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Business & Cultural Audit of Germany

Country History

The name Germany was first used by Julius Ceaser to refer to the area east of the Rhine as a way of differentiating it from regions like Gaul which he had already conquered. The industrial revolution modernized the country’s economy and led to the emergence of a socialist economy and the growth of major cities. By 1900, the country became one of the economic giants and the country sought colonial expansion just like other countries’ economic giants. However, the great depression of the 1930s affected the country’s economy in major ways such as increased levels of unemployment. This resulted in people losing their confidence in the government. The Nazis seized power as a result of this and under the leadership of Hitler, carried out various invasions and acquired numerous colonies. The fall of Germany came in 1945 and later this was followed by the division of the country into East and West Germany (Horst, 1986). The two regions later reunited in 1990 and much later in 1999, the country was among the founding members of the Eurozone.

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Demographic trends that may influence MICUS’s business activities

The population of Germany has estimated at around 8.1 million people the projections of the growth rate show that growth is at a declining rate. The demographic trends of the country are characterized by three main characterized. These are an aging population, increased life expectancy, and a very low birth rate. This means that the generation of young people has continued to shrink and therefore the government has adopted an immigration policy meant to bring people into the country. The fact that the country’s economy is well-developed leads to the improved living standards of citizens and therefore the increased life expectancy. The high percentage of aged people in the population means that firms need to be very careful when entering the market (Fitzpatrick, 2007).

Gerhard Schroeder, the Chancellor of the country up to 2005, introduced various economic reforms to try and manage the increasing levels of unemployment in the country. These reforms were also meant to re-energize the economic growth recovery process. As a result of the reforms, there were high levels of economic growth recorded in the years 2006 and 2007 and the level of unemployment went down during the same period. Another important period in the economic recovery of the country is the period between 2008 and 2009 when the government of the country under the leadership of the then Chancellor, Angela Merkel introduced stimulus programs and stabilization strategies aimed at providing better conditions for the growth of the economy which was not doing well at the time. These efforts resulted in an increase in the budget deficit in 2010 by up to 3.3%. However, there was the need to stem this high level of the budget deficit and therefore the then government introduced high tax revenues on both individuals and corporates and reduced the overall expenditure of the government. This intervention lowered the budget deficit to 1.7% in 2011. As it can be noted, this new rate was below the 3% limit established by the European Community and therefore the deduction that the country was doing well economically in terms of controlling the levels of borrowing and government spending. In an attempt to limit the budget deficit, the government passed an amendment to the constitution in 2009 which was aimed at ensuring that the deficit does not go beyond 0.35% of GDP by the year 2016 (Ewing, 2012).

Customs and traditions of the country’s people

The German way of life is characterized by various traditions and customs that are followed strictly and therefore have the ability to influence business operations in the country. The various customs and traditions of Germans include and are not limited to the following: Customs requires that when one is going to stay at another person’s house, they should bring a bottle of liquor with them. Germans are also associated with drinking a lot of alcohol. Germans are known to extend their Christmas celebrations for a 25 day period. It is normal for Germans not to engage in small talk with people they are not familiar with and they do not refer to others using their first names unless they are close friends. Another tradition of Germans is that they tend to eat heavy lunches and very light dinners and they love to exercise and to participate in outdoor activities. Germans are also known to greet each other by shaking hands. German nationalism is therefore based on these traditions and customs and it is important for business firms to understand them before launching business operations or new products in the market (Fitzpatrick, 2007).

Influence of social institutions on business culture in the country

The business culture in Germany is influenced by various social institutions such as the government, the political system, and the regulatory framework. For example, the country’s business sector is over-regulated in an attempt to protect local businesses from international competition therefore it may cost multinational corporations a lot of capital to invest in the country. The country has a social market economy that helps to promote free enterprise and competition, therefore, promoting the growth of businesses. The family is another social institution that may affect business operations in Germany because to Germans, the family is regarded as a first priority and everything else comes second. This means that understanding the consumption patterns of families can influence business growth in a positive manner (Ciarlo, 2008).

Informal trade barriers

The government of Germany and other legal authorities in the country have established various trade barriers in an attempt to regulate the business environment and protect local manufacturers. For foreign companies to enter the German market, they need to overcome various regulations and bureaucratic procedures set up by the government regulatory authorities. A good example of such barriers is the complex safety standards that are demanded products being sold in the country. Multinational corporations intending to invest in the country need to understand these safety standards and ensure that their products meet these requirements. The purpose of these regulations is to discourage the entry of international competitors to the local market in order to make sure that local businesses are promoted (Christopher, 2010).


The review carried out above has clearly revealed that the policies that the various leaders of the country adopted over time led to the growth of the country’s economy and improved living standards. This has resulted in a lower population growth rate and therefore an aging workforce. The business culture in the country is influenced by various social institutions and the cultures and traditions of the citizens. Firms such as MICUS, therefore, need to understand this environment before investing in the country.

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Christopher, S.A. (2010), Ideas, Institutions and Organized Capitalism: The German Model of Political Economy Twenty Years after Unification, German Politics and Society, 28 (2): 130-150.

Ciarlo, D. (2008), Globalizing German Colonialism, German History 26 (2): 285–298.

Ewing, J. (2012), In Germany, a Limp Domestic Economy Stifled by Regulation The New York Times, Web.

Fitzpatrick, M. (2007), A Fall from Grace? National Unity and the Search for Naval Power and Colonial Possessions 1848–1884, German History 25 (2): 135–161.

Horst, F. (1986), Germany in the High Middle Ages, London: Cambridge University Press.

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