The EU -- One Market or Many?

The EU resuscitated its drive to adopt an updated political structure this past weekend by agreeing to the terms of a proposed treaty that would control the common governance of its member countries.  By calling the document a "treaty" instead of a "constitution", the member governments hope to avoid the need to put the document up for a vote of their constituents which resulted in a messy rejection of the idea last time around.  Presumably governments can enter into treaties that govern their arrangements with their neighboring countries without a plebiscite, while a constitution, at least in a liberal democracy, requires the consent of the governed.

While this end run may allow the EU to act more effectively as a consolidated political entity once it is fully in place, the question remains for a company looking to Europe as a potential export market whether the EU operates as a single economy or as many diverse markets.  Depending on your particular product or service, it may be a little of both.

On the single market side, the EU certainly has

• a common currency
• an integrated transportation infrastructure
• a trans-national regulatory framework.

On the other side of the ledger, the EU has

• individual constituents that speak many different languages
• national regulatory requirements
• local cultural preferences.

The EU in which your company will do business may depend on the level of the market to which your goods or services appeal.  One helpful paradigm for understanding how this might play out is the Global/Glocal/Local framework proposed in a Harvard Business Review article in October 2006.  The idea here is that each country's market operates at several different levels, one being the "global"  level where consumers seek products and services that conform to global standards at global prices, a second being the "glocal" level at which consumers seek global products and services with some local features and at prices somewhat lower than the global price, and a third being the "local" level at which consumers seek products and services appealing to local tastes and preferences at prices determined by local competition.

The more your product plays in the global segment of the market, the more the EU will seem like a single market.  Conversely, the more local your product offering, the more the EU will be comprised of many smaller markets.  Understanding which of the EU's two market personalities you will encounter is critical to your company's success as it affects everything from choosing the locales in which you are likely to be successful, determining whether any product customization's necessary, the need to translate your literature, and the breadth and fluency of your sales force.  And I don't see these market dynamics being altered by a new governing document whether it's a treaty or a constitution.