InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Instructor Manual
Chapter 8: European Integration
to accompany Mike Peng & Klaus Meyer: International Business, Cengage Learning
Prepared by Klaus Meyer
version February 2011
Introduction to the Topic
Learning Objectives
1. Explain the origins and the evolution of the EU
4. Outline the political institutions of the EU
5. Participate in debates over the future of the EU
General Teaching Suggestions
Businesses stepping outside their national borders within Europe are almost invariably
engaged in business in the European Union. Chapter 1 gave some data: even for the UK,
more than half of its exports are to other EU countries. Therefore, this chapter is central for a
International Business course in a European context.
We are primarily interested in how the development of the EU shapes businesses. Hence, our
main focus is on the institutions created by the EU that set the rules for businesses. In other
words section 3 is the key to this chapter.
The chapter has a lot of factual information, and very little in theory. Students may thus
welcome the change after a strong theory-focus in the preceding chapters 5 to 7.
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
The discrepancy between the opportunities open to today’s 20-somethings and what their
parents faced should suffice to make everyone realize the importance of the EU.
Opening Case Discussion Guide
For this opening case, I have asked an executive (who preferred to remain anonymous) to
record his activities on a typical working day. The words used in the opening case are largely
his.
You can initiate a discussion by asking, how is doing business in Poland different than doing
business in Germany? What barriers does Marcus have to overcome to be able to do business
in Poland? (He didn’t think it necessary to mention that his native tongue is German, so
when negotiating in English he too is using a foreign language). Then, you should ask, how is
today’s business between Germany and Poland different than ten years ago – before Poland
joined the EU? Or twenty-five years ago, when Poland still was under communism?
Chapter Outline, Section by Section
Section 1: Overcoming Divisions
Key Ideas
This section provides a condensed historical introduction to the EU and its predecessor
organizations. There are a lot of terms and concepts here that need to be put in their
appropriate historical context. Table 8.1 provides the most condensed overview that I could
come up with.
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
your students! Table 8.2 and the two maps (Figure 8.2 and 8.3) provide you with the tools to
create ad hoc quizzes.
Key Concepts
European Union
The political and economic organization of 27 countries in Europe
Customs union
One step beyond a free trade area, a customs union imposes common external policies on non-
participating countries
Common market
Combining everything that a customs union has, a common market permits free movement of goods
and people
Council of Europe
A loose association in which essentially all European countries are member
European Convention on Human Rights
A charter defining human rights in Europe
Schuman plan
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
A plan in the 1950s that outlined the path for European Integration
Copenhagen Criteria
Criteria the new members have to fulfil to be admitted as members of the EU
European Parliament
The directly elected representation of European citizens
Maastricht Treaty
A major treaty deepening integration in Europe
European Constitution
An ambitious project to create a new legal foundation for the EU, which failed
Section 2: The Other Europe: Transition and Accession
Key Ideas
Eastern Europe had a history quite distinct from the West. Yet, today’s students are likely to
be born around or after 1990 and thus have no own memory of the authoritarian regimes and
the central plans that governed these economies. Thus, this section provides a very brief
introduction to the transition that these countries had to go through, and their accession to the
EU.
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Key Concepts
Central and Eastern Europe (CEE)
The common name used for the countries East of the former Iron Curtain
Liberalization
The removal of regulatory restrictions on business
Stabilization
Policies to combat macroeconomic imbalances
Section 3: The EU as Institutional Framework for Business
Key Ideas
This section introduces key institutional arrangements that are relevant for business. The
main focus is on the arrangement created with the common market programme of 1992, and
on the euro.
Key Concepts
FourfreedomsoftheEUsinglemarket
Freedomofmovementofpeople,goods,serviceandcapital
Commonagriculturalpolicy(CAP)
TheEU’spolicyfortheagriculturalsector
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Subsidiarity
TheheEUtakesactiononlyifitismoreeffectivethanactionstakenatlowerlevels
SchengenAgreement
Theagreementthatlaidthebasisforpassport‐freetravel
ErasmusProgramme
AnEUprogrammeencouragingstudentmobilityinEurope
BolognaProcess
ApoliticalprocessaimedatharmonizingEuropeanhighereducation
Eurozone
Thecountriesthathaveadoptedtheeuroatheircurrency
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Section 4: The Political System of the EU
Key Ideas
Key Concepts
EuropeanCouncil
TheassemblyofheadsofgovernmentssettingoverallpolicydirectionsfortheEU
PresidentoftheEuropeanCouncil
ThepersonchairingthemeetingsoftheEuropeanCouncil
DirectorateGeneral(DG)
Adepartmentofthecommission,similartoaministryofanationalgovernment
PresidentoftheCommission
TheheadoftheEU’sexecutive,similartoanationalprimeminister
MembersoftheEuropeanParliament(MEPs)
ParliamentariansdirectlyelectedbythecitizensoftheEU
Section 5: Debates and Extensions
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Key Ideas
The first debate concerns the enlargement process. While 2004 saw a major increase in the
size of the EU, but there are still countries knocking at the door of the EU, notably Turkey.
Section 6: Implications for Practice
Key Ideas
The implications section stresses the need for managers to stay up to date and engage with
developments in the EU, and actively participate in form of lobbying if appropriate – thus
linking to the closing case.
Review Questions
Review questions are provided to students on the website accompanying the book. They
directly ask to summarize the material provided in the text. Instructors may also use the
questions to structure their lectures or review sessions.
Review Questions
(as provided to students on the website)
Material in the Book
1. What are the five types of regional integration?
2. What was the main achievement of the Council of
Europe?
Page 231, esp. Figure 8.1
Page 231
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
6. What were the main economic challenges of Central
and Eastern Europe in the early 1990s?
9. Why is the single market for services more difficult
to implement than the single market for goods?
10. How does the EU facilitate student mobility?
11. Why has it been so difficult to implement passport-
free travel through the Schengen agreement?
12. What are the advantages and disadvantages for a
country to join the euro-zone?
Page 236-39, incl In Focus 8.2
Page 240-41
Page 242, incl In Focus 8.3
Page 242-43 incl Fig 8.2
(map)
Page 244-46
Critical Discussion Questions
At the end the chapter, we provide discussion questions that aim to stimulate students
thinking beyond memorizing the material learned in the chapter. They are designed to be
used at a basis for in-class discussions, group work, or individual assignments. Below,
provide some indicative answers of issues that may be raised in response to these questions.
Discussion Questions
(as provided in the book)
Indicative Responses
1. When should the EU issue regulation
that is binding for all businesses in all
countries, and when should it instead
leave regulation to the nation states?
1. This question builds on the single
market discussion (p. 239-40). It is
important that students build their
discussion on an understanding if the
3. Given the importance of the European
Parliament in shaping the institutional
framework of the EU, why is voter
of EU political institutions (p. 249-50),
which should be reflected in students
answers, though they will also need to
Closing Case
The closing case provides further opportunities to apply ideas and concepts learned in this
chapter in a real world setting. The Closing Case for this Chapter is “The Eco-Design
Directive: Nokia goes to Brussels” and focuses on “lobbying activities of the mobile phone
industry in the process of new EU regulation being developed.
This case draws heavily on the research by P. Kautto of the Finnish Environment Institute,
whose papers provide useful complementary reading for instructors wishing to dig deeper in
the material. Below are some indicative responses to the case discussion questions.
Case Discussion Questions
(as provided in the book)
Indicative Responses
1. How can companies get into the
discussions on new legislation at an early
stage when the major direction is likely to
be decided?
1. The case outlines four alternative
routes – in addition to regularly
reading newspapers.
2. Several lines of argument are
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
products, what measures should you be
taking?
Answers to the question thus have
to address organizational processes
needed to incorporate those new
regulations internally.
Further Learning Activities
In addition to the cases and discussion questions provided in the book, instructors may want
to use any of the following activities to further engage students with the material.
Errors and Corrections
We apologize profoundly for the errors in the two maps, where many islands not belonging to
the mainland of a country are left grey. There is an interesting story about offshore
outsourcing of map-making behind this, which may make an entry in future editions of this
text.
Further Readings
At the end the chapter, suggested further readings are provided. The primary aim is to
provide students a starting point for further work, for example when preparing a class
assignment or dissertation. These references also are recommended for instructors not
familiar with the topic and wishing to ‘get ahead of the students’ before lecturing on a topic.
D. Dinan, 2004, Europe Recast: A History of European Union. Palgrave-Macmillan – A detailed historical
account of the EU.
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
G. Suder, 2008, Business in Europe, Los Angeles: Sage – A textbook covering the institutional context of the
EU and business practice in the EU.