Company Profiles: Western Europe Essay ⋆ Business Essay Examples ⋆ EssayEmpire

Trading companies had operated in Europe since ancient times, and there is evidence of some of these from Roman times. Perhaps the largest “inter-country” private business operation of the mid third century b.c.e. was the Carthaginian colony on the east coast of Spain, where they extracted silver that was later used to finance the armies of Hannibal in the Second Punic War (218–201 b.c.e.). Prior to that, Phoenicians had been involved in trade in Cornwall in the west of England, where they bought tin. There is a vast amount of archaeological evidence showing extensive trade around the Roman Empire, with quantities of luxury goods and military materiel clearly made in one part of the empire being used in another part. In Rome itself, Marcus Licinius Crassus (115–53 b.c.e.) established a large business in real estate, silver mines, and trading in slaves.

In medieval times, businesses flourished in western Europe, usually within the framework of trade guilds that jealously guarded access to particular trades that kept up the level of quality, the official reason, but also maintained higher wages for members of the guilds. Most cities had a range of powerful guilds, which helped businessmen such as Richard Whittington (1354–1423) of the Mercers Company in London become very wealthy. Indeed, it was the Wool Guild in Florence that was able to finance the building of the dome for Florence Cathedral following the design of Filippo Brunelleschi (1377–1446).

By this time, the wool industry was well developed in England (after the Black Death of the 1340s)—it is still recognized in the “Wool Sack” in the British House of Lords—and in Flanders. Many of the guilds continue to the present day with the Worshipful Company of Mercers establishing schools in England, as have the Worshipful Company of Haberdashers and the Worshipful Company of Merchant Taylors, all from London. Mention should also be made of some of the vineyards, especially in southern France and in the Champagne region, which started producing wine at this time, a few of which continue to the present day. Most, however, date from the 18th and 19th centuries with Moët et Chandon dating from 1743, Veuve Clicquot from 1772, and Champagne Krug from 1843.

As the city and town guilds were building up their strength, the modern banking system emerged. The Knights Templar had a system whereby if a sum of money was left at one of their premises, it could be withdrawn from another if the correct paperwork were provided. This helped with the transfer of large amounts of money—the physical movement of valuables from one city to another was complicated and risky. It was the Lombards who became well known for their banking skills, and the Medici family in Florence under Cosimo de Medici (1389–1464) also established a substantial banking network.

Following from Vasco da Gama (c.1460–1524) and later Christopher Columbus (1451–1506), there was great interest in voyages of exploration, many of which generated massive profits from trade in spices and the like. It was the cost of voyages, as well as the risk in case the ship sank, that led a number of people to own ships, and the advent of shareholding. This allowed investors to spread their risks more widely. This also saw the emergence of the great chartered companies in many European countries, the major ones being the English companies, the Muscovy Company, the Levant Company, the Honorable East India Company (HEIC), and the Dutch East India Company (VOC). Many other countries also had these but few equaled the success of the HEIC and the VOC.

Gradually other companies were established on the same basis, and it was not long before various coffee houses in London, Paris, Lisbon, and elsewhere became central to exchanging news about trade. These in turn led to the establishment of informal stock markets. There were also instances of wild speculation with the emergence of the South Sea Company in London and the Mississippi Company in France in the early 18th century. Both tried to assume the government debt, and both resulted in a spectacular crash in stock prices ruining many people’s confidence in stocks for many years.

During this period, there was an increase in agricultural developments through the Agricultural Revolution. Trade between European countries saw countries develop greater specialization, and this was accentuated in recent times when refrigeration allowed for ease of movement of foods. Jersey and Guernsey cows became common in England, horned cattle in Spain, and also cattle bred in Switzerland, pigs bred in Denmark, and sheep in England, were raised on an industrial scale as milking machines, larger abattoirs, and much later, canning of meat resulted in the emergence of a number of agricultural companies. This was replicated in terms of olives from Spain and Italy and citrus fruit from southern Europe, and this later led to the development of apple cider from Kent in southeast England.

Industrialization

More cautious investing started by the middle of the 18th century, and it gradually meant that with the start of the Industrial Revolution in England, Scotland, Flanders, and elsewhere, companies were able to raise capital far more easily than before. This helped finance the establishment of factories, with inventors designing machines to make textiles and other manufactures on a much more extensive level than ever before. People like Richard Arkwright, Samuel Crompton, and the two men called John Kay all became well-known business figures in England. Gradually they and similar businesspeople in Europe started establishing companies which bore their names. How some of these businesses emerged can be seen through the career of John Cockerill (1790– 1840) whose father worked in Russia for Catherine the Great, and who then moved to France and later to the southern part of the Netherlands (later Belgium) where he was involved in making steam locomotives and established a company that was involved in heavy arms production up until its capture by the Germans in 1914; the company ran its blast furnaces until 2005.

During the Napoleonic Wars, Napoleon enforced the Continental System that led to the closing of European markets to the British. This allowed for the emergence of numbers of companies in Europe following the joint stock model, which then, in turn, led to the establishment of stock markets around Europe. Some banks emerged from the wars, with men like Samuel Bleichröder running a business exchanging money for the French, and his son Gerson von Bleichröder establishing a banking operation—the Bleichröder Bank—that helped finance German industrialization.

During the 19th century, there was a move toward more and more joint-stock companies in Britain, France, Belgium, Germany, the Netherlands, and elsewhere. The reunification of both Italy and then Germany transformed the political map of Europe, and the various conflicts in Europe and those overseas that involved Europeans led to the emergence of a substantial arms industry and the desire by governments to have a large heavy-industry capacity. With war looming in the early 20th century, several governments in western Europe, particularly those in Britain, France, and Germany, started subsidizing several of their industries, especially shipbuilding, as the three countries built up their merchant navies.

Many of the companies that operated in Britain in the late 19th and early 20th century were named after their founders, and large numbers of these are still household names: the department store Harrod’s, also auctioneers Christie’s and Sotheby’s. A few like Philip Morris had originally been named after their founder—Philip Morris died in 1873, at age 37, and the company ended up in the hands of a relative and then was bought by totally unrelated people who kept his name. By the late 19th and early 20th century, there were a large number of industrial companies that had the names of their founders: Benz after Karl Benz (1844–1929), Rolls Royce, after C. S. Rolls (1877–1910) and Henry Royce (1863–1933), and Renault after Louis Renault (1877–1944). Some other companies also named after founders were Michelin, founded in 1888, and named after Edouard Michelin (1859–1940) and André Michelin (1853–1931), the German company Krupp Steel run by the Krupp family, the Dutch company NV Philips taking its name from Gerard L. F. Philips (1858–1942), and Citroën founded in 1919, taking its name from André Citroën (1878–1935).

However, from the 20th century, far more companies were involved in naming their companies after the machines made, such as the British firms General Electric Company (GEC), Imperial Chemical Industries (ICI), and the British Oxygen Company (now the BOC Group), the Danish maker of toys Lego, and the German car manufacturer BMW (Bavarian Motor Works). With the exception of Lego, which has a shorter name, the other four companies now use the initials of their name, as do so many other companies including HSBC (formerly Hongkong Shanghai Banking Corporation, now with its headquarters in London), BNP Paribas (formerly two companies, Banque Nationale de Paris and Paribas).

Companies named after people tend to keep the names of the founders such as PSA Peugeot Citroën; there are exceptions such as in the Amsterdam-based KPMG that was formed in 1987 from a merger of Peat Marwick (named after William Barclay Peat and James Marwick) and Klynveld Main Goerdeler (named after Piet Klynveld and Reinhard Goerdeler), becoming KPMG Peat Marwick in 1991, and KPMG four years later. These companies (with the exception of KPMG, which is a partnership) were still reliant on stock markets to raise capital, and the link between them grew stronger as the companies were able to raise capital from these stock exchanges.

World Wars I and II

With World War I, there were major changes in the nature of companies in Europe. Because of the number of men in the war, many factories had to employ women, and working conditions in factories actually improved. After the war, large numbers of women remained in the workforce, so there were now families where both parents worked. The number of jobs open to women remained sharply restricted, but gradually with more and more women in employment, it was only a matter of time before there were numbers of women managers in Britain and Scandinavia, and also in France, the Netherlands, Belgium, and Germany. This coincided with more investment in stocks and shares, and a wider use of banks, with many of them losing money in the Great Inflation of 1923 in Germany and in the stock market crashes from 1929.

The Great Depression affected different countries to varying extents, with Germany, under Hitler from 1933, experiencing an economic boom and quickly regaining its reputation in production of expensive and high-quality manufactures. Germany kept its reputation for technology, Italy for style, and Britain for reliability. With the outbreak of World War II, many of the same needs as during World War I led to far more women in the workforce in many countries.

The Postwar Era

After World War II, the devastation of so much of western Europe saw many companies rebuild their factories, taking advantage of the new developments in industrial design. Some of these were soon able to compete with the established British and Swedish factories undamaged by war. This led to greater prosperity for Germany, and by the 1960s, the British companies were lagging behind. The midland late 1970s saw the decline of British Leyland and the British Steel Corporation. This coincided with the Japanese selling far more consumer durables and cars in Europe, eroding the traditional markets of so many companies in western Europe, and resulting in a decline in the manufacturing base in Britain, France, and also later Germany.

With restructuring in the 1980s, many of the companies in western Europe were far more competitive. The economy was far more focused on the services sector—the region attracted far more tourists than ever before, and financial and educational services remained in great demand around the world. A series of bank mergers resulted in the emergence of a number of much larger European financial institutions, many of which had diversified to take in insurance, loans, and other products. This coincided with a large-scale privatization of government corporations. This was spearheaded by Margaret Thatcher in Britain, and later followed in France, Germany, Belgium, Spain, Italy, and other countries. This dramatically transformed the nature of share ownership in western Europe, with many more small investors.

Soon afterward, many mutual companies, especially the building societies in England, were involved in demutualization, again adding to the number of share owners. Many of the companies privatized or demutualized have been very successful, but some of them, especially telecommunications businesses such as Deutsche Telekom, have seen the prices of their stock fall dramatically.

Since the fall of communism in 1989, some western European companies have spread into eastern Europe, taking advantage of the factories, the workforce, and also the markets. One of these, Thimm in Germany, rapidly emerged as one of the largest makers of cardboard boxes in central Europe. There have been companies that took advantage of the raw materials in eastern Europe, and others, such as the tobacco companies, have preferred the less-regulated business atmosphere of eastern Europe. Many other western European companies have also expanded into west Asia, and especially to east Asia and southeast Asia. In most cases this has been successful, but in one celebrated case, Baring’s Bank (which had been established in Britain in 1762) went spectacularly bankrupt over a “rogue trader” based in Singapore, resulting in the sale of the bank to the Netherlands bank ABN for £1 in 1995.

The European Union

In addition to many of the companies becoming larger and more powerful with the European Union (EU) and the economic power of Europe, there have also been many sectors of the economy that have been badly hit in recent years. Westland Aircraft was bought by the U.S. firm Sikorsky in 1986, causing a split in the British government that saw the resignation of Secretary of Defense Michael Heseltine. And although some airlines such as British Airways have flourished, and Air France continues to receive large French government subsidies, many other European airlines have closed down. Sabena, the former national airline of Belgium that had existed from 1923, went bankrupt in 2001. Swissair, the former national airline of Switzerland, founded in 1931, went bankrupt the following year. Neither was able to compete with the “cut price” airlines that appeared in Europe during the 1990s, nor airlines like Air Emirates and Singapore Airlines that have increased their patronage in recent years.

The main development in companies in western Europe over the last 20 years has not been in seeking markets outside Europe, but with the help of the heavy protection barriers provided by the European Economic Community (and from 1993, the EU), they have managed to get more and more sales within the EU, especially with the European Union expanding rapidly into central and eastern Europe. There has also been increased collaboration among European businesses, with the most high-profile example being Airbus, which began as a consortium of various aerospace manufacturers and since 2001 has been a standard joint-stock company.

The Schengen Agreement, initially established at a village in Luxembourg, and enhanced by the Treaty of Amsterdam in 1997, has considerably simplified the workings of the EU, with attempts to change it further in the Treaty of Lisbon in 2007. This has helped continue the standardization of company laws, as well as deal with the more politically high-profile problems of immigration and crime. The introduction of the euro, now used in most of western Europe, has also led to a much greater integration of the economies of the 15 members of the Eurozone: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, and Spain.

Bibliography:

Derek H. Aldcroft, The European Economy 1914–2000 (Routledge, 2001);
Ivan T. Berend, An Economic History of Twentieth-century Europe: Economic Regimes from Laissez-faire to Globalization (Cambridge University Press, 2006);
Heather Brewin, Major Companies of Europe: France (Gale-Cengage/Graham & Whiteside Ltd., 2007);
Heather Brewin and Allison Gallico, Major Companies of Europe: Benelux Region—Austria, Belgium, Liechtenstein, Luxembourg, Netherlands, Switzerland (Gale-Cengage/Graham & Whiteside Ltd., 2007);
Europa Yearbook 2008 (Europa Publications, 2007);
Allison Gallico, Theresa Rainbird, and Layla Romiti, Major Companies of Europe: Southern Europe—Cypress, Greece, Italy, Israel, Malta, Portugal, Spain, Turkey (Gale-Cengage/Graham & Whiteside Ltd., 2007);
Susan Hoernig, Major Companies of Europe: Germany (Gale-Cengage/Graham & Whiteside Ltd., 2007);
Luis Rubalcaba and Henk Kox, Business Services in European Economic Growth (Palgrave Macmillan, 2007);
Alice Teichova, Herbert Matis, and Jaroslav Pátek, eds., Economic Change and the National Question in Twentieth-century Europe (Cambridge University Press, 2000);
David J. Smith, Major Companies of Europe: Central Europe—Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia (GaleCengage/Graham & Whiteside Ltd., 2007);
Sue Ward, Major Companies of Europe: Scandinavia—Denmark, Finland, Iceland, Norway, Sweden (Gale-Cengage/Graham & Whiteside Ltd., 2007);
Katie Wilson, Major Companies of Europe—United Kingdom and Ireland (Gale-Cengage/Graham & Whiteside Ltd., 2007).

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