Doing Business In Germany Management Essay
Germany is an attractive place for investors who want to expand their business globally. Federal Republic of Germany holds central position in Europe. When business practices are expanded over the globe, different people come closer to each other. Different people interact with each other from different cultures. It is important and a good practice to study about norms, meeting etiquettes, business protocol and negotiation style. These are some areas, if considered seriously can enhance the chances of a successful business transaction. If there is lack of cross culture understanding, it will lead that business to form stereotypes. Common terms that are used for Germany include humorless, distant, stubborn, obsessed with details and aggressive. (Deeprose, J 1997).
Germans do not like to take risk, they avoid ambiguity and uncertainty. This behavior has become obvious in their social and business transactions. (Deeprose, J 1997). Germans put emphasis greatly on careful planning, consensus, consideration and consultation. It means you have to be prepared with greater details, facts and statistics.
Business is affected by major uncontrollable and external factors, which is referred as
Macro environment of that country, macro environment shapes the threats and opportunities for business. These major and uncontrollable factors influence organizational decision making, its strategies and performance. Macro environment include Economic, political, social, cultural, demographic and technological environment etc.
Macro environment of Germany:
Economic environment of Germany based on principal that private sector, population, and government should together to bring safety and benefits for all. Private sector is supported with protection by law and rights. Creativity, smooth delivery of goods and services and innovation is supported by government. In Germany, foreign direct environment is welcomed, government policies are supportive, and it is easier and profitable to invest in Germany. (Weihrich, H 1999). There is very low level of economic risk.
Germany is a member country of European Union and is included in 11 original countries that use Euro as currency in 1999. There is very low level of political risk in Germany. Economic and budgeting policies are very centralized. Germany is a high tech country. It is easier for companies to implement latest and innovative technologies and can lead in their respective industries. (Weihrich, H 1999). Around 3% of GDP is spent on technological innovation and R&D. the country has very supportive culture for FDI, It has become favorite place of investors due to its risk free economic environment and friendly policies for FDI by government.
As in Germany, focus is on innovation and creativity, so the company which will offer innovative and latest products will have greater chances of success. In this case, successful market entry strategy will be to enter with innovating products that are featured with high quality and modern styling. German market is diverse and decentralized; there are greatly differing tastes and interests of one German state to another. Offering Customized, high quality products with lower prices and after sale services locally, will be critical success factors in Germany. Although Marginal tax rates are relatively high in Germany, writ-offs and allows help to move effective rates of tax competitive to international level.
Control and structure:
As the German market is decentralized and diverse, business structure will be aligned with it and there will be enough control mechanism to manage diversity in order to enhance the chances of success. Business strategies that will support innovation and creativity will be adopted.
Social and economic responsibility:
Germany is very much concerned about social and economic responsibilities of companies. It is trying to create a socially balanced State. Companies are encouraged to show socially responsible behavior. As the market is open and attractive for FDI, it requires foreign firms conduct operations in consistency with German economic structure and culture.
To implement the strategy for success full business operations in Careful and extensive planning will be conducted before implementing the strategy. All the required resources will be made available, technologically advanced infrastructure and culture supportive to innovation and creativity will be developed. Focus will be on R&D to provide customer, innovative and superior quality services are provided to customer.
Role of management:
Management will play a very critical role. They have to act as leaders not managers, support new and innovative ideas from employees, free flow of communication, and carry our effective control policies for effective implementation of planning. Along with acting as leaders, they would also be managing the resources available by allocating them properly and in a way that will ensure the maximum use of these resources.
Mode of Entry:
The mode of entry will be foreign direct investment. Because Germany is very suitable FDI, it has very friendly policies and government supports the foreign direct investment. The economic environment is risk free, suitable for investing; political risk factor is very low. Labor is available at very suitable wage rates. Moreover the labor is very skilled and competent. Germany also has stable political and legal environment. Macro and micro both environments are attractive one to invest in Germany.
Reward and motivation:
Employee efforts are recognized and rewarded. Rewards will increase the motivation level in employees, they will be more committed to work and bring innovation in their business activities. As knowledge sharing is difficult in German organizational culture,
(JÃƒÂ¼rgens, U., Krzywdzinski, M., & Teipen, C 2005) giving the employees freedom to share their ideas will be innovative strategy that will bring great results.
Reward programs will be designed after analyzing culture and practices in Germany. Positive feedback such as recognizing and appreciating efforts of employees openly, individually recognizing and announcing about employee efforts in case of teamwork will be effective and enhance the involvement of employees in their work. Employees can be awarded with monetary rewards as well in addition to recognition of their efforts.
Workers in Germany know what they are supposed to do as job descriptions are very fine. They are use to follow formal hierarchy of orders and management and like to be treated in formal way. Hence an Authoritative and professional leadership style will be appropriate here.
Going global is not an easy decision to undertake. It requires enough time, energy and resources to plan properly about global strategy and its implementation. You have to study about the cultural values of that county, consumer preferences and living standards, a very careful analysis of Micro and macro environment of country. A careful analysis enhances the chances of success of business. Germany is very attractive place for FDI with safe and stable micro and macro environment. There are some cultural differences that should be managed strategically.