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In the present day, the trade relationship between Europe and other countries is constantly improving, however, there are cultural, political, governmental, and economic challenges to entering the European market. The main difficulties are determined by the differences in regulations that create particular standards in multiple spheres. In European Union (EU), “regulations contain mandatory language and are directly and uniformly applicable to all Member States when that regulation comes into effect” (International Trade Administration, 2018, para. 2). Thus, European legislation forces other countries to adapt to its requirements. Economic and financial issues traditionally include the difference in exchange rates, the absence of checks for payment, different banking structures, difficulties with opening non-resident accounts, and the cost-inefficiency of cross-border movements to the EU and the United Kingdom. Finally, the main cultural issues may be a language barrier and differences in interpersonal communication between business partners.
International business issues connected with legal requirements refer to the rule of The EU Air Safety List (ASL). It contains international safety standards that should be followed by both European and non-European carriers and suppliers. If they do not meet these standards, aircraft cannot operate in the EU. International business issues related to operational difficulties are closely connected with the competitive environment as a lot of aircraft dealers are present in the European market.
If the exchange rate changes from 1,45/1 Euro to 1,30/1 Euro, it will negatively impact the general profitability of S&S Air. The company will receive less amount of money after aircraft will be sold in Europe if prices in the European market remain the same. At the same time, the company will have the same production costs. Thus, it will spend more than 80% of sales on production.
Reference
International Trade Administration. (2018). Market Challenges.
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