Global Business Context: German Business Environment for UK SMEs

This essay examines the international business prospects for a small UK manufacturing company, JTL Kitchen and bedrooms Ltd., considering a move to Germany. It provides an overview of the company and the German business climate, including economic, fiscal, legal, and political aspects. The essay analyzes the company's internationalization, considering factors such as Hofstede's cultural dimensions, economic factors, social factors, infrastructure, and legal aspects. The paper also assesses the company's competitive landscape in Germany, highlighting potential challenges. The essay concludes by providing a comprehensive analysis of the German business environment and its impact on the company's decision to internationalize.

Running head: GLOBAL BUSINESS CONTEXT
GLOBAL BUSINESS CONTEXT
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Table of Contents
Introduction.................................................................................................................................................2
Background of SMEs in UK...........................................................................................................................2
Overview of the Company.......................................................................................................................2
Business Climate of Germany......................................................................................................................3
Economic and Fiscal Climate of Germany................................................................................................3
Legal and Political Climate.......................................................................................................................4
Hofstede theory of insight of Germany and UK.......................................................................................4
Factors to be considered for operating business in Germany.....................................................................6
Internationalization of Businesses...............................................................................................................9
Current status of the respective business...............................................................................................9
Examples.................................................................................................................................................9
Conclusion.................................................................................................................................................10

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Introduction
International business is not a contemporary phenomenon. International and trans-
national trade can be traced back to prehistory. According to Stearns (2016), since the annals of
prehistory, different civilizations from different parts of the world had contacted and traded with
each other. However, as the world and technology progressed, massive form of globalization
happened which also paved way for a completely new form of international trade and commerce
(Hamilton and Webster 2018). The respective paper is an essay which talks about the
international business prospects of a small concern in UK which is planning to set its business in
Germany, the scope and limitations of business prospects in economy. The respective paper
intrinsically as well as instrumentally comprehends the business environment and present
conditions of entrepreneurship in the context of Germany.
Background of SMEs in UK
The companies of United Kingdom that are generally small and medium- sized
enterprises (SMEs) are generally non- subsidiary, independent enterprises which employ fewer
that a particular number of employees to be employed. The number of candidates employed
varies according to the countries. The limit of SMEs of United Kingdom is 250 employees,
however, the respective small UK based company taken in the respective case employs less than
250 employees (Love, Roper and Zhou 2016).

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Overview of the Company
The respective company is JTL Kitchen and bedrooms Ltd. is taken in the respective
case. The company JTL Kitchen and bedrooms Ltd is a small and dedicated manufacturing
company that specializes on kitchen appliances and domestic cookery products which is based in
Leicester, in the province of Leicestershire, United Kingdom. The company has satellite
showrooms near Glasgow province, having a range of excellent selections of kitchen furnishings
and bedroom doors that can be customized in order to meet the personal preferences of the
customers. The company provides its customers with a variety of furniture suitable for office
with designs, perspectives and creative ideas that is suitable for the needs and preferences of the
office environment. The company provides dedicated and efficient professional staff with over
twenty years of experience (Jtlkitchensandbedroomsltd.co.uk.2019).
Business Climate of Germany
Germany is a country which is situated in the Western Europe. It covers the area of
around approximately 356,750 km2 (Braun and Thielmann 2013). The country Germany shares
its borders with nine other nations of Europe, namely, France, Luxembourg, the Netherlands,
Switzerland, Poland, Denmark, Belgium, Austria and Czech Republic. The country Germany is

4GLOBAL BUSINESS CONTEXT
fortunately geographically positioned in such a way that it is situated in the mid- point of the
world’s most active zones of trade and commerce (Obschonka et al. 2013). The capital of the
country Germany is Berlin which is considered as the largest city of the country in terms of area
and also one of the most influential cities in terms of politics and economy of Europe. The
country has the population which is more than 80 million and the economy of the country is also
strong, especially after the Brexit (Schneider 2015).
Economic and Fiscal Climate of Germany
Doing business in Germany is definitely a positive and a correct decision by any UK based
company as Germany has dime- a- dozen market and prolific environment for entrepreneurship
(Schneider and Kearney 2013). Germany is ranked 20th country for ease in doing business by the
World Bank. In the index of Economic Freedom, the country is ranked the 25th for its liberal and
forward thinking approach to business, openness to global economy, surveillance and premium
protection to the intellectual property rights and efficient business regulatory systems (Labrousse
and Weisz 2013). It has become one of the largest exporters of merchandized goods, products as
well as services and its GDP has expanded upto 19% in the year 2019. However, the German
fiscal policies are often considered to be notorious as well as difficult to navigate, comprehend
and abide by and many small and medium industries of the United Kingdom find it difficult to
get hold of the fiscal policies, which often leads to delay and complicacy in the business
(Schneider 2015).

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Legal and Political Climate
With Brexit, Germany has given ample opportunity to the business enthusiasts by becoming a
trade power center of Europe. However, Euro-zone crisis is also a reality in the business
environment of Germany. Due to the European Union treaty where the United Kingdom took
decision to get herself removed from the European Union, the country might fall into political
and economic issues in future (Bordo, Jonung, and Markiewicz 2013). With European law, law
of federation and law of sixteen states, Germany is a country with legal complexities. The
Federal constitution of Germany has provided freedom to carry out business operations with
strict court systems and labor laws (Luthra 2013). European Court of Justice has also provided
the foreign companies to set up business operations in the country with ease (Du et al. 2017).
Hofstede theory of insight of Germany and UK
Power distance: power distance is a parameter where equal distribution of power is justified by
introspecting the extent at which the marginalized communities within a country expects and
accepts the power distribution. Germany has strong middle class population and power distance
is 35 whereas UK is a country of inequality and status quo as it ranks lower in PD as compared
to Germany. Equality among the masses and dignified position of the working class proves the

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country has peaceful and efficient labor force that can be utilized in business (Bönke, Corneo and
Lüthen 2014).
Individualism: individualism is a yardstick that measures the degree of interdependence a given
society manages and maintains among its members. German society is highly individualistic
with nuclear families and scientific familial ties. However, according to Cashmore (2013), UK
too scores 89 in individualism compared to Germany with strong belief of personal fulfillment
among the masses. Strong belief of sense of duty and responsibility of the masses of Germany
can prove to be competent human resource for the businesses (Tolman 2013).
Masculinity: Germany is a masculine society which is driven by competition, achievement and
success. Britain, too, is a masculine society driven by impulse, success and achievement
(Cashmore 2013). Therefore, the market of Germany is prolific and evolving towards progress
and can be utilized for business (Tolman 2013).
Uncertainty avoidance: the degree at which the individuals feel threatened of the uncertainty of
the future and create beliefs and institutions to avoid such problems is the main idea of
uncertainty avoidance. UK scores low in uncertainty avoidance scale (35) which means it is not
planned or well organized to meet futuristic issues (Guerrero, Cunningham and Urbano 2015).
Germany is among the uncertainty avoidant countries. Germany is a planned and organized
society therefore, it is safe for setting up business (Schneider and Kearney 2013).
Long term orientation: The degree at which a society takes inspiration and ideas from its past to
solve the present and future problems is long term orientation. UK is intermediate; however, it
also takes pride and inspiration from the glorious British culture (Cashmore 2013). German

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society is pragmatically oriented, and therefore, realistic and efficient for building up enterprises
(Tolman 2013).
Indulgence: it is defined as the degree at which a society controls its desires and impulses.
Germany is a restrained society which does not believe in leisure. On the other hand, British
culture is indulgent and believes in enjoyment and recreation (Cashmore 2013). Therefore, it is a
productive country for entrepreneurship (Tolman 2013).
Factors to be considered for operating business in Germany
The respective company JTL Kitchen and bedrooms Ltd is a small and dedicated
manufacturing company that specializes on kitchen appliances and domestic cookery products.
The market size of the consumer appliances of Germany was estimated to be USD 18.5 billion in
2016 (Grandviewresearch.com.2018). The country Germany also provides household goods and
appliances of both large and small products. The independent companies that are involved and
functional in the market of Germany mainly generate their revenue based on highly effective
advertising strategies and stream lined operations. The established consumer appliance
companies in Germany have certain competitive and comparative advantage over the newcomers
in the market. Therefore, the company JTL Kitchen & Bedrooms Ltd. might be having ample of
scope and opportunities in setting up its business in Germany, however, the respective company
has to compete with the other consumer appliance companies in Germany, namely, Whirlpool,
Samsung and Panasonic as its competitors. The respective competitors have a specific edge in
the German consumer appliance market and competing with them would be difficult and
resources needed to be exhausted for it (Grandviewresearch.com.2018).

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1. Economic Factors: The market size of the consumer appliances of Germany was
estimated to be USD 18.5 billion in 2016. The market of consumer appliances and
domestic appliances in Germany is also evolving with new taste and preferences of the
new customers and millennial who have a more creative and refined taste of domiciliary
technologies (Schneider and Kearney 2013). Germany is ranked 20th country for ease in
doing business by the World Bank. In the index of Economic Freedom, the country is
ranked the 25th for its liberal and forward thinking approach to business, openness to
global economy, surveillance and premium protection to the intellectual property rights
and efficient business regulatory systems. It has become one of the largest exporters of
merchandized goods, products as well as services and its GDP has expanded upto 19% in
the year 2019. Germany has high standard of living, therefore, has great strength to
provide platform for business (Klagge, Martin and Sunley 2017).
2. Social Factors: Germany is highly masculine society which is driven by competition,
achievement and success. Germans are hard- working, laborious, industrial and are driven
by strong impulse. Therefore, the market of Germany is prolific and evolving towards
progress and can be utilized for business (Tolman 2013). Germany is among the
uncertainty avoidant countries. Germany is a planned and organized society, therefore, it
is safe for setting up business. High labor costs of the skilled labor in Germany are one of
the reasons for not setting up business in Germany (Mabbett 2016).
3. Infrastructural factors: Germany has innovative and most advanced technology as well as
highly skilled and educated labor (Klandt 2015). The per capita income of Germany is
considerably high as it is the trade center of Europe. Germany has strong middle class
population and power distance is 35. Equality among the masses and dignified position of

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the working class proves the country has peaceful and efficient labor force that can be
utilized in business. The existing domestic appliances companies of Germany are highly
efficient and competitive, having been renowned throughout the world, such as
Whirlpool and Panasonic, which can possess threat to the respective company in its
journey of establishment. However, lesser known fact about Germany is its source of
renewable energy (Renn and Marshall 2016). With the help of technologies that include
renewable energy in the production process, the company can remain at the cutting edge
of sustainable production and thereby, reduce production cost and save environment at
the same time.
4. Legal factors: Germany is having a population of 82 million and is considered breeding
ground of European trade. With European law, law of federation and law of sixteen
states, Germany is a country with legal complexities. The Federal constitution of
Germany has provided freedom to carry out business operations with strict court systems
and labor laws. With the summons of European Court of Justice, foreign companies are
provided with safe environment to carry on business (Du Plessis et al. 2017). However,
The fiscal policy of the nation Germany is complicated and difficult to navigate,
comprehend and abide by and many small and medium industries of the United Kingdom
find it difficult to get hold of the fiscal policies, which often leads to delay and
complicacy in the business (Bordo, Jonung and Markiewicz 2013).
5. Political factors: With the event of Brexit, the country has given ample opportunity to the
business enthusiasts by becoming a trade power center of Europe (Adler-Nissen, Galpin
and Rosamond 2017). Therefore, setting up business in Germany is always fruitful. Euro-
zone crisis is a reason that can be obnoxious for the country as well as the company. Due

10GLOBAL BUSINESS CONTEXT
to the European Union treaty where the United Kingdom took decision to get herself
removed from the European Union, the country might fall into political and economic
issues (Bordo, Jonung, and Markiewicz 2013).
Internationalization of Businesses
Companies take up the policy of internationalization due to certain customary reasons,
such as growth, development and expansion of the business and its operations (Rask 2014).
Domestic companies tend to internationalize for improving its profit margins. In order to add
customers and increase revenues with cost savings, the companies opt for international options in
the market. Another reason for international expansion might be for diversifying the business. To
enhance their innovation and develop additional variations of their solutions while operating in
multiple countries, the companies often take up internationalization process (Castaño, Méndez,
and Galindo 2016).
Current status of the respective business
The company JTL Kitchen and Bedrooms Ltd. is a small concern that specializes in
kitchen appliances and consumer appliances which is based in the United Kingdom. The
company is not internationalized till now (Jtlkitchensandbedroomsltd.co.uk.2019).
By moving its production to Germany, the company JTL Kitchen and Bedrooms Ltd. can
leverage in the field of technology and highly skilled labor, along with the free and neoliberal
prolific market of the country (Klagge, Martin and Sunley 2017). The company can synergize the
opportunities in its production process and increase not only the productivity of the company but
also its credibility.

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Examples
Vodafone is a UK based company which has its production and operations extended to
Germany as well. In Germany, the company Vodafone works by the name Arcor
Telecommunications. Vodafone UK can be a big example of the companies of the United
Kingdom that are successfully running even after Brexit event (Gujarathi and Comerford 2016).
Many investors are appreciating the fact that Vodafone getting linked with Germany because of
the size of its market and location within the European Union might prove to be beneficial for
the company (Dw.com.2019). Even though Vodafone is a big company and JTL Kitchen and
bedrooms ltd is an SME of UK, still it can learn from Brexit and undertake the risk.
Conclusion
The respective paper concludes to be an essay which talks about the international
business prospects of a small concern in UK which is planning to set its production process for
its business in Germany, the scope and limitations of production and business prospects in
economy. The respective paper concludes to intrinsically as well as instrumentally comprehend
the business environment and present conditions of entrepreneurship in the context of Germany.
The paper concludes also by presenting a scrutinized analysis of Germany as a business and
trade center as well as a production hub by stating its scope and limitations.