The most important “cons” could be that Spain (up to then a net receiver of funds from the European Union, due mostly to EU subsidies for regional development and infrastructures, and to the EU agricultural policies) might eventually become a net contributor to the EU. Also, some manufacturing plants might be moved (and indeed have been moved) to Eastern and Central Europe. And that the general level of “domestic” (e.g. intra-European) competition might increase.  Indeed, if Catalan or Spanish companies did absolutely nothing in terms of strategic responses in front of the then forthcoming enlargement, these “cons” would be real. Some authors estimated them at about 1% of GDP lost.

But the real challenge was to strategically exploit and benefit from the emerging opportunities derived from the European Enlargement that was indeed implemented on May 1st. 2004. To that effect, we concluded that Catalan companies should consider four strategic responses or “focal points”:

1.- Consider new E.U. member states as markets were to go and sell. 
2.- Consider the new E.U. member states as markets where to go and buy, where to source supplies of raw materials, parts, components, or even finished goods. 
3.- Consider the new E.U. member states as locations where to find suitable partners to develop alliances, in order to strategically proceed faster, with less risk and less investment.
4.- And finally, in a “damage control” exercise, identify in the new E.U. member countries the sources of potentially increased competition. These competitors could be either local companies, or subsidiaries of multinational companies recently implanted in Central and Eastern Europe.

By and large, as far as we know, many Western European companies are actively expanding their activities in Central and Eastern Europe. The most likely result will be a good and healthy economic growth for all involved.

Even though the circumstances may be quite different today, researchers might look at what happened in Spain and Portugal to examine future European expansion. Both Iberian Peninsula states joined the E.U. in January 1986. At that point in time, Spanish GDP per capita was about 75% of the average E.U. GDP per capita. Since then, the Spanish GDP per capita has climbed to around 85% of the average 15 member E.U. per capita GDP.

Most analysts in Europe expect that the per capita GDP in the recently added 10 new E.U. member states will also steadily increase in the immediate future. Even if slowly, a progressively improving economic situation in Central and Eastern Europe will be not only most welcome, but it will also contribute to moderate mobility. Not by any forced constraint or legal limitations, but because people from Central and Eastern Europe will positively prefer to stay in their own countries.

Before May 1st 2004, that is, before formal accession, nobody expected to witness any major migrations anyway. What we have seen so far seems to confirm that expectation.

Let’s not forget that Europe is a rich tapestry of nationalities, cultures, and languages, some of them quite difficult to learn, such as Hungarian, Finnish, Polish or Estonian. Europe is in many ways a more variegated territory than the U.S. We should not be surprised if geographical mobility is permanently much lower than in the more uniform U.S.  Moving your home is certainly not the only way to enrich yourself culturally. Quite on the contrary, even if working in their respective European home countries, European citizens have to learn and practice how to behave in a much more diverse business and cultural environment. Diversity is Europe’s strength, not mobility!!

Finally, although some may contend that the planned delays in the applications of a few of the agreements and regulations will cause “uncertainty, discontent and suffering," there is no uncertainty, as all the accession negotiations were finished well in advance of May 1st, 2004, including the set dates for delayed implementation and application of some specific E.U. regulations. These delays, in some cases have been agreed upon to protect and to facilitate the adaptation of the entering new member states. 
Some similar delays were applicable in the case of the accessions of Spain and Portugal, and nobody really complained.

All in all, so far, the accession of these 10 new member states has been done smoothly and without any major problems.  The year 2004 will be a year written in gold letters in the history of contemporary Europe. 

And beyond that, many Europeans are already looking forward to the forthcoming incorporation of Bulgaria, Romania in 2007. Then, maybe Croatia will join. And in a few weeks, next December, a specific decision may be taken regarding the future accession of Turkey.

For a more in-depth assessment of the business implications of European Expansion, please see the TECALUM-POLAND case. This case is about the dilemmas of a Spanish company active in the aluminum extruding business, regarding their strategic response in front of the then forthcoming EU enlargement, and more specifically regarding their penetration of the Polish market. Personal reading copies of the Tacalum Poland case, and its corresponding Teaching Note, both in English, are available, free of charge, to registered academics, from IESE Publishing, http://www.iesep.com