Economic & Monetary Union in Europe-A Golden Opportunity to Improve an Organisation

Article excerpt

On the Ist January 1999, Economic and Monetary Union (EMU) will take effect. On this date the euro will be introduced as the official single currency of those countries in Europe meeting the convergence criteria and wishing to join. From 1999, businesses in the UK will be able to file company accounts in euro, issue shares in euro, have bank accounts in euro and pay taxes in euro. By no later than the 1st July 2002 all currencies of those participating will cease to exist and the euro will be the sole unit of currency.

Benefits of Economic and Monetary Union

Although preparing for EMU provides companies with a major challenge, it will bring major benefits too, the key ones being:

* the elimination of exchange risk * transparency of prices across Europe This should help bring about the prospect of long term low inflation, monetary stability and low interest rates. In terms of making a UK company more competitive and successful in the vast European market place, these benefits should help them:

* lower business costs

* simplify administration

* predict market and investment requirements more accurately

The introduction of the euro will impact the way in which an organisation operates. It will affect many aspects of a business such as marketing strategy, products catalogues and pricing, information systems and relationships with suppliers and customers. During the transition period (1999 - 2002) pricing and accounting will have to cater for dual pricing (ie euro and national currencies), aimed at allowing organisations and the general public to get a 'feel' for the new currency.

Before a company can reap any of the benefits of EMU, or even participate in EMU, it is clear that it must first put its house in order.

Preparation for participation should be seen as a golden opportunity to improve the overall operation of an organisation by reviewing its business processes and improving/re-engineering them to fit the demands of EMU. This paper focuses on this aspect and outlines the steps to be taken to begin this preparation. NOTE: Even though the government's stated strategy is to prepare for EMU then decide whether to join or not early in the next parliament, UK companies should assume EMU will happen and begin this preparation now. In any event UK organisations who already have customers and suppliers across the rest of Europe would be wise to adopt their business processes to cater for EMU as soon as possible. Examples of companies already adapting to the euro are Marks and Spencer who will have the capability to accept euros in the UK and Daimler-Benz and Siemens who are using euros for all transactions with their suppliers.

Establishing a programme for EMU preparation

Accepting that EMU has potential wide ranging impact on processes and organisational support, the first task is to form a EMU steering committee comprising senior managers from those areas of the organisation likely to be affected by EMU (the Chairman should be a senior executive). The next step is to appoint a project manager who as well as being competent at project management MUST understand the background and implications of EMU. The project manager should report to the steering committee.

Once the scope of the EMU programme is agreed the project manager should co-opt parties with a vested interest onto the project, essential to ensure buy-in and cooperation with regards to accepting recommendations and change. At this early stage a communications programme should be incepted in order to keep all parties informed of the purpose of the project, who is involved and day to day progress. Without doubt, timely and effective communications will be a major contributor to the overall success of the project. Early communications will also capture the attention of anyone that has inadvertently been missed during the initial scoping stage of the project. …