Business in Europe: Opportunities and Challenges for Toyota in Germany, Sweden and Finland

Running head: BUSINESS IN EUROPE
Business in Europe
[Automobile Industry]
Name of the student:
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Executive summary
This study is aimed at understanding the business opportunities and challenges in Europe. It
specifically deals with three European countries Germany, Sweden and Finland. These countries
were chosen to identify the best of these markets for Toyota. The paper covers the current
challenges of doing business in Europe. It also includes the PESTLE and Porter’s five forces
analysis of Germany, Sweden and Finland. Based on the findings, the paper identifies Germany
as the most suitable of three markets for Toyota to set up the manufacturing and distribution
facilities. The paper also gives the business and the entry strategies to follow while doing
business in Europe.

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Table of Contents
Introduction......................................................................................................................................3
Question 1: Stating the reasons to select EU for the manufacturing plant......................................3
Question 2: Institutional and policy challenges and advantages within the EU..............................5
Question 3: Assessing Germany, Finland and Sweden for checking the suitability for production
and distribution facility & recommending the one..........................................................................7
Recommending one out of Germany, Finland and Sweden......................................................12
Question 4: Factors to consider in setting up the production and distribution facility..................12
Question 5: Recommending a strategy for the company entering and successfully operating its
business in the EU market.............................................................................................................14
Entry strategy.............................................................................................................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17

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Introduction
The study is based on doing business in Europe. The purpose is being served through a
comparative discussion on the three chosen European countries Germany, Sweden and Finland.
The comparative discussion is being constructed in reference to the chosen industry and the
business that is assumed as intending to enter the European market. Business in European
countries is a result of globalisation which promoted the flow of goods, services, technologies
and lot more between countries in different regions. Globalisation in Europe is both proactive
and reactive. European countries seek new markets and also that it face an increasingly growing
competition due to the entrance of new businesses (Pain et al. 2016). Factors that set up the
business environment for foreign companies include such as easier process for a business startup
and access to credit (Korhonen et al. 2015). The United States of America is the biggest
beneficiary of EU funds and also the biggest investor (Ahl and Nelson 2015). These all validates
a point that Europe is highly influenced from the globalised economy.
The study is, therefore, aimed at identifying the possible challenges and opportunities that
Toyota may have while doing business in Europe. In course of the purpose, the study also
examines the three chosen countries and identifies the best of the selected locations for Toyota.
Question 1: Stating the reasons to select EU for the manufacturing plant
It is very engaging and time consuming also to shortlist the one foreign location for a
business expansion. Being engaged to the import-export trading is a different thing than entering
a new location and also establishing the manufacturing & distribution facilities. A number of
factors in the target foreign country do really test the business intelligence of the company in

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concern. Business intelligence is required to understand the best countries to enter. Best
countries are those that have more opportunities than the barriers to the business. Opportunities
can include the list of thing like the technological advancement, easier policies for business set
up, static government policies, potential consumer base, skilled & cost-effective labour market,
favourable external environment and a fairer competition policies. These factors can also act as
barriers to foreign business if not being supported with effective policies for a foreign business
(Vahlne and Johanson 2017).
In a likewise manner, Europe offers a bunch of opportunities and challenges as well to
foreign companies. Companies intending to enter Europe get an access to the single biggest
market. Drivers of internationalisation are market drivers, government drivers, cost drivers and
the competitive drivers (Chetty, Ojala and Leppäaho 2015). These drivers are the biggest
opportunities for the foreign companies. In context to market drivers, companies get the similar
kind of customers in the different states of Europe. It means that customers are global in nature
and also that the similar or same marketing strategies are transferrable to different states. Cost
drivers include economies of scale, favourable logistics and the country-specific dissimilarities.
Trade policies, policies of host government and the technical standards are all the government
based drivers. European countries are interdependent between each other which are also one of
the elements of competitive drivers. Interdependency is good for a flow or exchange of goods
and services between the European countries. Competitors follow or adopt the global strategies
which enhance the level of competition in among the businesses (Surugiu and Surugiu 2015).
The list of opportunities as listed above is an enough evidence of why foreign companies
prefer entering the European market. The listed opportunities are very hard to get in other parts
of world. Notably, European firms are widely recognised for their efficiency to play at the global

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level; however, those firms have declining importance for manufacturing (Bailey and De Propris
2014). Foreign companies with its intention to set up manufacturing facilities in Europe will
certainly be welcomed and rather face a minimal competition from the competitors.
Question 2: Institutional and policy challenges and advantages within the EU
Toyota can face the institutional and policy based challenges while operating in Europe.
European integration was a result of political, economic and security reasons. Countries were
economically integrated to avoid any possible conflict and to discourage the repetition of thing
that had happened post World War II (Kesternich et al. 2014). Economic integration was done to
create the peace and include the defeated Germany in the post-war reconstruction (Wagner
2015). An open economy for supporting the interdependent trades was a result of protectionism
which was identified as the root cause behind economic instability in 1920s and 1930s
(Mitchener and Wandschneider 2015).
Key achievements of European Integration
Economic reconstruction: Rectification of economic destruction caused during the
wartime. Protectionism had badly affected the European economy during 1920s and 1930s
(Mitchener and Wandschneider 2015).
Political/security in Europe post World War II: It has resolved the ideological differences
in political and economic states of France and Germany. Those had emerged as the two
superpowers in Europe (Kesternich et al. 2014).