Table of Contents
Business expansion is one of the most important aspects associated with the organizations of modern era, as competition across business segment is growing at a fast pace. According to the analysis of Rubinfeld and Hemingway (2009), the ideology of business expansion can be defined as a set of business strategy, which is important for the organization to achieve business growth and at the same time for increasing the level of value added services for the consumers. As an organization, there are some key advantages that the organization is working on for expanding its business operation and those are: opportunity for the organization to recruit new people from the country, where it is looking to expand its business (which gives opportunity to gain more skillful employee base). Any organization with the help of business expansion can increases its consumer base in the new market segment; exploring financial opportunities in the new countries to expand business and most importantly developing better business opportunities to increase profitability of the business organization (Rubinfeld and Hemingway, 2009).
Objective of the Paper
The overall report will discuss about how Doggie and Cattie Corporation’s senior marketing manager can analyze the overall scenario of target country, which is Germany, where the organization is planning to expand its business. The comprehensive report gives a clear picture about overall understanding of the nation, which includes a brief history, political, economic and socio-cultural status.
Historical Overview of the Nation
Germany considered as one of the leading nations of the globe. The nation is located in North-Central part of Europe. It is one of the largest nations of Europe and provides a wide variety of landscape that attracts people not only within the nation as well as from other parts of the globe (Encyclopedia Britannica, 2017).
The name Germany as a nation came into existence in 18th century, only when Prussian Prime Minister Otto von Bismarck brought dozens of German-speaking empires, principalities, some of the free metropolises and duchies together to develop German Empire in 1871. This Second Reich very rapidly had become one of the powerful nations of the European region that acquired various colonies in different parts of Africa, Asia, and in the pacific regions (Encyclopedia Britannica, 2017). However, this empire did not las for long, as after the First World War, the nation started to face various challenges such as economic depression, a large scale of unemployment, and increasing political and civil war. In 1945, Germany was divided into two separate nations and those are Federal Republic of Germany (West Germany) and the German Democratic Republic (East Germany) and these two nations were separated by a long boundary for a long period of 40 years. This wall is popularly known as the Berlin wall and Berlin was considered as the flagship point between the USA and Soviet Union during the period of Cold War, although the city lost its majority of significance till the year of 1989-1990., The fall of Communist Government in the year 1989 is considered as one of the most significant moments in global history, and it helped in the formation of the Germany of modern era (Encyclopedia Britannica, 2017).
Political System and Current status of the Nation
Within any nation, one of the key areas, which is necessary to understand, is the overall political scenario. Political stability and well-organised political structure of any nation are helpful not only for itself to represent a better picture, but at the same time it is beneficial to ensure a proper economic growth as well. For any organization, when it is looking to expand its business operation, the top management needs to understand overall political scenario of the nation, which is significant to analyze the possibility that the organization is having to expand its business in that very nation. According to the analysis of Haynes (2009), the reason behind the existence of the political systems is same across the globe, but structure of the political system might be different in different nations. A well-organised political system often provides an opportunity for the common people and the political leaders to work together, and develop proper law structure that are helpful to manage the overall scenario of the nation. Also, it is helpful for the society in terms of ensuring economic and educational development, creating better job opportunities, attracting foreign investors so that the overall nation improves holistically.
Various authors in their analysis have discussed about the political scenario of Germany and pointed out some key points, which are necessary to understand while assessing the overall political scenario in the nation. One of the key factor associated with the politics of Germany is its republic nature (Kastl, 2017). The nation is known as Federal Republic of Germany. Till First World War, it was ruled by Prussian royal family (Luyken, 2017). At present, the country is ruled by President and the present president of the country is Frank-Walter Steinmeier. There is a policy or rule, which suggests that the President must be above party politics but that concept is not being followed, as most of the times the President has been selected from the largest political party of the nation. The present President is from the party of Social Democrat (SDP).The political system is federal in nature as the country is made up of 16 states (Luyken, 2017). Every state has a separate leader and own parliament and every single state leader is popularly known as Minister-President. Among all the areas, city-state of Berlin, Berman and Hamburg have Mayor, who is the main authority to rule the states. The ideology of Federal system existing in the country is mainly due to the fact that as a nation, Germany grew out of highly decentralized Holy Roman Empire, where ideology of small council was predominant nature of ruling. There is a clearly written constitution known as das Grundgesetz, which makes court of law the most powerful arm of the state (Kastl, 2017; Luyken, 2017).
Socio-Culture nature of the Nation
The key point that an organization often considers before expanding its business is the socio-cultural scenario of the country. The ideology of the socio cultural scenario is mainly associated with the local culture of the country, buying habit of its people, their choices, etc. The local culture of the people was mostly influenced by Holy Roman Empire. Throughout the Western world, this nation has played a foremost role in the expansion of Christianity religion (Kwintessential, nd). As a nation, one of the most significant aspects associated with German people is their organised nature. Their social as well as professional life is very much organised. Both these parts of the life are very much separated. It is, therefore, necessary to understand the fact that people or organizations visiting this nation in purpose of business must maintain everything very much professionally to meet the socio cultural structure of the nation itself (Kwintessential, nd).
Economic System of the Nation and Current Status
Despite there is a continuous change in the economic scenario of the European Union, as a country, Germany has been showing a stable economic scenario over a long period of time. This stability in the economic condition often attracts number of foreign organizations to target German market as one of the major ones to expand their business. In the country, there is strong business and investment freedom, which is allowing the foreign organization to target the market. Foreign companies, which are planning to do business in the country, are supported by the fact that there is a great opportunity to achieve long-term competitiveness and entrepreneurial growth with the help of rules such as openness to global commerce, a well-organised and well protected property right for the investors, who are looking to invest in the business, and a well-developed business regulation that is regularly monitored and updated by the government of the country (The Heritage Foundation, 2017). In recent years, like every other EU nations, economy of German was also affected by the financial crisis. As there is a strong regulation policy in place, it has become easier for the nation to overcome the impact of the same and make its economy a stable one within a short phase of time. One of the key aspects that the nation needs to look at is its open door policy, which leads to a total 1.14 million immigration in the year of 2015.This immigration crisis not only affected the social and political stability but at the same time left a greater impact on the overall economic scenario as well (The Heritage Foundation, 2017).
In the country, there is a high tax rate for the people, but to encourage corporate houses in expansion of their business, the German government set the Federal corporate tax rate at 15.8%. However, if one considers the effective tax rate, it is close to 30%. In order to improve the infrastructure and ensure well-being of the people, the government spent close to 44.2% of the total GDP in last three years and this is helpful for the development of the nation as a whole in terms of attracting foreign investors for business expansion. The overall business operation is very much dynamic in nature in Germany, and it is mainly due to the existence of strong regulatory framework that is helpful for the authorities to control and monitor all forms of business activities and expansion in the country (The Heritage Foundation, 2017).
Monetary freedom exits in the country, as the government has introduced a statutory minimum wages for the working people. Although monetary stability within the nation is very high, but one of the big challenges that the business organizations often face is the high electricity bill (The Heritage Foundation, 2017). This is mainly due to the fact that the government is committed towards promoting the use of renewable energy in the nation. If one considers the overall economic condition of the country from a business perspective, one of the major factors to consider is how much strong the import and export of the nation are. Major part of the country’s GDP is coming from export and import, as it is contributing towards 86% of the overall GDP of the nation. There are very little barriers for foreign investment in the country, which often attracts the investors to open new business venture, however, one key point that the organization needs to consider is the fact that in German, the state owned enterprises are affecting the economic and business scenario to a large scale (The Heritage Foundation, 2017). From the economic perspective, one of the key aspects that any organization needs to focus on while planning to expand its business in Germany is understudying the trend of household spending. In recent times, there is a huge growth in new job opportunity but the overall household disposable income has reduced from 65% of the overall GDP in 1990s to 60% of the overall GDP in the recent past This is one of the key factors that business organizations must consider while the expansion of their businesses (The Economist, 2017).
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Business Rules of the Nation
For any organization, understanding the business rules is very much important and how they are assisting the industry in the long run.. The overall business rules in the Germany are different from that of the UK and America, as the business related issues are not under the direct jurisdiction of the court in Germany (Binder, 2015). The business laws in Germany are much easier to develop business contracts and resolve various issues related to solvency, construction of business offices, etc. The business tax model in Germany is also different compared to any other European nations, as the overall tax model is geared towards tax authorities instead of the shareholders. Another key aspect associated with the business rule is the firm line adopted by the authorities regarding the implementation of any business plan. It is important to understand how it is different from other European nations, where more of a consultative approach has been taken by the authorities, which often can be affected the business setup (Binder, 2015). There are certain rules such as corporate tax, VAT and solidarity surcharge, which make the overall business tax to reach close to 29%. Another key issue that a business organization needs to consider while expanding its business in Germany is the availability of skillful workers. It is necessary to for the organizations to understand whether skilled labors are there or not so that they can plan accordingly and follow the wages rule set by the government (Binder, 2015).
Safety and Security in the Country
To expand business operation, one of the key factors that every organization considers is the level of safety and security that the organization require to start their new business venture. Germany is considered as one of the safest nations in the EU and even across the globe. In global peace index, the nation is ranked among the top 20 most peaceful countries, which encourages the business organizations to open new units in this nation (Make it in Germany, nd).
Technological Status and Capabilities of the Nation
Technological innovation and use of advanced and modern technologies help German industry to move very fast. These modern technical developments availability of software etc. providing organization enough opportunities to achieve business excellence. The nation is well known for its automobile sector as some of the leading brands are from this nation only. One of the recent technological innovations that changes the overall structure of IT across the globe is the invention of ICT or information communication technologies (European commission, 2012). Apart from that, manufacturing robotics is another key area, where the nation has achieved a higher level of success. All these technical innovations are helpful for the organizations to manage the new business firms to expand their business operation to a great deal (European commission, 2012).
Infrastructure: Present and Future Scenarios
For a long period of time, Germany has a great reputation providing a boundless infrastructure for the business organizations, which are already operating in the industry or looking to start a new business venture. For a long period, the nation was considered as the model for reform, where the employment opportunity is maximum among all European nations (Spiegel Online, 2013). However, after the financial crisis, the nation is not able to completely get out of the same, which is affecting its overall performance a great deal. Another key area of concern for the people in Germany is the problem associated with labor market. These two are the critical areas, where most of the investments from the government are focusing in recent years, as the investment shortfall from 1992 till 2012 recorded 3% of the GDP (Spiegel Online, 2013). As a result, there is lesser focus on the infrastructure development in the recent times. This downfall affected the overall infrastructural development in a large scale. Another key factor behind the same is that the nation is good at saving money but diversification of investment is not that much appropriate, which is affecting the overall development of the infrastructure of the nation (Spiegel Online, 2013; Spiegel online, 2014).
Ethical framework of Business Operation
The last most important factor related to set up of new business is the ethical issues associated with the business operation in Germany. In order to ensure that the organizations are following a better ethical standard, there are some well-defined policies that the organization needs to follow, which is important to develop ethical business environment. The key points are
- Ensuring the clean business operation which are good for the organization,
- Considering both economic and intangible consequences associated with the business so that corruption can be reduced,
- Setting well organised prevention policies which are important to manage the business operation,
- Investigate all key risk areas etc.
It is important that new business firms follow these guidelines, which are important for managing effective business operation (Norton Rose Fulbright, 2009).
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The overall report clearly justifies the fact that as a nation the standard of politics, rules and regulation and business laws are supporting new business venture to a large extent. There are certain challenges that the nation is facing in terms of financial perspective such as tax issues, investment to develop new infrastructure to expand business and availability of the skillful employees. If the organization is able to get skilled employees, it will be easier for the new businesses to start new venture.
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