Critical Evaluation of German Business Environment for Liz Earle

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Critical Evaluation of German Business Environment

Executive Summary
The study has discussed the different economic, political, legal, and demographic factor of the
country Germany. The study helps to evaluate the same and determine the current stand and
status of the economy for the expansion of the business of Liz Earle in the country. The study
with its brief analysis derives to understand that the current situations are very favourable of the
company in the country. The skilled labour force and technological advancement of the country
could help the company to efficient incorporated the resources of the country and strategically
expand its business of herbal cosmetic products and fragrance in the country Germany.
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Table of Contents
Introduction......................................................................................................................................4
Business climate analysis of Germany............................................................................................5
Justification behind internationalization in relation to the trade profile of Liz Earle......................9
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................11
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Introduction
Business management and development is a necessary aspect to consider in current ambience. It
is seen that the service management process has a link with business off shoring. A stable and
well-developed organization can make significant changes in the system in order to adapt to the
new environment in which it is planning to expand. Here the company named Liz Earle is
considered as the organization, which is going to internationalise its business and expand in
Germany. In the following segment, the business environment of Germany is going to be
selected and in accordance with the condition approach, strategies will be planned as well.
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Business climate analysis of Germany
The business environment analysis is going to include a brief detail of the factors that are
associated with proficient analysis of the issues. For an example the factors may include, labour
condition, economy, and others. For better understanding, the management policies have to be
checked and that might have to be aligned with the people’s demand as well (Velásquez and
Meunier, 2017). In the following segment some of the business environment factors will be
analyzed and in accordance with the approach strategy.
Political factor
The German business management process is related to the factors that are connected with the
situational analysis of the country. According to Falkner (2017), Germany is a federal republic
company and it has the culture of making proper communication with the different levels of
hierarchy. It is seen that the most important factor is the policies that are made by the people who
are working in the political line up. If a detailed discussion of the political environment of
Germany is considered than it will be found that, the country functions with the judiciary process
and it helps in making decisions faster. There are not too many parties in the business and it is
seen that the power revolves around Social Democratic Party and the Christian Democratic
Union.
The most important thing is to analyze the rational approach of the business management
process. The political parties do the policymaking. From the context of ease of doing business,
Germany is one of the top most countries. From the viewpoint of Kuzemko et al. (2016), the
political parties in power support business management process and business development in
order to achieve the best economic state as well. Promotion of diversity is one of the most
intrinsic factors to consider in order making a justified approach. According to Autio and Fu
(2015), the issues related with the business management process can be managed with the help of
having a rational thinking and in the end; this will help in contemplating the issues properly. The
stable nature of political environment is a good thing to consider from the context of business
management and development. According to McDonnell and Werner (2016), the problems can
be sorted with the help of having a better kind of analytical detail and in the recent context it can
be stated that the stable environment of the political parties help business development process.
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There is no sudden change in the legislation from the context of business management and it is
the best thing to consider for any organization that is planning to have better business in the
geographical segment.
Stability with modification instigates changes required in a system in a steady manner, which
helps in making changes in accordance with the requirement. A company like Liz Earle can have
better kind of support from the business management prospect and this will be economically
beneficial as well. The management policies need to be changed as well if needed to be adapted
to the business environment of Germany.
Influential legal factors of business in Germany
Business management process is well connected with the business management process and they
are looking forward to make some modifications in accordance with requirements. According to
Clauss (2017), it is observed that the business management process is related with the
understanding of the legal ambience. In accordance with the German Corporate Law, the service
providers need to understand the difference of the companies that are performing in the business
environment. It is seen that the possibility of making changes in the system needs to be assessed
to make certain modifications that might be needed. In accordance with the Companies Act of
Germany, it is necessary for better understanding of the scenario that is associated with the
business ambience. According to Drazkiewicz et al. (2015), the companies need to be liable for
the management related mistakes and if necessary then they have to make required changes in
the top management to have a distinct approach as well.
On the other hand, the Stock Corporation Act 1965 can be considered as well in order to make
certain changes that are associated with the stock market (Gesetze-im-internet.de, 2019). The
companies, which are in Stock, market needs to abide the stated facts in this segment. In
accordance with Drazkiewicz et al. (2015), the legal factor analysis needs to be managed in
accordance with the requirement and the best solution or approach can be taken accordingly. The
company Liz Earle must have to reflect on the procedure on which they are working on and they
have to make sure that they are considering the best kind of approach in accordance with the
business management process. In accordance with the Works Constitution Act, the services have
to be managed because in Part One, General provisions, Section 5 employees a detailed
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description of employee management and rights are given (Gesetze-im-internet.de, 2019). These
acts have the authority to make certain changes in the system to grow with the demand of the
market from ethical perspectives. The management of the organization Liz Earle needs to adhere
it in order to flourish in the segment. From the context of skin care products, the country does not
have any major norm regarding hygiene and other factors; hence, business flourishing will be
beneficial as well.
Economic factors
The economic conditions for the country Germany are very general in nature and follow a very
stable outlook. The country after the financial crisis of the 2008 has adopted the strategy for low
wage growth to overcome the issue for job security. This did help the industry to overcome the
issue and post a very stable unemployment rate of 3.9% in the years 2018 (Heritage.org. 2019).
The stability of the political conditions and the repeated establishment of Angela Markel’s office
have portrayed stability in the global business economy. The company has been successful to
maintain a low inflation rate due to incorporating strategies of financial policies to keep the
liquidity at the minimum. The country currently enjoys a 1 to 6% rate of inflation, which is
comparatively very stable.
Figure1: Inflation rate of the country Germany
(Source: Tradingeconomics.com. 2019)
The economy of Germany has been hit by the global slowdown and the current trade war
between the United States and China (Cashin et al., 2017). The other major factor is the
dependency of the German economy on fossil fuel for its energy need. The prevailing tension
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with oil rich countries and sanction on countries like Iran and Venezuela have disrupted the flow
of crude in the economy and disrupted the smooth functioning of the country. The country has
very strictly moved its focus to develop new and alternative source of renewable energy such as
wind and solar energy. This will help the industry to overcome the dependency of the country on
the fossil fuel and bring about a more stable outlook for the future. The country has been
reporting a budget surplus for the consecutive 3 years due to low governmental spending. The
government has planned an approach for the year 2019 to boost the economy and increase it
government spending to enhance the scope of economic growth in the country (FocusEconomics.
2019.). The stable political condition and the outward budgetary planning of the country to
enhance the overall governmental spending and enhance the positivity of the macro economic
conditions is very forward looking approach of the country. The same could enhance the overall
macro factors of the economy to overcome the global slowdown in the economy.
German Workforce
The country enjoys a very high literacy level of over 99% and produces a very skilled labour
force who is very well equipped with the tasks they approach. This not only helps the industry to
be efficient and deliver a high quality product for the global economy (Klapper et al., 2015). The
country follows a 10-year compulsory education system with 100% attendance; this has helped
the company to portray a very high literacy rate of over 99%. The country enjoys a very high
labour involvement rate and the basic age of retirement is comparatively higher to other
countries in the European Union. The country focuses to holistic development with the focus on
development of skills of it citizens or labour force. The government has opted to increase the
wage for the employees in the nation over its low wage growth agreement with the employees of
the country (Hancock, 2019). The strategy is considered to enhance the disposable income in the
country and the same is expected to be spent rather than to be saved. This portrays a very huge
probable growth for the overall industry in the country focusing on the retail and fashion
industry. The small and medium scale industry is focused to be the major beneficiary of the
strategy and the same could enhance the overall prospect of the economic growth for the country.
Demographic factors
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The country Germany enjoys a strategic geographic location with the low plains in the north, the
high plains with hills and basins in the centre and the east and the great mountainous region of
the Alpine in the south. This gives the country a very stable prospect for the industries to
function. The high literacy rate and developed society does not discriminate between the gender
of the employees and focus to divulge equal opportunities for all the constituents of the society.
The country comprises of mostly Germans 91.5%, Turkish 2.4% and others 6.1% of the total
ethnical composition of the country (Worldpopulationreview.com. 2019). The company is the
largest economy in the European Union and the fifth largest in the world. The population of the
country is approximately 82 million and has been showing a negative growth rate of 0.53% this
is a very big concern for the country as it is facing a very rapidly aging population and the same
will soon become un-productive in nature. The high skill and technological advancement of the
society has helped the country witness a very rapid growth in the most trouble economic times.
The same has been the result of the strategic planning and farsightedness of the German
government.
Justification behind internationalization in relation to the trade profile of Liz Earle
The company Liz Earle has had a long association with the beauty industry for over several
decades. The company first founded in the year 1995 has seen several ups and down which it has
strategically overcome the same with its expert management and strategic alliances. The
company dealing in natural heals and skin care products and fragrance is focused to expand its
venture onto the Germany economy (Steer, 2018). The current circumstance seem to be very
favourable and the company as the initiatives of the government to enhance the disposable
income of the country to increase the national spending. This could have a very direct effect in
enhancing the revenue of the retail and fashion industry. The company Liz Earle could make the
most use of the economic boom and stabilize its business functioning in the German economy.
The slowing global economic conditions and budget surplus has entailed the government to
increase its public spending and any new Foreign Investment are welcomed by the country. This
all portrays a strategic role for the company Liz Earle to grab the benefits of the prevailing
favourable conditions to expand its business venture in Germany. The company could get the
benefit of the highly skilled labour force and the technological advancement of the society. The
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available resources of the society could strategically help the company Liz Earle to create a
sustainable business model in the country Germany.
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Conclusion
From the given detail, it is evident that German market is a flourishing region for the service
providers to work on. The business management process needs to be aligned with the legal and
political environment to have better return on investment. The company needs to ensure that the
labour force is working in a specific manner in order to make changes to the situation
management. It can be concluded that the business management process of Liz Earle has the
potential because from the trade profile it can be stated that the company can make certain
decisions in accordance with the requirement of the situations.
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Reference
Autio, E. and Fu, K., 2015. Economic and political institutions and entry into formal and
informal entrepreneurship. Asia Pacific Journal of Management, 32(1), pp.67-94.
Cashin, P., Mohaddes, K. and Raissi, M., 2017. China's slowdown and global financial market
volatility: Is world growth losing out?. Emerging Markets Review, 31, pp.164-175.
Clauss, T., 2017. Measuring business model innovation: conceptualization, scale development,
and proof of performance. R&D Management, 47(3), pp.385-403.
Drazkiewicz, A., Challies, E. and Newig, J., 2015. Public participation and local environmental
planning: Testing factors influencing decision quality and implementation in four case studies
from Germany. Land Use Policy, 46, pp.211-222.
Falkner, R., 2017. Business power and conflict in international environmental politics. Springer.
FocusEconomics | Economic Forecasts from the World's Leading Economists. 2019. Germany
Economy - GDP, Inflation, CPI and Interest Rate. [online] Available at: https://www.focus-
economics.com/countries/germany [Accessed 18 Jul. 2019].
Gesetze-im-internet.de. (2019). [online] Available at:
http://www.gesetze-im-internet.de/englisch_aktg/englisch_aktg.pdf [Accessed 18 Jul. 2019].
Gesetze-im-internet.de. 2019. Works Constitution Act. [online] Available at:
https://www.gesetze-im-internet.de/englisch_betrvg/englisch_betrvg.html [Accessed 18 Jul.
2019].
Hancock, M.D., 2019. Structural Components and Requisites of West German
Corporatism. Social And Political Structures In West Germany: From Authoritarianism To
Postindustrial Democracy.
Heritage.org. 2019. German Economy: Facts, Population, GDP, Inflation, Unemployment,
Business. [online] Available at: https://www.heritage.org/index/country/germany [Accessed 18
Jul. 2019].
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