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Introduction

The decision to expand operations of Acme, a U.S Multinational Enterprise into Europe presents a magnitude of opportunities amid other significant risk factors. In respect to this, the viable candidates taken into consideration include Denmark, which a European Union member and Ukraine, which is a non European member, even though considered a potential candidate.

DENMARK

Legal Framework/Maturity

The legal system of Denmark is based on the civil law system, composed of judicial and legislative acts and accepts compulsory jurisdiction under the ICJ although with some reservations (Central Intelligence Agency, 2009). The legal system ensures smooth transition of business activities especially in solving arising problems with trade activities.

Market Size and Economy

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The market share in terms of industries is as follows: agricultural sector by 1.4%, industrial sector by 25.9% and service sector by 72.7% (Central Intelligence Agency, 2009). The main import commodities are "machinery and equipment, raw materials and semi-manufactures for industry, chemicals, grain and foodstuffs and consumer goods" (Central Intelligence Agency, 2009). Denmark was significantly affected by the global financial crisis. "The slowing global economy cut growth to 0.3% in 2008" (Central Intelligence Agency, 2009). This has a negative impact of sales and profits potential in most industries.

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Gross Domestic Product

The project Gross Domestic Product as from 2006 to 2008 indicates an incremental trend. For instance, in 2008 the GDP was $204.9 billion, in 2007 the GDP was 206.2 billion, and 2008 the GDP was projected at $204.9 billion (Central Intelligence Agency, 2009). The GDP per capita was projected at $37,200 in 2006, $37,700 in 2007, and $37,400 in 2008 (Central Intelligence Agency, 2009). Denmark also has a high GDP per capita. "Because of high GDP per capita, welfare benefits, a low Gini index, and political stability, the Danish living standards are among the highest in the world" (Central Intelligence Agency, 2009)

Taxation

Taxation in Denmark in significantly high. Due to the progressively high taxation imposed on income implies that the net rate of return from income is among the lowest in Europe (Organization for Economic Co-operation and Development, 2010). In fact, the indirect wage costs in form of social security contributions are extremely low going by the international standard while the rate of direct taxation on wage income remains high (Organization for Economic Co-operation and Development, 2010)

Culture and Language

Denmark's culture is strongly determined by regional traditions cased on urban, rural and island communities with major distinctions seen with regard to local language, food choice and historical attachment (Advameg Inc, 2011). Danish language features varying geographic, individual and social dialects while secondary languages include English, French, German, Russian and Spanish (Advameg Inc, 2011)

Currency

The fact that Demark is a key member of the EU, the element of accession rates of the individual currencies into a common currency expressed in form of the Euro presents significant challenges. The formation of the European Monetary Union (EMU) implied that member states had to join the Euro. However, of the fifteen original European Union members Denmark, United Kingdom and Sweden decided not to abide by the EMU regulations (Melicher & Norton, 2010).

Trade Policies

Denmark has initiated important trade policies to drive foreign direct investment opportunities. As a result, the economic benefits of having an open market can be seen being a small country surrounded by sea (Organization for Economic Co-operation and Development, 2000). Trading partners in Denmark suggest that the market principles are intertwined in the trade policies, while regulation is minimal (Organization for Economic Co-operation and Development).

Human Resources Issues

Denmark has initiated strategic mechanisms to regulate its labor force. The high marginal taxation rates have an element of discouraging immigration of high skilled workers (Organization for Economic Co-operation and Development, 2010).

UKRAINE

Legal Framework/Maturity

Ukraine has an elaborate legal framework that was recently structured to accommodate changes in governance. The judicial arm consists of a supreme court and a constitutional court (Central Intelligence Agency, 2009). However, the legal system has an element of incompetency in addressing arising trade problems.

Market Size and Economy

The market environment in Ukraine is not well fragmented like in other liberal markets. Ukraine depends on Russia for its energy (virtually three quarter of its natural gas and oil needs) and poor structural reforms have made its economy to become vulnerable to external shocks (Central Intelligence Agency, 2009). The global financial crisis greatly affected its key industries driving the economy. The drop in steel prices during the global financial crisis led to increased foreign borrowing consequently leading to a contracting economy in 2009 (Central Intelligence Agency, 2009). However, looming political turmoil in Ukraine couples with deteriorating external conditions significantly hamper Ukraine's efforts at economic recovery (Central Intelligence Agency, 2009).

Gross Domestic Product

The Gross Domestic Product in terms the purchasing power parity has been incremental from 2006 to 2008. This was reflected as $306.7 billion in 2006, $330 billion in 2007, and &337 billion in 2008 (Central Intelligence Agency, 2009). The Gross Domestic Product in terms of real growth rate was 7.3% in 2006 and 7.6% in 2007 (Central Intelligence Agency, 2009). The Gross Domestic Product per industry is as follows: 58.9% in services, 31.7% in industrial establishments and 9.3% in agricultural industry (Central Intelligence Industry, 2009). The Gross Domestic Product per capita growth was at $6,600 in 2006, $7,100 in 2007 and $6,900 in 2008 (Central Intelligence Agency, 2009).

Taxation

The Ukraine Government eliminated many tax and custom privileges through the passing of its March 2005 budget law consequently initiating economic activity into its shadow economy but there still need for reforms (Central Intelligence Agency, 2009). However, the taxation regime still requires a lot of reforms to enable free trade.

Culture and Language

Ukraine's culture reflects significant composition in terms of its demographic factors. Majority of the members (made of 72.7%) are Ukrainians, 22.1% Russians and other minority groups (Advameg, 2011). The last statistics carried out indicate that 87% of the population speak Ukrainian language, 12 % are native Russians, while there is a significant trend of assimilation leading to the inclusion of Germans, Greeks and Poles (Advameg Inc, 2011)

Currency

According to the Oxford Business Group (2008) the Ukrainian currency has been pegged to the US dollar implying that the Ukrainian currency, the hrynya, cannot operate in a free-floating exchange rate, as a result it cannot adjust its interests rates to implement control on the supply of money. As a result, major companies cannot perform effectively in the stock markets.

Trade Policies

Ukraine has in initiated numerous policy formulation efforts aimed at facilitating critical trade reforms. Though the World Trade Organization accession, Ukraine's average tariff was projected at 5% for industrial goods and 11% agricultural production (Emerson & Centre for European Policy Studies, 2006). In 2004 Ukraine enabled a market offer to bund rules for market access which include: no limitation for cross border supply, abroad consumption and commercial presence for more service subsectors (Emerson & Centre for European Policy Studies, 2006).

Human Resources Issues

The labor market of Ukraine offers significant human resource potential due to the high unemployment rates. The country unemployment rate stands at 3% for officially registered numbers while a large number has not been registered (Central Intelligence Agency, 2009).

Recommendation

The data presented gives a good picture of the different situations existing in the two markets. This enables effective decision to be made based on an estimate of the projected performance variables. Hence, using the data variables it is possible to weight the positive elements presented from each case against the negative elements. This needs to focus on the qualities of best practice and positive future prospects.

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