On May 7, 2017 France elected 39-year old centrist Emmanuel Macron defeating Marine Le Pen of France´s National Front (FN).
This former finance minister and ex investment banker ran his campaigns on a set of Pro-EU policies that include wielding France´s position within the EU bloc.
He is a pro-business reformist. In March, he showed in his manifesto that one of his goals is to entice British businesses and banks to relocate to Paris. He promised a substantial reduction in corporation tax to 25 percent from its current 33.3 percent. He wants the 35-hour legal work to remain but wants to let companies negotiate real work hours.
Over the last couple of weeks leading up to the election, he has mentioned repeatedly that he will apply sanctions against countries that do not respect social and environmental clauses of trade agreements of the EU; that he will overhaul the retirement system into one beneficial scheme that will benefit both public and private sector; and that he will increase France´s security investments.
The Marriage of Business and Politics
So why do businesses have to concern themselves with politics?
Every international business wants a stable government that is able to maintain itself in power and have sound and predictable political policies which are not subject to radical and sudden changes. The most important consideration for many multinational or international businesses are the political and legal forces in the country in which they conduct business.
Why is this the case?
This is simply because a government that is unstable may choose to adopt radical changes such as seizing of private properties, suspension of business operations, or constant protesting or striking of the workforce. All these are big no-no’s for many businesses.
Businesses often do not care too much about who the new head of state is, what is important is that both economic and political policies remain and that the new changes put forward by the new administration do not severely impact or interfere with international business operations.
Macron´s Election and Businesses
Now after having mentioned the kind of policies that are most likely to be adopted by the new French President, many businesses can breathe a sigh of relief.
President Macron´s pro-business stance obviously is beneficial to many international firms wanting to conduct business in or with France and even within the EU. The same is true for those businesses with the ambition of international expansion.
Every single factor that is important for a business´ expansion in a new country such as France is present – promise of increased security investments, continued infrastructure spending, corporate tax cuts, access to the single market, and employer flexibility on issues as such as setting of work hours.
Now this is also the time to highlight the different aspects that needs to be looked at for many businesses wanting to expand internationally or for those that want to continue to succeed internationally. While there are a million things to consider when thinking about international expansion or improving international business operations, let us focus on financial readiness of the businesses to go global.
Finance Role in Strategy Making
It is no state secret that when running an international business or when a local business has ambitions of international expansion, the financial health of the company is perhaps the most important consideration.
This is why over the last decades there has been mounting pressure on finance departments through the finance managers and CFOs to improve the way they operate in order to aid growth.
When running an international business or planning an expansion, a business always needs to look at availability of financial resources and staff because trying to juggle overseas operations while maintaining good domestic performance is very difficult plus add international strategy formulation into that equation.
Why is this burden shouldered by finance departments?
As mentioned previously, the financial and structural stability must be in place in order to efficiently run or expand businesses.
Questions such as “how much available resources can be allocated for the expansion”; “what is the direct cost margin” or “what is the effect of 3% mandatory increase on employee salary to the company´s cash flow” can only be answered by the finance department.
Now while these may sound rather simplistic, the idea is that these questions are incredibly hard for finance departments to answer if they do not have an effective and streamlined report and budget process in place. If their numbers provide no clear insight into things that truly matter for the business, those numbers really do not serve any purpose at all.
A multinational business that still relies on traditional spreadsheets in its day to day accounting will have a hard time answering pressing questions that allows the business to maintain its competitive advantages. It is also less adaptable if it cannot react immediately to external stressors.
So to end, now with President Macron´s election, a golden door of opportunities has opened for many businesses that have been wanting to expand further into France or Europe.
In order to do this, part of the company´s due diligence is not just about researching about local competition or demands of local customers but also staying on top of the company´s financial health. It is important to not have a clouded view of the real financial status of the company in order to truly have a sustainable growth.
In order to sustain international growth or to attain that goal of international expansion, companies should first look at the finance department´s operations and how effective it is – whether or not the company chooses to invest in a business intelligence solution or a corporate performance management solution, what is most important is that the business has all the insights it needs and it can answer pressing questions when it matters most.
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