CurrentEconomic Status in France
CurrentEconomic Status in France
Franceis one of the leading economies in the world today. Its GrossDomestic Product (GDP) is expected to grow by 1.6% by the year 2018(OECD.Org 2016). The growth is as a result of a reduction in taxesand the rapid growth in job opportunities that has also beensupported by stronger private consumption. Growth in jobopportunities in France has been brought by the influx of investorswho have been attracted by the reduction of taxes and interest rates.Current GDP of France is standing at 57%, and it is one of thecountries with the highest ratios in public spending ratios in theOrganization for Economic Co-operation and Development (OECD) membercountries, and this requires high taxes to finance it (OECD.Org2016). However, to lower the tax burden on the public, it isadvisable for the government to reduce public spending this can becomfortably done by focusing mostly on those areas that areconsidered to be of less priority. The reduction of publicexpenditure requires recurrent efforts to reduce the number ofsub-central governments. To add on that, it is important to note thatinflationary pressure in France is currently very low and the growthin the economy has been triggered by the increase in privateconsumption and the influx of investors who have been attracted bylow-interest rates and taxes (OECD.Org 2016).
CurrentArea of Concern for Business Owners in France
Inthe recent past, the French government has had several issues to dealwith, and some of these issues include terrorism, the loss of EuroCup Finals, and Strikes. All of these issues have been viewed bybandits as a threat to economic growth. For example, the issue ofterrorism led to the reduction of tourists who are the major sourceof foreign revenue in France. In 2015 alone, there were about 85million tourists that visited France, but this reduced sharply by 8%in the first three months of the year 2016 as compared to the sameperiod in 2015 (LawyersFrance,2016).This reduction of tourists was brought by the fear that was inflictedby terrorist activities in France. In the first half of the year2016, hotel bookings in Paris alone reduced by 7.5%. The reduction oftourists visiting France led to reduction foreign revenue by 40Billion Euros (Buerauof Economic and Business Affairs, 2016).
Analyzethe government and political impact that your business will have toadjust to.
Francehas continued to structure its legislations for foreign investment toalign with its aim of attracting more investors into the country.Moving the shoe company to France is coming at the time when the lawshave been structured to the favor, foreign investors. Although thecountry advocates for free investment, the Shoe Company will still berequired to seek approval from the Ministry of the Economy. This isfor the purpose of ensuring that the company is not investing in theindustries that are under restriction (LawyersFrance, 2016).
Francehas generally been considered a good country for investing in byforeign investors due to various reasons such as tax exemption insome regions for a given period of time, the falling cost of laborand investors incentives that are offered by the government. Ininvesting in France, the Shoe Company will only need to adhere tocommon rules such as engaging in corruption transactions andpromoting human rights in its operations (LawyersFrance, 2016).
OnMay 2016, the French government had a plan to re-introduce thecontroversial Article 49.3 of the French constitution with the aim ofintroducing new labor laws. The new labor laws that the government isplanning to introduce will assist in reducing unemployment rate whichis currently standing at over 10%. The introduction of the new laborlaw that would have been anticipated to create more employmentopportunities received (LawyersFrance,2016).
Explainhow you might mitigate any areas of risk
AlthoughFrance is ranked as the third country with most foreign investments,it is still important to establish measures to prevent the risk thatcomes with investing in the country. The first risk that the ShoeCompany may be faced with is from the burden of high public debt. Acountry with a high public debt makes business to risk being deniedfinancial support, in addition, the country may impose high taxes tohelp in paying its debt. In order to prevent this kind of risk, theShoe Company should focus on enhancing its market operations to winmore customers boost its return on investment (LawyersFrance, 2016).
Determineany foreign exchange issues that might occur and how you will beproactive in dealing with them
Theforeign exchange rate of a given country determines various sectorsin the economy which include traveling, purchasing power and thegeneral operations of the industry. Currently, France has a highamount of debt it means as the country seeks to repay the debt, itmay be forced to incorporate different measures which may havevarying impact on the industry. When the exchange rate rises, ShoeCompany should save its money in foreign currencies to safeguard itsvalue (Economic Online, 2016).
Summarizethe legal environment that you will have to be aware of when doingbusiness in your selected country
Withthe complex legal system, it is important for businesses to seekadvice from an attorney familiar with business matters. As asignatory to the Vienna Convention on International Contracts, thusbusinesses can apply international laws in their operations. InFrance, both local and foreign investors should uphold intellectualproperty which includes patents, trademarks, and models (Duranton &Kerr, 2015). The shoe company will have to ensure that manufacturesunique designs which meet the international standards. In addition,the Company should structure its code of operations as a measure thataligns its functions to the requirements of the law. There is a widerange of laws that relate to operations of businesses in the countryaligned to promote healthy competition, protect consumers that createa smooth business environment. In addition, businesses should befamiliar with strategies for dealing with various issues and conflictthat may face a business in its operation. The law provides differentprocedures that businesses can use such as filing a case or seekingfor alternative conflict resolution methods provided by the law(Duranton & Kerr, 2015).
Explainthe information needs of your business and how you plan to addressthem
Whena business moves its operations to a new location, it is important tohave a constant flow of information for better understanding aboutmarket and other areas of operations. For instance, the shoe companymay require understanding the customers in the region, thecompetitors and any other information related to the industry(Duranton & Kerr, 2015). In France, business information can beaccessed from various sources such as from business dailies,researchers and business based surveys targeting the market.Information on the country’s risk and impact on business can beaccessed from different sources in the country such as financialreports.
Manyorganizations are going international hence it is important for anyorganization to make sure it goes international to capture moremarkets. France is among the markets that most organizations are alsorunning to capture in their more markets. Therefore, for any businessto enter in the France market, it must be able to understand all thelogistics that occurs in political, social and economic sphere. Forthe shoe company to access this market, it will as well have tounderstand these aspects.
Buerauof Economic and Business Affairs. (2016). Franceand Monaco.http://www.state.gov/e/eb/rls/othr/ics/2016/eur/254363.htm
Duranton,G. & Kerr, W. R. (2015)."The Logic of Agglomeration."HarvardBusiness School Working Paper, No.16-037,
LawyersFrance.(2016). FrenchLegislation for Foreign Investment.Retrieved December 21, 2016, fromhttp://www.lawyersfrance.eu/french-legislation-for-foreign-investments
OECD.Org.(2016). France- Economic forecast summary (November 2016).Retrieved December 21, 2016, fromhttp://www.oecd.org/economy/france-economic-forecast-summary.htm
EconomicOnline. (2016). TheMarket for Foreign Exchange.Retrieved December 21, 2016, fromhttp://www.economicsonline.co.uk/Competitive_markets/The_foreign_exchange_market.html