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| Trend:
Centralizing European activities |
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| How does the emergence of the European Monetary
Union ("EMU") affect the set-up of a company's European
organization? Since the harmonization of European regulatory standards
and the convergence of prices has made the European market more transparent,
the comparative cost advantage of having subsidiary units in multiple
national markets has become less advantageous. Therefore, a growing
number of companies are choosing to centralize their operations with
significant cost savings to provide high quality and low cost financial,
administrative and support services to customers and line management.
Barriers that once inhibited pan-European approach to business have
come down and increased the benefits of setting up pan-European Call
Centers, Shared |
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Service Centers ("SSC"),
European Distribution Centers ("EDC"), and other types of
operations that have traditionally been handled on an in-country basis.
Multiple administrative support functions including accounting, finance,
insurance, human resources, information technology, real estate, billing
and other transactional operations can now be handled by an SSC. Companies
can also add activities, such as customer support (call center), logistics,
sales and marketing support to establish a European Operation Center.
These centralized European activities centers, have to be located
in a country whose infrastructure and Euro-readiness can enhance profits.
Recently, the Netherlands was voted by The Economist Intelligence
Unit as the best place to do business - evidence to the high number
of SSCs and European Operation Centers that have selected the Netherlands
as their primary site. These centers enable companies to lower costs
of operations by gaining economies of scale and deliver more expedient
service, while centralization of expertise and resources also allows
companies to focus on core business and new markets. |
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