of operations are absolutely vital to the success of any venture.
