Business operations are influenced in a number of ways and by different factors. This is also true with businesses conducted overseas. In fact, overseas business and trading are more challenged than any other trade operations (Hofstede, 2001). This follows the fact that a number of barriers and factors are faced in such businesses. The factors affecting international business include social, cultural, economic, political and legal factors. This report focuses on such contextual factors with respect to Germany and compares them with those of Australia. From such a comparison, the report will then be able to give relevant recommendations on the viability of the business’ operations in Germany.
Social, cultural, economic, political and legal factors in Germany
In terms of economy, Germany is rated as the largest national economy in Europe in terms of GDP (CIA Factbook, 2005). It engages highly in global business and has a high level of innovation. The country is the third largest exporter of finished products but is poor in raw materials. Germany is also well known for its small and medium enterprises. Gavin (2010) regards one thousand of these companies as global market leaders in their respective industries. This strong globalized economy is therefore necessary for an international company like VBD to establish business.
The main feature of its politics is the federal parliamentary representation governed by the rule of law. This has made the republic of Germany to be highly democratic. The politic stability is very high. The country is therefore very suitable for investment since political stability enhances a good business environment. It is therefore appropriate for VBD to establish its branches in Germany.
The cultural and social position of Germany is also an important factor to be considered before VBD establishes its business in the country. Generally, Germany’s culture has been influenced by intellectual and popular waves in Europe. It is populated by quite a number of poets and philosophers and is also a home to many museums and cultural institutions. The country promotes gender equality and disability rights. The country also permeated civil unions since 2001. Germany is also rated as having the highest level of socio-cultural in the world (BBC, 2011). The main language spoken in Germany is German, which might hinder the entry of VBD into Germany because Austria is an English speaking country.
As noted form the above discussion, the Economy of Germany is larger than that of Australia and it has more small and medium businesses than Australia. Germany’s political stability is also higher. The language spoken by Germans is also different from that of Australia. This may hinder the relationship between the two countries. The socio-cultural ranking of Germany is also higher than that of Australia.
Critical factors that may hinder VBD operations in Germany
- Difference in culture – the culture, especially in terms of language may cause a communication barrier in the company’s operations in the foreign country.
- Geographical location – Germany is located far in a different continent from Australia (located in Europe). Transporting human and physical capital and goods to Germany will therefore not be easy.
- Establishing a cross-cultural management training which will focus on training employees on international involvements in general and German language in particular (Hofstede, 2001).
- Allocating enough funds to transport costs and opening independent branch in Germany which does not heavily rely on the headquarters at Brisbane. The communication to be used to ease the Geographical barrier should also include the use of internet.