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Global Business Cultural Analysis: Germany Dorothy Thomas BUSI604_International Business Liberty University Dr. John Karaffa April 15, 2013

Abstract This paper explores the culture diversity in the region of Germany. Values of individuals are rarely determined as a result of a single variable or a single incidence, but much more because of a series or pattern of events. This paper addresses values, ethics, communication, language, religion, and economic condition in Germany. All of these variables can cause either positive or negative effects on individuals. Also, a comparison of doing business in Germany will be compared to doing business in the United States.

Global Business Cultural Analysis: Germany Introduction to Germany Germany is a well-known region for the taping of a popular American sitcom called Hogans Heroes. The historic reference to this sitcom is only to present Germany in a positive light first. However, many would introduce the wars, the extermination of the Jews during the horrific Holocaust, forced-labor of the Polish, and many murdered prisoners of war. The Berlin Wall was another historic landmark in Germany. The Berlin Wall separated East Germany from West Germany. The Berlin Wall separated individuals from their dreams and aspirations of a better life. The people of East Germany was constantly driven and motivated to seek a life of opportunity and equality in West Germany. The only obstacles in the way were the wall, total dictatorship, armed Nazi soldiers and death. Many lives were lost trying to cross over the Berlin Wall into West Germany. At the end of WWI European nations struggled to get back on their feet. Britain and France demanded that Germany and Austria pay for the damages of the war. The problem was that Germany and Austria didn't have the money because most of it was spent on the war. After WWII a British economist named John Maynard Keyes knew there had to be a way to prevent the same economic disaster as WWI. The preventive method was labeled the International Monetary Fund. Nations who wanted to be a part of International Monetary Fund (IMF) made deposits to become members. The deposits were used to help nation that were in financial need. So after WWII nations that needed funds to help rebuild their economy would take loans from the IMF to help repair their economy. The IMF also helped monitor and guide nations

economies, and their value of their currency. Today the IMF is being criticized for a being a bail out center for countries. Germany joined the European Union which is an economic and political union between 27 countries located primarily in Europe. The European Union has created a standardized system of laws which apply to all member countries. It also maintains policy regarding many items including trade. The European Union members currency is the Euro. West Germanys undervalued Deutschmark was replaced by the Euro in 2002 (Funke, M., & Strulik, H., 2000). As a result of the EUs adoption of the Euro, countries realizing a trade surplus using their own currency (such as Germany) were effectively throttled back, while countries that were floundering under their native currency (such as Greece) were given a sudden boost (Feldstein, 2010). East Germany suffered significantly trying to catch up with West Germanys advanced economy. In essence, had the Euro not replaced Germanys native currency, and had that native currency been allowed to float in response to free market demand for German products, the people of Germany would have enjoyed a more favorable rate of exchange, which would find them placing an increased demand for imported goods, thus allowing the market to naturally correct Germanys growing trade surplus (Feldstein, 2010). Major Elements Even though the collapse of the wall was supposed to unify the people they are still divided economically. East Germany is looked upon as second rate and West Germany is superior. Unemployment rate is higher in East Germany than in West Germany along with a significant difference in wages. Unified Germany is under pressure to provide similar living standards and conditions for all the people. The big idea was to unify Germany. Once the Berlin

Wall fell the East Germany people were free to go into West Germany. This was a meaningful event for Germany. Increasing dissatisfaction among East Germans about heavy restrictions on mobility, lack of personal freedom, and the declining performance of the East German economy led to large scale demonstrations in 1989 (Redding, S. & Strum, D., 2008). The people of East Germany fought and never lost their desire for freedom. Dr. Oliver Marc Hartwich a German economist and Research Fellow at The Centre for Independent Studies depict Germanys social structures and organizations after the fall of the Berlin Wall. The people of East Germany prevailed in taking history in their own hands. They marched and fought for their freedom. The author states, The Germans were the happiest people on Earth (Hartwich, 2009). The Berlin Wall was a sign of hate that separated friends, families and lovers (Hartwich, 2009). East Germany was depicted as one big prison (Hartwich, 2009). Many were killed trying to cross the wall or escape East Germany into West Germany in pursuit of a better life. This historically event did not last. The rejoicing only lasted for a brief moment. The two sides still could not come together and work out their differences. They are still divided in the hearts and heads of the people (Hartwich, 2009). Germany is recognized for the many challenges that exist in the dimensions of learning their culture. The weather is one of those unpredictable events that is hard to get accustom. Germany is known for its beer. Beer drinking is more accommodating than the drinking of water. It is even acceptable to see young children serving or drinking beer. It is common to see dogs everywhere in Germany. The guide dog training was first started in Germany. German shepherds were trained for assisting the blind veterans with their daily tasks. Dogs are an historic part of Germanys culture. The German shepherd dogs were first trained in Germany as guide dogs. They assisted in the wars, aided blind soldiers with their everyday task, acted as guards,

messengers, and carriers of supplies. That same training is standard in Germany today. Dogs are a commonplace in public throughout Germany and they are trained well. Dogs being an important part of Germanys culture are respected and held in high esteem. The social structures were renewed and organizations like the European Union and North Atlantic Treaty Organization aided in the change. West Germany took the lead in the unification and was considered superior over East Germany. West Germany controlled the money supply per the author, Gary Geipel. The spirit of the people in East Germany has persevered to make a difference in their growing economy in spite of low wages, unemployment and second class citizen status. West Germany is also striving to make a difference in East Germany through recent innovations. Dimensions of Culture It is evident that a regions culture has an impact on globalization. Culture dictates beliefs, moral standards, religions, values, and norms which in return dictate behavior. When dealing with globalization and culture a deep thought process should go in to it. Culture is very meaningful in itself. Understanding the meaning of culture and intercultural competence is the key to describing the dimensions of culture. The three uncontrollable environmental forces are cultural, economic, and politicalregulatory. The force of cultural or cultural diversity involves values, customs, cultural symbols, and language. A cross-cultural analysis is the first step in attempting to resolve issues with the cultural force. A cultures values are a set of standards or beliefs that have existed over time. A societys customs are the norms and how people are to live and act inside that group. Cultural symbols are ideas that are close to the hearts of the country, nation, or group of people.

It is important that all future or current professionals recognize all diverse beliefs, moral standards, religions, values, and personal norms. Cultural differences could also be a reason and a block for globalization, in that it is not always profitable for companies to globalize. Some companies products and business plans would not be profitable or effective in a foreign country or even a different region of a country. There is a curvilinear relationship between international diversification and firm performance that begins positive, but eventually becomes negative with increasing international diversification (Hitt, Hoskisson, & Kim, 1997). This is largely determined by product diversification and business strategy, but as previously stated, for some companies, globalization can have a negative impact on their business. Certainly every business and individual will at some point encounter the effects of globalization whether or not they realize it. Companies must decide whether globalization would be profitable for their product and business model. Five global cultural competencies managers need to succeed globally are cultural selfawareness; cultural consciousness; leading multicultural teams; negotiating across cultures; and global mindset (Cant, 2004). If the United States is going to compete globally, recognition, knowledge and respect for other cultures is mandatory. The expanded global reach of business in recent years has made this study even more poignant. The norm of doing business is no longer domestically but expansions into the global markets with consumer products and services for all people. Firms that is more diversified and spread out between many international markets sales and revenue are able to remain steady because they are not dependent on one market.

Communication In todays global economy, people from many cultures are required to communicate with each other. Other regions possess values and beliefs that differ from those in the United States. It is very important to know the cultural differences in other regions. Cultural competence is imperative in providing clarity in the delivery of messages. The final portion to the cultural force is language. Obviously companies understand that people from different countries speak different languages. What is important is that the companies understand that while a country may have the same dedicated language there can be subtle differences in different regions of that country. Different regions with different languages are communication barriers experienced in Germanys business and personal communication. Verbal communication is mostly recognized in Germany due to their low context culture. Language is perhaps one of the most difficult cultural challenges for a firm because of the different dialects. Language is developed within a culture, and the meaning of communication is derived from cultural interpretation (Davis, Leas, Dobelman, 2009). A word or sentence can be interpreted one way in a particular culture but interpreted another way depending upon the culture of another country. Cultural rituals that include forms of gratitude, invitations, use of humor or anger, the use of salutations and first names may vary across cultures and may be expected in communications (Davis et al, 2009). The communicator has to be aware of barriers such as gestures that may have different meanings in different cultures such as eye contact, facial expressions, or crossing legs. Some gestures may be acceptable in one culture but not in another. Finding out some of the basic

gestures, sayings, and basic cultural norms and traditions will help ease the stress and tension that is associated with new environments. According to German culture it is rude to use the okay hand gesture and applying the index finger to the forehead while looking at another person. Some gestures are appropriate like the thumbs up and applying the knuckles on a hard surface, signifying good luck. Certain cultures find normality in very close proximity and would even consider it rude if a larger distance was maintained. Germanys culture tends to appreciate their personal space. Their reaction to proximity is not to let strangers get too close. In every culture, and every walk of life, there are defined sets of rules relating to social behavior. Sometimes these rules are written into law, but most of the time they are unspoken and emphatically enforced in one way or another. Manners and Customs The manners and customs vary substantially from one culture to another. You can offend a person by not knowing their customs and traditions. Customs is a factor that a firm must consider when operating in an international market. Customs are the way that a people behave. Member of the firm that is in another region will be expected to respect and even follow certain customs. Germanys business culture places a great emphasis on punctuality. Time must be carefully planned in order to arrive on time for appointments. Arriving too early is also frowned upon. It is essential to arrive at the exact time. A courtesy phone call must be made if the arrival to the appointment will be late, or if not at all. Everything is conducted on time. Professionalism is deemed appropriate at all times. Do not ask personal or leading questions. Germans dont


need a personal relationship to do business, and they are mostly interested in your credentials and how long your business has been operating (Global Road Warrior). Business dress is most appropriate in a business setting. The elders are respected in Germanys culture. Not like in todays society where honoring and respecting elders are a thing of the past. Greetings are initiated to elders first, titles, and so on down the line. In business settings always address individuals by their titles. That is why it is important to do your homework first and make sure the necessary knowledge is attained. A firm handshake and good eye contact is a plus when interacting in Germanys culture. Hugging and kissing is not allowed. Body contact is off limits and its best to keep appropriate boundaries. Doors are always closed because of the Germans appreciation of their privacy. It is always appropriate to knock first and wait for an invitation to enter. It is not appropriate to discuss business during lunch. Business breakfast has a commonality more often than lunch or dinner in a business setting. Business deals are handled by gathering facts and supportive information before making any business decisions. Germans will not be pressured into making hasty business decisions. Bribery and Corruption Although some foreign companies allow bribes and gift giving, it can have major implications for the companys reputation and finances. In a July, 1995 article written by Mary Walsh of the Los Angeles Times, she states: Opel disclosed earlier this month that 65 of its past and present employees Were under investigation in what appears to be a massive kickback operation dating back many years. Early estimates suggest the illicit activity has cost OpelGermanys second-largest auto maker--$8 million, although the figure is likely to grow as the probe continues (Walsh, 1995).


Education Education is very important in Germanys culture since great emphasis is played on titles and social status. Advanced degrees are the most prevalent, especially doctoral degrees. Many pursue apprenticeships along with attending classes. Vocational training is offered to children with low recognizable academic skills. Parents in the US are able to send their kids to private schools, while in Germany private schools are very rare. Germanys title recognition also spills over into the school systems. Kids of prominent parents are given preferential treatment not based on their performance. In the US parents are able to home school their children, but home schooling is not allowed in Germany Ethics Ethics are very important in the global business world. Ethics and morals may vary from one country to another. When doing business with other countries it is very important to know what is ethical to them. All parties must consider the others ethics to be able to conduct a good business relationship. Ethics Must Be Global, Not Local discusses the need for businesses to adopt a global standard of ethical practices. Because the business world now operates on a global scale, it is important to have a standard set of ethics. While some businessmen may be willing to make ethical compromises in order to secure a business deal, this may compromise their companys reputation. Employing situation ethics, especially in a developing country, may in the end destroy a global organization. A businessman should be confident that if he is unable to secure a contract or sale due to an unwillingness to make an ethical compromise, his employer will back


him up. Great global organizations can be built only from a solid ethical foundation, (George, 2008). Even though good business practices have been mandated since the beginning of time, businesses still have a reputation of being unethical. Whether or not initiating codes of ethics along with the ethical standard of business would aid in ethical conduct many answered no in the United States and Germany (Becker, H., & Fritzsche, D. J., 1987). The interpretation of right and wrong also depends on the socioeconomic status that one belongs to in society. People in a low economic status may view things differently than a person in a higher economic status. Another aspect of why people view right from wrong differently can be the result of means of survival as well. When humans are in life or death situations, moral judgment can change because of their mean of existence. Integration of these Cultural Elements Global culture is earmarked by the realization and integration of foreign cultures and their values within the broader spectrum of the company. This allows companies to leverage the strength of having a vast array of cultural experiences at their disposal as they cope with changing markets, increased competition, and new business ventures. In this culture respect and trust in local knowledge is exhibited which allows local business leaders to mold the business practices into local semblance of the Corporate values and use them as broad parameters or guidelines. The successful integration of local cultures into the corporate culture of multinational corporations is the key to creating a successful Global Business Culture that both respects and


values local cultures of foreign business units and encourages locals to become part of and contribute to the multinational corporation. Comparison between United States Culture and Business Relationship transparency is crucial in Germanys integrated economy. While making cheaper products in order to gain a competitive advantage might be some regions strategy, Germany is all about exceptional quality, and not price. Porsche cars, motherboards, machine tools and equipment for consumer goods are on the top of their list of exports. They develop 21st century products by investing a lot of money in research and development. Innovation is their top concern in exporting. German is the 2nd largest exporter. Value and customer satisfaction is the key in building a business relationship. In this article relationship transparency is defined as an individuals subjective perception of being informed about the relevant actions and properties of the other party in the interaction (Eggert, A., & Helm, S., 2003, p. 103). Facts and examples about products must be proven and accessible with statistics in order to build a transparency relationship. Mission statements are very important to the stakeholders. Comparisons between the international mission statement of the United States and Germany depicts what is important to the stakeholders in the region concerning communities/community; customers; employees, stockholders/stakeholders and suppliers. The United States places a higher value on communities, customers, employees, and stakeholders than Germany. Also in the category of ethics and trust, the United States mentions them in higher percentages than Germany. Germany values innovation, quality, and being leader in the industry (King, D., Case, C., & Premo, K. (2012). Mission statements from the 25 top firms in the United States and Germanys top 25


companies states Conducting ethical operations or concern for ethics was mentioned in only one of the 25 German mission statements (King, et. al, 2010). United States businesses scored higher in ethicality than the German businesses. German workers work less than forty hours a week, while U.S. workers work 40 or more hours a week. German workers seldom change occupations due to the training requirements, while U S workers change jobs often. U S businesses must familiarize themselves with the employee contracts in Germany because they are different from the US. It is hardier to terminate an employee in Germany than it is in the United States. German workers are paid 6 weeks or more in vacation pay for the year, while US workers earn an average of 3 weeks annually plus sick time. Most of Germans businesses are referred to as Mittelstand ranging in small to medium. German is a leader in industries such as transportation, chemicals, household goods, and machinery. Implications for United States Businesses in Germany Ethnocentrism has been found to significantly influence consumers purchasing decisions when there is the option of buying domestic goods versus foreign goods. The concept has been studied for several decades, but has come to the forefront of examination again due to many companies trying to penetrate global markets with their product or service. Consumers that are ethnocentric are often not open to the idea that imported goods can offer more value and higher quality than some domestic made products. This concept is a huge potential barrier to trade for companies to promote their products on an international level. Companies must continually research ethnocentric tendencies within certain demographics abroad if they wish to grow in the global marketplace. It is vital for


companies to develop marketing strategies geared towards consumers with this mindset; especially in areas that have been found to have a high concentration of ethnocentric consumers. If there is a way to harness the ethnocentric mindset, perhaps whatever product is being marketed could be perceived with the same superiority granted to a local product. In order for that to happen one would need to truly understand the culture and be able to adapt to the environment. The import and export of goods are governed by a set of rules and regulations. Each country has its own set of rules and regulations before the process of importing or exporting products can begin. International trade is essential to the American economy. Exporting and importing goods, made in America not only help to narrow the trade deficit but it also creates jobs in America. Globalization has played a continually increasing role in our economy since the fall of the Berlin Wall in 1989, however since the most recent worldwide economic downturn; global trade has taken a hit (Smick, 2012). Germanys ethnocentrism is centered on their obsession for superiority. Germans excelled in music, philosophy, theology, mathematics, science, and the arts. Workers take great pride in their occupations and finished products. In order to be successful, a global business must always be on the lookout for new opportunities for international trade. If not they may face the same difficulties the worlds governments are potentially facing. Germanys economy in comparison to the world is the 6th largest in purchasing power parity (CIA). GDP for Germany in 2012 was around 3.19 trillion and GDP per capita was 39 thousands. Germany experienced a low growth rate of 0.9% in 2012. Most recently Germanys


acquisition of some of Greeks debt in a time of financial crisis is significant in regards to their slow growing economy. According to The World Bank, Germany ranks number 20 in the Ease of Doing Business compared to 185 other economies (The World Bank). It also ranks number 106 in the ability to start a business in Germany. This high ranking depicts the bureaucratic and regulations new companies face entering the market. Competing globally is a great aspiration for US entrepreneurs. Once the entrepreneur enters the Germany business environment they will reap benefits in the region. Market opportunities for U. S. companies in Germany are overwhelming. Germanys exceptional labor force and high productivity is a plus for any astute U.S. entrepreneur. The United States and Foreign Commercial Service Market Research Library reports:
The most successful market entrants are those that offer innovative products featuring

high quality and modern styling. Germans are responsive to the innovation and high technology evident in U.S. products, such as computers, computer software, electronic components, health care and medical devices, synthetic materials, and automotive technology. Germany boasts one of the highest internet access rates in the EU and new products in the multi-media, high-tech and service areas offer great potential as increasing numbers of Germans join the Internet generation (U.S. Commercial Service). The above market opportunities suggest that the region of Germany would be great for the research and development of new health care and medical devices and computer technology. It is a well-known fact that German business people are very research oriented and highly analytical. It leads the world in mechanical engineering, exceptional quality in products and excellent in work ethics. Germany is excited to attract new international businesses and have recently lowered their corporate property taxes. Although business ventures in Germany may seem a little risky because of low wages and the slow recovery after effects of the recent Greek


debt crisis Germany is still a great place to do business. All business ventures are inherently a risk versus reward endeavor and a successful entrepreneur is one who identifies and pursues ventures which provide the maximum amount of reward with the minimum amount of risk. The legal system in Germany includes three principle figures that are responsible for economic policies. These figures include the Chancellor, the Minister of Finance and the Minister of Economics. Germany is heavily regulated and their bureaucracy is difficult. Operational Risk Corporate responsibility isn't just the job of the CEO and CFO but, everyone. The basic breakdown of the morals, integrity, and personal accountability isn't just one person's fault but the cumulative effect of a whole business community's inability or worse unwillingness to do the right thing. It's only through national, regional and local regulation that such corruption like this will be curtailed. Reducing operation risk in the global business environment is imperative when looking at the long-term survivability of a company, and it absolutely bears immediate reward in the shortterm, as well. Of the three types of risk most prevalent for global businesses, operation risks are the main risks that companies can actually do something about, (Satterlee, 2009, p. 92). Operation risks vary and can be plentiful, ranging from IT services, subordinate mentoring, transportation of goods, redundancy in information delivery, differences in language, conflicting cultures, religious and regional holidays and the list goes on. A global business professional must seek to identify and understand all of the operational risks and frictions that may arise when seeking to operate in a foreign market, and then seek to manage, if not completely neutralize those areas of friction identified.


Sometimes businesses, potential investors, government agencies neglect to review the people behind the logo, those who represent the company and who the people are that carry those titles and responsibilities. One of the most fallible pieces of a business is the people whom are actually in charge, and they must be scrutinized along with such data as quarterly earnings and growth charts. A business is akin to a building or house, no matter how elaborate or elegant that building is, its only as strong as its foundation and structural supports. The people, the human factors of a business or organization are the lifeblood of that business and if there are people that are deficient or held unaccountable for their performances then it can highlight a potential future issue on the horizon. Its vitally important to understand and research the people you may do business with or invest with, a companys reputation and business culture may be potential disqualifiers. In business, operation risks are the least problematic to manage, and the easiest risk to manage is the people that we place our faith and trust in. Conclusion While the world continues to struggle through this economic turndown, all aspects of survival for organizations are essential. A business with a strong business presence in the international marketplace is more likely to survive. In an effort for the business to survive via globalization, a business must recognize that, we live in a multicultural diaspora of individuals; all diverse in beliefs, moral standards, religions, values, and personal norms which dictate ones behavior. If an organization understands that cultural barriers affect globalization, it will have won part of the survival battle. It is evident that a persons culture has an impact on globalization. A persons culture will dictate their beliefs, moral standards, religions, values, and personal norms which dictate ones behavior. When dealing with globalization and culture a


deep thought process should go in to it. Culture is very meaningful in itself. Understanding the cultural differences and boundaries with others is very important. The faith that America was founded on is not a religion but a lifestyle. Christianity is at the core of what good business represents. A successful business must have employees of good moral character, ethics and values. The same values that are defined through Christianity were written down in the Bible a long time ago. Faith is an important term to come to understand. If the truth fails to be a priority then all that America stands for will be forgotten in the mist of turmoil and corruption. Faith keeps us honest in all the aspects of life, "For we live by faith, not by sight" (2 Corinthians 5:7NIV). Faith is a very powerful tool to integrate into business. Mark 11:23 states, "For verily I say unto you, That whosoever shall say unto this mountain, Be thou removed, and be thou cast into the sea; and shall not doubt in his heart, but shall believe that those things which he saith shall come to pass; he shall have whatsoever he saith" (Mark 11:23KJV).


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