Impact of Political, Economic, Social, Technological, and Legal Factors on Expanding Business in Germany

This report discusses the impact of political, economic, social, technological, and legal factors on expanding business in Germany. It highlights the challenges and opportunities for Alpha Manufacturing Ltd. in the German market.

GLOBAL BUSINESS IN
CONTEXT
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Contents
Contents.............................................................................................................................2
INTRODUCTION...............................................................................................................3
DISCUSSION AND ANALYSIS.........................................................................................4
1.Political factor-.............................................................................................................4
2.Economical factor-......................................................................................................5
3.Social factor-...............................................................................................................6
4.Technological factor-...................................................................................................8
5.Legal factor:................................................................................................................9
6.Environmental factor-................................................................................................10
CONCLUSION.................................................................................................................11
REFERENCES................................................................................................................12
APPENDIX.........................................................................................................................1
5.Country profile.............................................................................................................1
6.Company profile-.........................................................................................................2
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INTRODUCTION
A global business is a company that operates facilities (such as factories and
distribution centres) in many countries around the world. This is different from an
international business, which sells products worldwide but has facilities only in its home
country. They will like to expand it till the year 2020. Report will highlight the political,
social, technological factor that can affect the company while expanding the market into
Germany. It will also highlight profile of Germany and company profile. Present study
will lay emphasis on political, Economic, social, technological, legal and environmental
aspects that will lay impact on decision making of firm.
MAIN BODY
Figure 1 Growth of manufacturing sector in Germany
(Source: Germany industry Growth, 2018)
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Figure 2 German economy
(Source: German economy shrinking, 2019)
DISCUSSION AND ANALYSIS
.
In order to expand the business in Germany, the small and medium sized
manufacturing Alpha manufacturing Ltd. company can be impacted by various social,
legal and economic factors. The impact can include following:
1.Political factor-
It includes factors such as policies, regulations, tax rates given by government that
can affect the business. Alpha manufacturing Ltd. can also get affected by these factors
while expanding their market in Germany. Firm can face problem in expanding as the
country is facing political dis-balances. They have been converted from monarch
government to democratic republic which has caused chaos and riots in country
(Hamilton and Webster, 2018). So it can be quiet difficult for Alpha Manufacturing Ltd
manufacturing company to expand their market share in Germany. Also it has been
analysed that country is going through trade war with China in year 2019. Because of
this the country has been engaged in changing laws, rules and policies related to
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expanding of market. This can affect growth of Alpha Manufacturing Ltd. manufacturing
company. This can affect the growth aspects of company. Various factors like laws,
rules and regulations given by government can affect growth of Alpha Manufacturing
Ltd. company. In this company needs to make sure that they are providing healthy and
safe working environment to employees so that they can work efficiently. It will also help
company in reducing the turnover of employees if they face any. They also need to
recruit people of diverse culture, so that they can adhere to rules passed out by German
government. This will also help firm in establishing their market in Germany(Tallman,
Luo and Buckley, 2018). There is also another challenge which can be faced and
suffered by small and medium sized enterprises is that the purchasing power of people
in Germany is facing a diminishing trend. This can affect the business of Alpha
manufacturing Ltd company negatively (de France.and et.al., 2017)Also the aging
population in Germany can also affect the new and innovative business falsely as it is
very difficult to make them understand about the latest and digitalised technology. For
this company can engage in making people know about the benefits of technology they
are using. It can help firm in growing and establishing their market share.
The major as well as diverse issues related issues within Germany is that they have
different fundamental from the issues of British such as Euro, refugees as well as
increasing with the rise of Eastern Europe at the border of the Germany while Brexit
was considered as the foreign policy drama as most of the people contact around one
million refugees that are accepted in 2015-2016.
2.Economical factor-
It includes the various factors such as inflation rate, labour rate, fiscal policies that
can affect the manufacturing company like Alpha Manufacturing Ltd. It has been
analysed that Germany is going through a drastic recession time due the trade war with
China
(de France.and et.al., 2017) The Economy of country has fall out because of the trade
war which .is going on with China. It has been analysed that the Germany has a threat
that if tariff regulations made by USA is implemented in country then it can reduce the
sales of steel in domestic country. So this can affect Alpha manufacturing Ltd. firm
negatively. It can also lay impact on profitability aspects of company. They would not be
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able to establish their market share in new market that is Germany. It has also been
analysed that Trump has asked Germany to impose huge amount of taxes on the
manufacturing of cars. It also involves the parts of cars. So Alpha manufacturing Ltd
who is building steel gear of cars can be affected adversely by taxes
(Jurado, Léon. and Walter,2018) It can reduce the sales of car parts manufacture by
them. This can also hinder the firm from growing and increasing their sales in Germany.
Consumers of Germany faced a higher prices on the products as organization react to
shake up to trade within Europe. If this happens then it can negatively affect the growth
criteria of firm. It can also build negative image on mind of consumers which can hinder
the goodwill of society(Kasemsap, 2018). In 2019, production in the manufacturing
sector in Germany fell by 4.6% in real terms – its first decline since 2013, and the
sharpest one since 2009. At 21.6%, its lowest level since 2009, the share of total gross
value added accounted for by Germany's manufacturing sector declined for the third
time in a row in 2019. Like for example If Labour rate in Germany increases then this
can lay negative impact on Alpha manufacturing company Ltd. Also this can increase
operational efficiency of company. Firm needs to check whether the economic condition
of country is favourable for them or not. This will only help Alpha manufacturing
company in enhancing their market share. It will also support firm in growing and
attaining and retaining their market share.
3.Social factor-
These factors include the attitude, belief, thoughts and values of people which needs to
be addressed by people living over there. So Alpha manufacturing Ltd. company while
expanding market over there needs to lay emphasis on this. The main social crisis
which can be faced by small and medium sized enterprise is that the ageing population.
Germans significantly ageing population can reduce the economic growth by 25%
(Salvatore, 2015). Also when the firm is going to bring new and innovative products it is
very difficult for them to make people of old age understand this. Also it has been
analysed that the purchasing power of people has also been reduced in country, so this
can drastically affect the business which company is going to establish in Germany. It
can also affect growth aspects of Alpha manufacturing Ltd. company. Also it has been
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analysed that Germany is following parallel cultures, they have many immigrants living
in country. So when company is going to recruit people from over they need to make
policies of company according to them. This will help small and medium sized
organization in creating employee loyalty. It will also help them growing their market
share in Germany. Brexit's change the behaviour of the consumers towards purchasing
as things becomes costlier than earlier so Alpha manufacturing Ltd impacted a lot in
negative sense (de France.and et.al., 2017). Alpha manufacturing while increasing their
market share must take care of that they follow all rules, regulations, policies that has
been implemented by government. By following this the company will be able to put
good image in mind of consumers. Also they must not involve in hampering or hurting
any individuals belief, values and attitude. So this will support them in putting a positive
impact in mind of customers. They must make sure that no consumer is being hurt by
their products and services. This will help Alpha manufacturing company in putting a
positive impact on mind of consumers. This will support the organization in Germany in
retaining their market share. It can also help them in creating consumer loyalty.
According to the Hofstede cultural dimension the German society is a truly Individualist
one. Loyalty is based on personal preferences for people as well as a sense of duty and
responsibility. In United Kingdom collectivism is been followed in which the leaders are
engaged in harmonising the team efforts.
4.Technological factor-
Information and communication technology can impact Alpha manufacturing
Limited while expanding business in Germany. It has been analysed that organization
can have used to technology in order to expand their business and increase their
profitability. Automation can be used by manufacturing company to increase production
quality and reduce the cost which is linked with it. This can assist Alpha manufacturing
firm in setting down its business in Germany. It will also help them in marketing their
presence in new market (Jurado, Léon. and Walter,2018). Technology was identified as
the most important area of manufacturing process decision making, followed by quality
assurance and control. Alpha manufacturing can make use of Robotic Simulation, plant
layout which can be monitored and control by them in 3D environment. There are
various digital manufacturing solutions available in market that can be used by company
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while growing their business in Germany. Like for example these solutions can provide
organization with features like design for service, it will assist Alpha manufacturing firm
in optimizing work flows during the plant layout stage, it supports firm in increasing
productivity aspects and overall output that has been produced by them.
This solution can also be utilized by Alpha manufacturing company to design and
develop green and Brown plant. These plants will assist them in making effective use of
energy and also it will help them in consuming less amount of energy. It will reduce the
amount of carbon emission produced by company in Germany. This can help them in
building up a reputation in new market. They can gain competitive advantage through it.
Virtual validation can be done by firm by making use of this technology. Apart from it,
these technologies also provide organization to plan and utilize their resources
effectively by making proper use of available plant space. Other technology such as
human ergonomic solutions can assist Alpha manufacturing in evaluating ways to carry
out the task manually which would reduce the burden of employees who will be working
on shop floor. It will be beneficial for company as they can invest their time in more
productive aspects (Lewis and et.al., 2017). It can help them in enhancing their market
share in Germany. These solutions will also reduce the risk of occupational hazards, it
can help company in providing employees with more safe and secure environment.
Digitalization is really beneficial for organization who are making use of six sigma
process. It will help Alpha manufacturing company in improvising their product quality,
detecting errors during manufacturing process and coming out the solutions to fill up the
gap that has been analyses in enterprise. In order to gain competitive edge form
competitors company has to make use of automation. Artificial intelligence and 3D
technology (Lewis and et.al., 2017). This will provide them with a goodwill in Germany.
Making use of technology can help firm in enhancing their cost efficiency. Companies
are procuring information and machinery from low-cost centers that are currently very
popular. Advanced technology can help Alpha manufacturing firm in achieving short
term and long term objectives. It will increase their profitability.
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5.Legal factor:
Various factors like laws, rules and regulations given by government can affect
growth of Burman and Sons Ltd. company. In this company needs to make sure that
they are providing healthy and safe working environment to employees so that they can
work efficiently. It will also help company in reducing the turnover of employees if they
face any. They also need to recruit people of diverse culture, so that they can adhere to
rules passed out by German government. This will also help firm in establishing their
market in Germany (Jurado, Léon. and Walter,2018). In order to expand company in
international market, Alpha manufacturing firm needs to lay emphasis on various laws
like for example Anti-discrimination act. This rule focuses on that no discrimination
should take place in firm on basis caste, colour, religion, thoughts, values. This can lay
impact on organizations goodwill, it will also lay negative impact on mind of people. In
Germany, by this company might face problem of employee turnover, if discrimination
exists. Company also needs to make sure that they are providing consumers with high
quality of steer gears as this will help them in establishing their market in Germany.
Various other laws like health and safety act must be used. Like for example
organization must make sure that workers in Germany are not working in hazardous
conditions. Benefits like health insurance and more must be given to employees. This
can assist them in creating employee engagement and can also increase
belongingness of workers towards firm (Lewis and et.al., 2017). It is really essential for
growth of organization. Also Germany’s monetary policy must be revised by company,
they need to make sure that company is relying on their terms and conditions. If they
are not engaged in following laws given by Germany government, this can hamper
goodwill of firm. It can also lay negative impact on organizations profitability and
revenue aspects. Alpha manufacturing company’s growth can be hinder because of not
following rules and regulations given by German government. The country’s export-
focused economy has been hit by the US-China trade war, uncertainty over Brexit, and
a decline in the manufacturing industry due to new emissions rules and the shift to
electric vehicle. So Alpha manufacturing needs to lay emphasis on this fact while
expanding their market in Germany. If company is involved in following rules and
regulations, then this will increase organizations goodwill.
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6.Environmental factor-
In this factor Alpha Manufacturing Ltd. manufacturing company can get affected by
various environmental laws which has been passed by German government. In this firm
needs to engage in following various corporate social responsibility. They must engage
in effectively utilising the resources so that firm can also save for future generation. This
will support company in establishing their market share in Germany. It can also help in
increasing their profitability aspects. It can help company in growing. They must also
maintain that no pollution is being created in German country because of the
manufacturing process they are growing through. It can affect profitability aspects of
Burman and Son Ltd. company. It can affect their growth aspects. It can also hinder
them in expanding to Germany. Due to Brexit Germany has to follow ad formed their
own laws to prevent environment which will impact business operations in Germany
(Jurado, Léon. and Walter,2018). Alpha manufacturing firm must also be involve in
following Corporate social responsibility. In this they must make sure that employees
working with them in Germany is provided with safe and secure working conditions. This
will support them in creating employee loyalty and also it will help them in creating
workers belongingness. They must make sure that when manufacturing parts of gears
they do not produce much pollution, so this will help them in creating a positive image in
new market share like in Germany where they are going to expand their business
market. It will help them in increasing their operational growth and also they can
enhance their goodwill (de France and et.al., 2017). Following environmental rules,
regulations and policies will help them in enhancing their brand value. Alpha
manufacturing Ltd. company must also be involved in following aspects of sustainability.
In this they must make sure that they make use of resources in a sustainable way. So
that future generation do not suffer from the problem of resources. It will promote
sustainability in Germany where they are extending. It has also been interpreted the
automotive sector in Germany is making use of disruptive innovation. So Alpha
Manufacturing Ltd company to establish their market in Germany must also make use of
new innovation so that they can attract consumers over there. It can also support firm in
growing and establishing their market in country. By making use of disruptive innovation
they will also be able to make huge amount of profitability. This can help firm in growing.
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The nature of market need is expected to shift as new innovations such as connected
cars, specialized high-end long distance vehicles, low-cost/high-volume urban pods,
and robot-taxis emerge. After Brexit it has also been analyzed that United Kingdom
government is engage in motivating industry to expand their market share.
CONCLUSION
From the above study, it has been summarised that Alpha Manufacturing Ltd
company has been engage in expanding their market share in Germany. Firm has been
affected by the various laws, rules and regulations that has been implemented by
German government. Enterprise has also been affected by the ageing population as
they are unable to understand the new technology in steering gears which has been
brought up by company. It has hindered the growth of organization while expanding
their market in new areas of Germany. It has also been analysed that company can also
get affected because of the recession which is being going in Germany. They also need
to follow labour laws, if the rate of labour in Germany is high, then this will increase cost
of Alpha manufacturing company. It will also reduce their operational efficiency and
productivity. Firm also needs to maintain equality; they must make sure that right people
are being appointed on right jo
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REFERENCES
Books and Journals
Adekola, A. and Sergi, B.S., 2016. Global business management: A cross-cultural
perspective. Routledge.
Bulmer, S., 2018. Germany and the European Union: Post-Brexit Hegemon?. Insight
Turkey, 20(3), pp.11-28.
de France, O.and et.al., 2017. The impact of Brexit on the European armament
industry. report cité, p.4.
Doh, J., McGuire, S. and Ozaki, T., 2015. The Journal of World Business Special Issue:
Global governance and international nonmarket strategies: Introduction to the
special issue. Journal of World Business.50(2).pp.256-261.
Germany industry Growth. 2018. [ONLINE] Available through: <https://www.focus-
economics.com/countries/germany/news/industry/growth-in-industrial-output-
picks-up-despite-still-weak>
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford
University Press.
Jurado, I., Léon, S. and Walter, S., 2018. European Preferences for Brexit: Evidence
from a conjoint experiment in Germany and Spain. University of York and
University of Zurich.
Kasemsap, K., 2018. Mastering business process management and business
intelligence in global business. In Global Business Expansion: Concepts,
Methodologies, Tools, and Applications (pp. 76-96). IGI Global.
Lewis, H. and et.al., 2017. Design+ environment: a global guide to designing greener
goods. Routledge.
Online
Perry-Kessaris, A., 2016. Global Business, Local Law: the Indian legal system as a
communal resource in foreign investment relations. Routledge.
Pikhart, M., 2017. Managerial communication and its changes in the global intercultural
business world. In SHS Web of Conferences (Vol. 37, p. 01013). EDP Sciences.
Salvatore, D., 2015. Managerial economics in a global economy. OUP Catalogue.
Tallman, S., Luo, Y. and Buckley, P.J., 2018. Business models in global
competition. Global Strategy Journal.8(4).pp.517-535.
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APPENDIX
5.Country profile
Germany also have really tough licensing system, so Alpha Manufacturing Ltd.
can also face tough challenge related to obtaining licence in the country. It might include
they have to go through really tough documentation process. SMEs in public
procurement procedures, such as the legal obligation to keep the requirements for
businesses participating in procurement procedures as moderate as possible (Lewis
and et.al., 2017). It has also been analysed that small and medium sized enterprises
while expanding the business over there can face difficulty to have funds which can
support them in establishing their market share over there. Germany is also engage in
making new policies and procedures related to supporting innovation which has quiet
helped small and medium enterprises. Also the challenge that can be faced by Alpha
Manufacturing Ltd. company is that they need to make sure that they do not hamper the
sustainability and environmental aspects of country.
Germany has been firm in maintaining manufacturing units by providing
consumers with high quality of products and services. They have maintained this even
after facing competition from China.. The automobile sector in country has employed
8,51,000 people. This has helped country in enhancing their economic condition. It has
also been analyzed that manufacturing sector in Germany is highly innovative as the
70% of firm in country are investing in innovation and 30% of them are providing highly
innovative products. It has been analyzed that the manufacturing sector in Germany has
provided significant amount of revenue to the country.
There are various macro environmental factors like social, political, technological
that can impact the working of Alpha Manufacturing Ltd. Small and medium size
enterprises in Germany have faced mixed development, they have added 10.5% in
Gross domestic product during the year 2013-2017(Perry-Kessaris, 2016). It has been
analysed that the complex challenges which are faced by these industries are
technology advancement. It is because the transformation which are digitalised require
high amount of investment in research and development. Industrial revolution has also
been one of the major challenges for the small and medium sized industry. These can
hamper the growth of Alpha Manufacturing Ltd. It can also lay impact the profitability
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aspects of company which is producing steering gear. The need therefore, is to create
an environment to facilitate transformative innovation within manufacturing to create
new market demand through better anticipation of customer needs. It can also increase
sustainability aspect in Germany. The contribution of manufacturing labour force in
Germany’s Gross domestic income is 18.1%. Alpha manufacturing Ltd. will also be able
to earn more amount of profit as from a report it has been interpreted that Germany in
the year 2017 has been the world’s largest exporter of cars. Brexit shows the harsh
effects especially for the exports of the Germany as they have to face an additional
cost both in terms of customs and bureaucracy of transportation, logistics, taxes and
data protection.
6.Company profile-
Present report will lay emphasis on Alpha Manufacturing Ltd. Alpha Manufacturing
will offer fine-finished Stainless-Steel sheet metal fabrication services for the first time in
their history, following major investment to diversify their offering. It has been analysed
that Germany has been ranked 6 all over the world, as the best place to develop the
manufacturing business over there. Germany has managed to retain its core
manufacturing advantage by competing based on quality and not just cost, but also on
making the necessary investments to retain its role as a differentiated manufacturing
destination globally. So the decision to expand in Germany by Alpha Manufacturing Ltd.
Can be considered as quiet beneficial for them. The manufacturing business in
Germany has raised from 10% to 22.2%. Also it has been analyzed that the government
of Germany has also being making huge investments in research and development, so
this can help Alpha Manufacturing Ltd. Firm to make use of advancing technology and
grow over there. Alpha manufacturing company must also be involved in analysing
fiscal policies so that they can be engage in implementing proper strategies for it. This
will help firm in growing and attaining new market share. They must also make sure that
when they are expanding their market, no recession period is going in Germany. This
will help them in increasing their profitability.
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