Romania entering the European Union (EU)

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Romania entering the European Union (EU)

Category: Case Study

Subcategory: Logistics

Level: Masters

Pages: 2

Words: 550

Question 1.
Romania entering the European Union (EU) offers opportunities for Renault Company. This is because the EU is a trading block and would allow the company to import parts from other EU countries at cheaper prices by taking advantage of the free trade agreement that is in place for the member countries. In essence, joining the EU implies that Romania has eliminated the trading barriers with other EU countries and is in a position to promote free trade. In addition, it allows the company to use the parts produced in its Romanian facilities as local content without paying any import duty on them even when they are transported to Renault production facilities in other EU countries. This is a particular concern with regards to the imports from Africa and Morocco since they have to pay high import duties that cut into their earnings and profitability. Besides that, it increases the investment opportunities for the Romanian production facilities. This is because they are brought to the attention of the greater EU investors, can now be listed in their stock exchange, and open up credit facilities at favorable conditions. Also, it allows the company to protect its intellectual property rights since the EU makes it a point to put the interests of its member states above all other interests. Additionally, Romania entering the EU opens access for Romania produced goods to a greater market size since the EU presents a significant export market. The increased competition from the other companies in the region can be used as an opportunity for increased productivity and efficiency. Finally, this would allow the company to exercise greater economic leverage in the EU by influencing policies as an employer in more than one country within the region. Therefore, Romania entering the EU offers new opportunities for the company.

Question 2.
Renault’s alliance with Nissan offers Renault the possibility of using Nissan’s parts in its products. However, that would only be possible after considering some factors. Firstly, it should only be considered if it is cost-effective to use Nissan parts without having a negative effect on design and performance. In this case, it would be imprudent for Renault to develop a new part and set up its production facilities when it could easily get the same quality parts from Nissan. Secondly, the market response must be considered on the understanding that using Nissan parts on Renault branded cars could be considered as dishonest by the market. In such cases, the market would feel that they were being defrauded by purchasing a Nissan under a Renault brand name. Thirdly, the convenience in the proximity of the production facilities and associated transport logistics and costs should be considered. The parts that are produced in facilities that are in close proximity should be considered for a redesign since the production and transportation problems would present very little problems. Fourthly, the compatibility of the parts should be considered with those that are compatible with being redesigned. Finally, the quality differences should be considered with only parts of either higher or equal quality being deliberated for redesign and use in Renault. This is because using inferior quality parts would compromise the quality of Renault’s products, making them perform in a less than optimal way. Addressing the mentioned factors would facilitate the decision-making on whether Nissan parts should be redesigned for use in Renault products.