Assignment

On
Business Environment of Germany
Course Title: Business Environment

Submitted to:
Mahfuzur Rahaman
Lecturer
Dept. of Marketing
Comilla University.

Submitted by:
Mosfiqur Rahaman
ID: 11807024
Dept. of Marketing

Date of Submission: 04/10/2021

Introduction
Business environment means the combination of internal and external factors that influence a
company operating situation. The business environment can include factors such as clients and
suppliers; its competition and owner; improvement in technology, laws and government
activities and market, social and economic trends. Germany is one of the most developed country
in the world. For this Germany business structure is very strong. Most of the power in Garman
companies is vested in the hands of a few senior managers. The management board is the final
decision maker on policy matters which affect management. The members of the verstand have
shared responsibility for the overall management of the company and this means that the
chairman of the company has considerably less personal power than a certain other countries
management at the top could be said to be collegiate. German industry as a whole and at German
business people individually is that they are inflexible and slow to change to new situations.
A free economy, a valuable political system, and a favourable legal system are the bedrock of a
powerful nation. Germany utilizes all of these features as well as the ability to co-operate with
other countries and sign trade and political agreements with them. Our purpose is to describe
through a detailed analysis some of the aspects that led Germany to be a world leader in today’s
world despite the difficulties and challenges which this country has faces all over its history.

The Cultural Environments Facing Business

Today’s German culture is the result of the development of several factors over the centuries.
Taking into consideration only the 19th century, for example, three major events have strongly
influenced this country and its culture: World War I and II, and the Cold War. In particular,
World War II and the Cold War had a significant impact on Germany. The first one was strongly
characterized by the development of a Nazi culture (an example of culture imperialism), which
has dissolved over the course of the 20th century. The second one deeply influenced the entire
country and German culture because of the construction of the Berlin Wall, which divided
Germany in two parts as well as the rest of the world.

The Political and Legal Environments Facing Business

Political system of Germany: Germany is a federal democratic republic consisted of sixteen

states. The power is therefore distributed between the federal and state government. The head of
the government is the Chancellor who is chosen by the Federal Assembly for four years.
Whereas, the head of the state is the President who is chosen by the Federal Convention for five
years.
Being a democratic country, the power is divided between the executive, the legislation, and the
judiciary as per the constitution. However, as per freedom house Germany is ranked as a free
country on the standard of freedom with the highest political freedom as civil liberties.
Political risks in Germany: Being the fourth largest economy in the world (Picture 4 in the
Appendix) and a member of the Eurozone, Germany is an important country in the European
Union. It is also one of the original eleven countries which adopted the euro as currency in 1999.
According to the AMB country risk report of 2016, Germany is ranked a CRT-1 country. The
Country Risk Tier (CRT) reflects A.M. Best’s assessment of three categories of risk i.e.
economic, financial system and political risk. CRT-1 indicated that Germany has a very low
economic, political and financial system risk.
Europe has recently faced the “Brexit” blow. Although it affected many of the European
countries, Germany is still expected to grow but with a lower rate. The “Brexit” triggered
financial instability and immigration issues in many of these countries. Therefore, in March 2016
regional elections, increase in support for anti-immigration alternative has been noticed in
Germany.

The legal environment: The law of the federal republic of Germany applied to all aspects of
life. German legal system is driven by the constitutional law but is also influenced by
international law and the law of the European Union. In terms of legal stability foreign investors
rank Germany second. Such legal stability attracts many foreign businesses to the country.
The legal codes are divided into two main categories. The first one is General Codes which
includes penal code, civil code, and civil procedure code. The second one is Specific Codes
which include commercial codes. Commercial disputes that involve Germany are very rare.
However, in case of any commercial dispute, it is resolved by the Court of Attribution in line
with the German Attribution Act.

Legal issues faced by international firms: Nearly 4% of global direct investments are incurred
by Germany. Only a few countries across the globe are such tightly connected to the world
economy. However, doing business in Germany can still be a challenge for those that are
unfamiliar with the taxation and legal structures. Therefore, help from the locals is at times
essential. Some of the issues faced by businesses are as follow:

Starting a business: Despite the global economic standing of Germany, the World Bank and
International Finance Corporation (IFC) rank it 106 th in the world for ease of starting a business.
The businesses are required to register and coordinate with the local chamber of commerce and
industry, the local office of business and standard, and the required professional association.

The Economic Environments Facing Businesses

Germany has been one of the world’s strongest economies when it comes to economic freedom,
despite challenging environment prevailing in the European Union. Business as well as
investment freedom remains strong in the country. Entrepreneurial growths and competitiveness
are well supported by strong property and business environment. Overall the economic freedom
index of Germany is recorded to be 73.8 in 2017.
The property rights score is 82.9, which means that the German law fully protects the rights of
local as well as foreign citizens. Even the tax burden is considerably high and recorded as 61.9 in
Germany, yet the government spending in the country has going up considerably as well and has
been given a score of 41.4.
German economy has considerable business and monetary freedom, as shown by the scores
(being 86.6 and 85.9 respectively); however, labor freedom is 42.8, which means that the labor is
mostly repressed.

Type of economic system: 

Germans follow a free market economic system but they call it as “social market economy”. This
means that the system has both a material and a social dimension. Thus, the only role of state is
to protect the environment from monopolistic or oligopolistic competition. However, the term
“social” is stressed a lot in the system because it signifies that the German economy not only
benefits the wealthy but also cares for the workers and others who might not prove able to cope
with the strenuous competitive demands of a market economy.

Globalization & Society

Germans are masters in planning and thinking ahead of time. They usually know what they will
be doing at a specific time. Germans probe all aspects of a project thoroughly and their thought
process is very detailed. Mindful planning provides sense of security in people’s businesses and
personal life. Moreover, Germans think that keeping a separation between people, places, and
things is the assured way to lead a structured and ordered life (Business etiquette, n.d.).
Germans do not welcome sudden changes in business transactions, even if it can positively affect
the outcome. Business is considered very serious, and Germans do not appreciate jokes in a
business matter. Moreover, Germans prefer to maintain a demarcation line between work and
personal lives. People also believe that there is a proper time and place for every activity.

Marketing Globally

Germany is home to the numerous global players who provide products and services all over the
world. The country’s companies continue to take over the world, creating major competitions to
domestic businesses in other countries.
What makes these companies stand out in different parts of the world, varies from one to the
other. However, what they all have in common is the pursuit of quality and precision invested in
all the products and services each company provides. The use of highly skilled workforce and
well-crafted strategies to infuse the company’s own principles of quality both home and abroad
is common (The Economist, 2006). To demonstrate a few of the strategies used by some of the
companies to enter global markets, we will be concentrating on Volkswagen and Allianz.
Germany has many more global companies and they all have their own way of attracting
customers to ensure they remain competitive in the global markets.
Conclusion

In conclusion, according to Travel Germany (2017), Germany has the largest population of any
European country, around 82 million. Berlin is Germany’s capital and it is also the largest
German city with a population of 3.4 million. Today, life in Germany is subject to a great
diversity of cultural influences. It can generally be described as modern and cosmopolitan.
Germany has been a democratic parliamentary state since 1949 and consists of 16 federal states.
Moreover, Germany is a part of the following treaties: European Union, G8, G20, NATO,
OECD, OSCE, and UN. From an economic point of view, the country is very strong, with a GDP
per capita of €37,099, labor force of 43.7 million, and annual gross income of €47,377 (Business
Insider, 2017).
In the future, the German economy is expected to hit new heights of employment, particularly
because of the expansions of transportations into the Middle East and surrounding areas
(Wearden, 2017). For this reasons, it is safe to say that the German power is likely to strengthen
both in terms of political and economic influence.
Germans have overall seen economic growth in the country taking place. Germany’s GDP was
recorded to be $3.356 trillion in 2015, which was considerably higher than that of countries such
as United Kingdom, Russia, and France.
Population was recorded to be 81.41 million in 2015, and it has not significantly changed over
the years. At the end of 2016, the unemployment rate was estimated to be 3.9%, which was
considerably lower than countries such as United States, United Kingdom, France, and Italy.
Inflation, on the other hand, has been increasing steadily (by 0.09% in 2016).
Overall, the economy of Germany is exceptionally strong. As previously stated, Germany holds
the keys of the European Union, and Germany’s outstanding results are benefiting Europe as a
whole. Germany is effectively planning the European projects in order to make the German
exports more competitive, and in the near future these projects will immensely benefit the
country.
A free economy, a valuable political system, and a favourable legal system are the bedrock of a
powerful nation. Germany utilizes all of these features as well as the ability to co-operate with
other countries and sign trade and political agreements with them. Our purpose is to describe
through a detailed analysis some of the aspects that led Germany to be a world leader in Today’s
German culture is the result of the development of several factors over the centuries. Taking into
consideration only the 19th century, for example, three major events have strongly influenced
this country and its culture: World War I and II, and the Cold War. In particular, World War II
and the Cold War had a significant impact on Germany. The first one was strongly characterized
by the development of a Nazi culture (an example of culture imperialism), which has dissolved
over the course of the 20th century. The second one deeply influenced the entire country and
German culture because of the construction of the Berlin Wall, which divided Germany in two
parts as well as the rest of the world old despite the difficulties and challenges which this country
has faces all over its history.
Germany has been one of the world’s strongest economies when it comes to economic freedom,
despite challenging environment prevailing in the European Union. Business as well as
investment freedom remains strong in the country. Entrepreneurial growths and competitiveness
are well supported by strong property and business environment. Overall the economic freedom
index of Germany is recorded to be 73.8 in 2017.
The property rights score is 82.9, which means that the German law fully protects the rights of
local as well as foreign citizens. Even the tax burden is considerably high and recorded as 61.9 in
Germany, yet the government spending in the country has going up considerably as well and has
been given a score of 41.4.
German economy has considerable business and monetary freedom, as shown by the scores
(being 86.6 and 85.9 respectively); however, labor freedom is 42.8, which means that the labor is
mostly repressed. So at last the present situation in Germany is very developing day by day.