Germanys current form of government ” democratic federal republic parliamentary” system. Federal republic of Germany originated in 1945 but was not the government for all of Germany till it was united in 1990. It comprises of 16 states after the merger of the West and the East government of Germany following constitution “GRUNDGESETZ” of the West Germany. The president is a only a position to nominate the ” Chancellor” who is the head of the government. In turn the chancellor recommends or dismiss members of the federal cabinet who help him in the governing of the country. The country is divided into sixteen states who are represented by “Bundesrat” occupying an total number of sixty-nine seats. All constitutional initiatives must first be sent to bundesrat and must pass by 2/3rd votes. The “Bundestag” is the federal assembly which is directly elected by the citizens which consists of 614 seats. The legal body is the Federal constitutional court which makes the supreme court decisions.
Germany political influence over foreign business:
Germany while giving a strong global boast to numerous international businesses faces many challenges of overcoming its “post-writschaftwunder state” and also struggling with high tax rates and unemployment. After the world war the government forced companies to invest in one and other which led to companies too compile a long time planning yielding low profits. Late in 2002 Germany’s parliament ended the capital gain and cross holding giving freedom to companies to invest freely. Ever since the country’s growth has been significant to a position of business leader.
Germany political risk and expropriation:
Germany has stable government with minimum political risk for international business, the corruption level in the country is very low. The policies of the government provide little risk to business expropriation. The judicial system upholds the law and is fair with the foreign business. There seizer of assets and property by the government has not to be feared without a compensation or post-uninfected. Although eminent laws do exist specifically article 14 paragraph 3 of German law which discusses basic rights of property which apply to both individuals and businesses. The law states that “expropriation shall only be permissible for the public good and it may only be ordered by or pursuant to a law that determined by establishing an equitable balance between the public interest and the interests of those affected.” German laws provide property protection laws and by the European union. The European union treaty allows violation of the laws can be brought to European court of justice”.
Even though the country has booming business overall its economy is suffering. The main reason being that the small and medium industries are not prospering its people are more of a saver than spending which is the main reason hurting the economy. Later in 2003 France and Germany supported the USA in the campaign against Iraq hoping it would boost the economy. This strategy was based upon the theory of “Broken Window fallacy by Henry Hazlitt’s Economy” but it failed. Over all the war brought down the economy. Germany has always been a proud country not allowing other countries to boss them or interfere in their politics after their loss in the world war II they renewed their ideas and moved to a more political and business module allowing them to gain status in trade control and even government sanctioned control over businesses.
Assessing the German politics Germany does have companies and business it protects but on the whole it is safe environment for international business and investment. Leading the economy in the European union its political system is open to international business and investors. As in all Germany has low political risk.
Germany’s legal system
Germany’s legal structure:
Germany’s legal structure starts with the constitution known as the basic law which holds two major function it insures the rights of the individuals as well as establishes the bodies of government for the land. The traditional system Germany follows is know as the civil law system, there no precedent set by the judicial rule. The civil law follows a system of codes which consists of five “civil, civil procedure, commercial, and criminal procedure” these code are further divided into five books which includes the general part, obligations, properties, family, and inheritance. The judicial system has to also obey the laws set up by the European union as it is part of the organization. The courts are divided into three category the ordinary courts, the specialized courts, and the constitutional court the highest court in each category is called federal court. The federal court of justice also know as “Bundesgerichtshf” is the last court of appeal for a review. The federal constitutional court also know as “bundesverfassungsgericht” only hears matters dealing with constitutional rights. The constitutional court is divided into two divisions dealing with two different halves of the constitution.
German tax law is a very complicated and constantly changing and but Germany has many tax deduction laws which help but it only depends on the companies tax advisors knowledge and loyalty. The tax includes social insurance, a wage tax and a solidarity tax. Ten percent of the writing on taxation is on Germany tax laws. The social tax is equivalent to twenty one percent of the total taxable income which pays for the healthcare and social services. The employer must pay the social tax that matches the amount the employee pays to the government as well. The wage tax is based on the income the personal and it is divided into three ranges. The deduction on these taxes vary and complicated and it mainly helps the rich who are able to meet the requirement. Which is why the government is criticized for its taxation law.
Germany has a strong employee biased law and is called “Employee protection law”. The act requires the employees to be given safe and healthy work environment, limited physical labor. Expecting and nursing mothers are protected by the maternity protection act, and provides fully paid material leave before the due date. The government has strict laws against child labor, those under 15 and older attending full time schooling are prohibited from employment. The hours of work act has a strict requirement of safety and health protection and the average time they are allowed to work a day. But there are no laws on minimum wages instead it is written in the contract. All the employees should be treated equally and discrimination on the basses of sex, cast, religion and color are prohibited by law. Laws on the termination are extensive, there should be a minimum of six to seven months notice before termination.
Germany being a member of the “Organization for Economic Co-operation and Development” an organization made up of thirty countries resolving economic, environment and social issues. These countries are striving for a free market economy to bring up the living standards, financial stability, employment and other needs. And in 1997 these countries signed a convention, introducing a law in there judicial system The Act of Combating Bribery of Foreign Public Official in International Business in September of 1998 but it came in action in February 1999. Ever since bribery of foreign public official became a criminal offence before which only domestic bribery was considered an offence. Hence companies who deducted bribes on taxes were cracked down and where punishable by law.
Germany has one of the strict laws on market restriction especially when it comes soliciting activities such as telemarketing which can only be carried out if the companies have prior consent.
In general German legal system is stable and safe for international businesses to transpire without fear. And it also protect human rights to the fullest and gives freedom to invest globally.
Germany’s Economic market
During the second world war Germany’s inflation ran uncontrolled due to Hitler imposing price controls which lead to an inflation in the economy with some sectors of the economy failing. After the war the country suffered a full economical crisis with the prices of goods frozen and the excess of printed money for the war there was sever shortage of good with food being the most. The economy was reduced to a bartering system. To ascertain there was no threat to the country the government substantially weakened the industrial power which included the shutting down the building of planes, ships and ammunitions which where the driving force of German economy before the war started.
The Marshall plan helped Germany in monetary and psychology support however the monetary support of dollar was not enough and with currency Reichsmark worthless, the grate economic miracle or Wirtchafswunder was mainly due to the reform in currency. Many economists in the country addressed the reform in the currency and in 1948 they introduced the Deutsche Mark and along with it they reduced taxes and lifted the price controls. With these reforms Germany in several years had rebuilt its economy and had advanced to become the third largest economy in the world.
Even with all this Germany miraculous period it has many natural reasons in deceleration of the economy the main reason being the countries service sector of industries was not as good as the manufacturing sector which overall lowers the competitiveness in the global market. And second being the slow accumulation of capital as the country has reached its peak in production, the third factor being the drop in job market due to the shock and the increase in the oil prices. Due these factors reforms are being made in the laws and the constant growth in the GDP and world demand of German goods remaining firm reforms are to be made to keep the countries output growth. The country has experienced a stage where unemployment had reached a record high due to poor economy and harsh winters causing construction and production to stand still. Each country has an way to calculate there unemployment Germany follows the European foundation for the improvement of living and working condition according to it “the number of people registered as unemployed as a percentage of the total number of people in employment and seeing employment”. But presently due to the strong global economy and other factors the unemployment has reduced.
Germany’s travel and tourism has grown significantly in recent years due to the low prices of visiting and staying in Germany it has become one of the most visited sites in Europe. As of 2003 Germany’s service industry has brought 7% of the total GDP. Majority of the tourist are from the US, united kingdom, Switzerland, Belgium, France, and Italy. The German automobile industry has been one of its pride industries. The industry is one of the highest employers of the population. However the automobile industry being the highest income it is considered the lowest environmental friendly as Germany has done little in the development of eco-friendly vehicles.
Germany is a promising country for private investors since the reforms in the government which diversified portfolios, tax reforms, maximizing shareholder value and other political changes. The credit system in Germany has similar operations as US and other countries. The banking system in Germany is one of the biggest in the world since the formation of the European union it follows the rules and regulation of the European central bank. From 2001 Germany has replaced its Deuteche mark to Euro.
When someone travels to a new environment even if they do not know their language their body language speaks at lot for them. So it is essential to know the opposite parties culture before you make a mistake. Like some body language in your culture may mean good but in others it may mean bad like how you greet, or how you sit, or how you wave these all have different meaning in different languages. In some countries their culture and their speaking include a lot of hand signals during such time you should be very careful. For example a wave in Germany during a business meeting is not accepted as good while it may mean differently to you, or if it is a birthday a person should not wish him before the date as it is considered bad in Germany. Such small differences may hinder or cause difficulties in your business on the long rum. Even though Germany has reformed its ideas to permit its business culture but their rigid formal and to the point business styles is still the same as the old ways of the national socialism beliefs.
Germany has a very unique business culture which they follow even with their wide globalization. Due to these cultures it is a fact that products of a German production under a German manager is said to have a high quality. There companies and managers use quality and responsiveness and dedication to maintain and produce quality goods. All of these are possible because they are good planners and their workers proceed according to the agenda planed for them. Germany has one of the best health care systems in the world and are fare to all its citizens. There insurance options include three government, private and a combination of both and majority being covered by the government. Each of the insurance in available to citizens on the amount of earnings per annum.
German is the official language of Germany and Austria, the Hoch Deutsch is the formal German spoken and taught. The language has similarities to English and Dutch languages. Germany since long has had a major problem of racism, the racial violence is one of the major factor in attacks on individuals since the time of Adolf Hitler who was a against Jews but now it ahs taken a new form racism against color and creed .
Germany is one of the most advanced country in the world in technology. Germany has a law called “The German Digital Signature Law” to enforce high security technical standards. Siemens home and office and the Polyapply are Germanys leading communication devices. these help companies to increase engineering productivity and to meet the world demands. Polymer electronics which are the application of ambient intelligence same as Rf communications have come a long way. Every country may have technology but the cost of for such high technology cannot be owned all countries but Germany has all these and that is why its one of the worlds leading in technology. Even the health care system is to advanced that some are not found in most parts of the world.
After considering all the factors of the country Germany is one of the best countries in the world for international business. Having a stable political system, the third best economy with strict laws giving equal justice cultural freedom and on of the best technology. Germany having a central geographical position and part of the European market it is considered a center for international businesses. The country is the world leader in exporting goods. The main factor for Germany’s success in the global market is its government who have supported in the development, research and studies in various fields of the market. Currently one of Germanys critical international business involves European Aeronautic Defense and Space Company which is a merger of European union aeronautical companies.