France is one of the most important European countries, covering an area of roughly 211,200 square miles. France is home to about 66.5 million people and has a comparatively smaller population per unit area compared to other large European fraternity nations. France is predominantly urbanized with Paris as the most occupied capital relative to other cities such as Lille, Bordeaux, Lyon and Nice, among others. France also has other smaller cities linked to major cities by roads and airlines. France, among others, neighbors Belgium, Italy, Luxembourg and Germany. The accessibility of France through ports adds to the factors that aid the business success in France and the extensive international business in the country. France is divided into 13 major divisions that are further subdivided into communes. The country is led by a president elected by the citizens in a five – year tenure system. Each of the 13 divisions are guided by a council known as the Conseil Régional in French meaning Regional council and the various departments managed by the County council.
Owing to the large population in France and the fact that France borders with very powerful and developed countries, business is, therefore, a major income generator for the owners of the business enterprises and for the government. The population has to be sustained in terms of goods and services provided by the various companies. The French administration is responsible for granting business permits and is in charge of levy collection and policy implementation, therefore, plays a major role in ensuring the success or failure of the businesses set up in the French soil. The government policies together with other external factors dictate the major types of business enterprises mainly thriving in France. The French authorities allow broadly two types of businesses based on the structural set up. A lone trader may operate on alone if he or she wishes so or a business is owned by more than single individual. The sole proprietor in French is known as entreprise individuelle while the partnership in French is the société. The authorities also broadly restrict companies to either operate as the public companies or the profit-making companies. The formation companies also entail the evaluation of terms such as the extent in which the stockholders take responsibility on the business success or failure and either protect or expose the shareholders to exposing their personal assets as collateral if the corporation runs bankrupt.
Major Types of Business Enterprises in France
In France, the terms set conditions for the formation of a firm are the same whether the company setting up its operations is French or from overseas. The French Regulations allow the following major categories of firms in English and French:
Sole proprietorship (Entreprise individuelle) EIRL
A business Coroporation (Société anonyme) S.A.
Limited Liability Company(Société à responsabilité limitée) S.A.R.L. or E.U.R.L.
Simple Collective Stock company( Société par actions simplifiée). S.A.S. or S.A.S.U.
Partnership (Société en nom collectif) S.N.C.
Public Company(Société civile) S.C.
Sole Proprietorship with Limited Liabilities
The sole proprietorship is known as Entreprise individuelle in French and involves the most precise steps for the creation of such a simple business entity. The owner of the business is always liable for any arrears generated in the running of his or her business and in case of bankruptcy and debt, private assets are used to cover for the debts. The provision of the EIRL clause, that is the Entreprise individuelle à responsabilité limitée, adds the privilege that sole traders actually are predisposed to their commercial resources in case debt and bankruptcy situations emerge.
Private Limited Company Owned by an Individual (Entreprise Unipersonnelle à Responsabilité Limitée”, EURL)
An individual may decide to start a sole business or a business organization with at least a euro. The starting capital could be gathered from pooling funds, a variety of small funds from other sources to boost the entrepreneur’s capital. 20% are essentially raised in the first five years of operation. The firm is steered by a manager, who can be the proprietor or a different person hired to manage the business. The involvement of a manager necessitates the envelopment of the terms of relationship ,written and law binding to ensure the manager acts within the limits set by the firm. The manager, however, is expendable and has unlimited liabilities cover to ensure mismanagement does not kill the company (Lynch, 2006).
Annual auditing is necessary when the firm grows under some considerable proportions; say when the capital goes behold 1.55 million euros and hires at least 51 workers to efficiently run the firm.
Business Corporation (“Société Anonyme”, SA)
Corporations are large firms that deal with great business tasks. The firm can be formed immediately after raising half of the required minimum capital margin of 37,000 euros, and the company is required to clear the remaining half within its first five years of operation. The capital could be raised in terms of business shares in any terms of payment, either cash or cheque. The joint owners of the business legally agree on the appointment of an editor who monitors the running of the corporation. The corporation ownership is shared by at least 7 individuals at the start with the company affairs, run by a board of executives who vary in numbers, between the minimum of three and a maximum of 18 executives. The protection of the partners’ assets from the possibility of covering business risks is directly tied to the amount of shares in the corporation.
Simple Collective Stock company ( Société par actions simplifiée, SAS).
Simplified collective stock company refers to the big firms with investors willing to spend big. The company may be a merger between different companies or individuals working together .The companies are formed with at least a single euro with no maximum amount of capital. The company is governed by set terms in the articles of association by shareholders with unlimited liability terms. The executive management members are held responsible for any mismanagement that could arise.
France records the second best consumption market in the European fraternity over the recent years with quite a resilient economy and ranks the 6th overall globally behind the leader United States, China, Japan, Germany, and the United Kingdom. Agriculturally, France ranks best in terms of production in Europe equipped with a large number of industries and available skilled labor.
The technological empowerment and the innovative nature of the French steer their economy to the new heights. The front runner economic projects in France include the manufacture of wire devices, aerospace, development of the modern defense equipment, manufacture of cars and other transport machines, and construction of aircrafts among others. The Government controls the sensitive economic sectors such as the energy firms, transportation, and communication.
The French government welcomes foreign investment by allowing overseas companies to set up business projects in France through the reduced taxes and the availability of labor. The estimated growth the per capita income in euros from a recorded rise of in 33,469 in 2014 euros to 34,097 in 2015 shows the strength of the economy. France recorded an estimated 2194 billion euros Gross Domestic Product figure in 2015 (RSM, 2016).
Ways through Which the French Government Influences the Economy
The French government plays a huge role in the success of the French businesses and shapes the economy through the following ways:
One of the main strengths that promotes a business environment in France is the good transport network ranging from ports, road, and air transport connecting all the economic sectors in the French soil. Good transport ensures goods reach the targeted areas on time and also attracts overseas business.
Foreign Investment Policies
The government permits foreign investment by allowing companies from overseas to invest in the French soil thus improving the economy with the net income from abroad.
The government ensures that business environment is maintained by providing security through the French police which safeguards the income generating activities from theft.
Maintaining Trade Ties
France is a part of the European union and through the government the French are able to maintain close ties with other Powerful European nations in terms of trade and labor.
The development of the technological sector by the government through the control of the telecommunication sector ensures that the sector runs efficiently since the government has available funds from the public which play a huge role in the success of the businesses in France.
Non-Governmental Forces that Influence the French Economy and Business
The French population is approximately at 66.5 million, enough to provide the industries with the necessary labor force requirements for mass production, therefore enabling business.
The Nature of French People
Traditionally, the French were innovative. The French still come up with efficient production ideas on how to maximize on production and agriculture as well as introduce innovations for the market, therefore ensuring the resilience of the French economy (Michael,2003)
The support firms such as insurance companies that cover the French business firms enable business to continue by ensuring the confidence of investors and restoring businesses damaged by various incidences, such as fire and theft.
A growing economy has problems associated with progress. Overtime, the French economy has grown rapidly leading to the increased money flow in the economic sectors compared to the relatively lower rise in the production index. The situation has led to inflation as huge amounts of money purchased relatively lower quantity of goods than it was a few years ago.
France is a powerful and financially enabled country with a government that balances the public funds with the public needs. The key strengths of the country being the vast land for farming, good transport, and the available modern technology. France produces some of the necessary machinery for the mechanization of their production activities, and the large population provides for the domestic consumption and available labor for the home firms. All these factors keep the French economy with the rest of the top economies of the world which makes France a great country to invest in.
Michel, D.( 2003). Financing small businesses in France, EIB Papers, Volume:] 8 [Year:] 2003 [Issue:] 2 [Pages:] 93-119, [ISSN:] 0257-7755.
Lynch MBF,(2006):France and the International Economy, London &Newyork, Routledge pages 81-85.
RSM (2016). A Guide to Doing Business in France. Doing Business in France, Posted on January 2016, https://www.rsm.global/france/sites/default/files/media/news/dbi_2016_-_france.pdf. [Accessed Nov.3, 2017].