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New business models for Europe

The Center for European Business & Affairs helps Swiss companies to gain a foothold in Europe. A good network is essential for this.

Impact No. 32 – March 2016

It’s been over a year since the Swiss National Bank discontinued the minimum exchange rate of 1.20 Swiss francs per euro, and the impact on Swiss exports is clearly evident. Last year, for example, orders in the machine, electrical engineering and metals industry nosedived across the branch by 14% and turnover dropped by 7%. Approximately one third of these companies slipped into the red in 2015 as a result, according to Swissmem, the branch association. For many companies, cost-cutting is the only way to survive. New business models for the European market are in great demand.

A differentiated picture of Europe

“Europe is our most important trading partner,” says Florian Keller, Head of the Center for European Business & Affairs (CEBA) at the ZHAW School of Management and Law. “A holistic understanding of the European market is a major competitive advantage for Swiss companies, since Europe offers a wide range of market opportunities, optimisation potential and global competitive advantages.” The CEBA was founded in April 2015 with the aim of drawing a differentiated picture of business and politics in Europe, and of developing new models. “Many companies are concentrating only on Germany and France, and in this way, they miss other market opportunities, such as Poland, Sweden and Great Britain,” says Keller. Before joining the ZHAW, Keller worked for the British government for four years advising companies in the European market. Using a fictitious example, he explains how holistic business models can function in Europe – without companies having to cut jobs in Switzerland.

In this example, the Swiss engineering company, Railnet, employs 24 people and provides services for railway installations in Switzerland and its surrounding countries. Since the end of the 1990s, the company has been particularly successful in France, and has contributed to major TGV rail projects of the SNCF, the French national railway company. Due to the strong Swiss franc, the company notices that it can compete less and less with other European providers in terms of price – even though the number of incoming orders is still rising. And on the domestic Swiss market, German providers are becoming a threat.

“We work closely with partner universities, government offices, industrial and technology parks, as well as Switzerland Global Enterprise.”

Florian Keller, Head of the Center for European Business & Affairs (CEBA)

In the market analysis, a Swedish high-speed rail project arouses the interest of the Railnet CEO. But here too, the company cannot keep up in terms of price. Together with the CEBA experts and Switzerland Global Enterprise, the CEO develops a new business model for the European market. With a local business partner in the branch, he founds a joint venture in Sweden, and in this way, he can establish direct contact with the Swedish project, as well as reduce his cost base substantially at the same time, for example by dividing the work between Olten in Switzerland and Göteborg in Sweden. This allows the company not only to win the project in Sweden, but also to land projects in France again.

“The company described is a representative example of how the CEBA can provide support with market analysis,” says Keller. “We work closely with partner universities, government offices, industrial and technology parks, as well as Switzerland Global Enterprise. In this network, entrepreneurs can develop, test and implement new business models with us.”

Optimal use of free trade agreements

Within the context of a CTI project which aims to strengthen Swiss export business, the CEBA examines how companies can make optimal use of free trade agreements. Today, many companies pay tariffs that are too high in certain markets, despite free trade agreements, and therefore lose competitive edge. In cooperation with the University of Zurich, the CEBA has developed guidelines which point out to companies cost reduction potential that has not been realised and proposes measures that improve management of the free trade agreements. Companies are still being sought for this project.

Author: Florian Wehrli