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The Socio Cultural Forces Economics Essay

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Published: Mon, 5 Dec 2016

As discussed earlier also, the Al Ain Diary is planning to expand its business overseas market of Germany by launching its new camel product within the foreign country. Thus, the launching of new products in the new market gave rise to development of the new international strategy which requires the external environmental analysis of the Germany market in comparison to the UAE market. The business environmental analysis of the Germany is done as under:

Socio-Cultural Forces:

Socio cultural forces have great impact over the international business as it is directly related with the external and the internal customers of the country. Germany is considered as the most popular nation of Europe and contributes a lot to the national culture of Europe, such as the German culture. In order to establish the international business within Germany, it is very essential for Al Ain to induce the cultural and social factor of the country within the international strategy. The key cultural and social features of the country are as follows:

Ordnung:

German living and the working style is regulated by the structures such as with the help of laws, rules, procedures linked with the economic, political and social factors. Thus, the German business is regulated by the strict and prescribed rules and regulations of having low degree of flexibility and spontaneity.

Focussed Facts:

The decision making and the problem solving process are based on the objective facts within the country. So, such processes are governed by logical analysis of information rather than perception.

Focussed Tasks:

Germans believe that they have to achieve the task that is in their hands rather than future tasks. They have well defined structure of their tasks and the interpersonal relationship plays a secondary role in the business.

Communication Style:

Germans follow direct and confrontational communication style. Therefore, the business discussions are followed by the open criticism and the project problems are not taken as the personal issues.

Punctuality is the essential and vital part of doing business in Germany.

German Business culture is well defined and strictly followed on the structures and hierarchy. There is a clear description of roles and responsibilities for each and every person.

Personal life is never mixed in the professional life by the Germans.

Business relationships are often made for mutual advantage.

The level of formality is even maintained within the business and the colleagues. The first name is only taken by the closed ones, however within the professional environment, the last names and appropriate titles are used.

Business meetings are totally formal procedures and greeting is initiated with the firm and brief handshake.

Body language and eye contact plays a very vital role in business communications.

The official language of the country is German and most of the Germans follow Christianity (Gorrill, 2007).

Hofstede’s Cultural dimensions of Germany in comparison to UAE:

Power Distance:

The power distance in Germany is highly decentralised and supported by the strong middle class. The score for the power distance is 35, which shows that the co-determination rights of the country is comparatively extensive and requires management. While in the UAE, power distance is highly centralised and governed by the upper middle class.

Individualism:

German society is truly individualistic and controlled by the short families with parent child relationship. While the UAE society is mostly grabbed by the expatriates and the migrants from the different countries.

Masculanity/ Feminity:

Germany has a very high score in this factor and performance is highly valued in the country with transparency. The people in Germany have high standard of living and managers are decisive and assertive. While in the UAE, the society strongly follows the male dominance and women are restricted to work outside. The high level of standards is also maintained in the UAE society.

Uncertainty Avoidance:

Germany is among the uncertainty avoidant country and the UAE also falls in the same category. To avoid uncertainty, they plan everything wisely and try to set rules, laws and regulations to rely on.

The above analysis depicts that there is a great cultural differences between the culture of UAE and Germany and thus for the expansion of Al Ain within Germany all the cultural factors must be kept in mind as it directly related the internal and external customers of the company. Operation in Germany comprises of local employees following the German culture so the whole HRM should be designed within the cultural paradigms of Germany. The Major area of focus is the customers of Germany as they also believe in German culture and thus much concentration should be given on the cultural areas as these factors directly affects the loyalty of the customers.

Economic and Socio-Economic Forces:

The economy of UAE have witnessed a significant rise in the past decade, wherein they have been considered with an adequate economic stability and viable growth rates which are inclusive by their increased GDP and Fiscal Balance. On the other hand, the economic growth statistics of the UAE which was reported to be 2.9% owing to the impact of depreciated oil prices evident on a global scale will subject to vulnerability.

Germany’s economic freedom score is 71.0 which make the German economy as the 26th freest economy in the index of 2012. German economy has ranked as the 12th among the 43 countries of the European Region. The foundation behind such long term competitiveness and dynamic growth is based on the high quality legal regime of the country and strongest rule of the law.

Regulatory efficiency of the market and the open market polices benefits Germany to contribute within the global economic business and market. The economy has been emerged from the effects of the global economic downturn which has negatively affected the financial and economic management. The budget deficit of the country has been pushed over the 3 % of the GDP (Germany).

The population of Germany 81.726 million which makes it 16th most populated country. 13.7 % of the total population accounts for the people of age group 0-14 while 66.1 % of the total population accounts for the age group of 15-64 and 65 and above age group accounts for 20.3 % of the total population. The sex ratio within the economy is 0.97 Male/Female. The local German citizens within the total population accounts for 73.63 %, while German citizens with immigrant background accounts for 10 % of the total population and 8 % of the total population are foreigners without German citizenship. The literacy level within the country is 90 % and over 10 % of the German youngsters are functionally illiterate. The government of the country is democratic, parliamentary republic and federal republic and the GDP accounts for 3.571 trillion USD.

The economic analysis depicts that there is a great scope for the business in the German economy as the economic structure of country strongly supports the business environment. The expansion of Al Ain in the German market i therefore beneficial for both the countries in economic respect.

Legal Forces:

The Federal government of the Germany is recognized as the constitutional state that ensures the stability within the laws and the protection of liberty and equality within the country. Basic law acts as the standard for the democratic constitutional state. The federal constitutional court monitors the management and maintenance of the rights and the preservation of the justice within the country. The administration of the country is being divided into five branches namely:

Ordinary.

Labour.

Administrative.

Social

Financial Courts.

Generally there are three tiers that re-analyse the decision of the court. 20000 independent judges pass the justice who are bounded by law and passes the judgement. There are 5000 public prosecutors and 15000 lawyers in the country. The internationally stabilised and recognized legal environment is able to attract the foreign countries to trade and operate the entrepreneurial activities within the country (The Legal System).

The above analysis depicts that the strong and structural legal system is being followed in the German constitution and thus the expansion of Al Ain Group within German market should be done with all the standard legal norms and regulations.

Political Forces:

The Emirate of Abu Dhabi has been developed as an industrially fertile hub which has attracted various multinational corporations, diplomatic relations and investments made by the government in the various initiatives. The impact of Emiratisation policy may be seen in the Labor law which requires private sector organizations to employ 20% of their work force from the domestic population compulsorily. This means that any private sector organization which fails to obey to the recruitment regulations would be banned from undertaking any further recruitment of additional foreign employees in their organization.

The Germany is the unified country which does not represents and depends for the decisions on two different type of government i.e. state and central government and thus the political stability of the government is very high. The Basic Law initiates the Supremacy of political parties in the government system which results to the development of all the government policies through the organizational structure of political parties that ultimately adds stability to the political environment. The trade restrictions within the country of Germany are restricted by the norms of WTO and EU Community. WTO trying to ensure that minimal technical or the non-tariff barriers are faced by the traders to smoothen the trade and economy.

The above analysis depicts that the political environment of Germany is quite stable which supports the expansion of Al Ain through fulfilling all the political norms.

Labour Forces:

As per the data revealed by the labour ministry of UAE in the year 2010, the number of expatriate workers in the UAE symbolizing the stamina of the oil-rich economy is 3.8 million. A hasty financial and economic boom in the region of Gulf led to more than replication of the number of expatriate workers from 1.8 million in the year 2001 to four million in the climax year of 2007 prior to it slumped to 3.8 million by 2010 due to economic tightening in the stir of the global economic meltdown of 2009. (3.8 million foreign workers in the UAE, labor minister says, 2011). There are lot many issues due to the expatriate workers in the UAE. The first and foremost issue is that the immigrant or expatriate workforce may act as barrier and challenge the country by endorsing their own government’s welfare or that of a planned crime within the alliance or federation. Secondly the expatriate employees frequently require a higher rate of payment for rendering their services and practically they transfer all the revenues and income to their countries rather than expanding or investing that amount in UAE. This affects the economy of UAE very badly in terms of revenue deficit, fiscal deficit, balance of payment, gross domestic product and gross national product etc. Last but not the least, immigrants or expatriate workforce exaggerate pre existing segments of society within the country since they learn to be the chief workers in non-oil industrial sector of the UAE, while the local Emiratis of UAE usually prefer to get employed for the government sector. (United Arab Emirates – Overview of economy). The domination of expatriates over the UAE nationals is projected to have developed in around 8.2 million with UAE local citizens making only 11.47%. The UAE attracts personnel from across the globe, primarily from the Asian subcontinent and the Arab region. The key issues pertaining to the expatriate workers in the UAE are the Remittance of local revenue to the other countries. The dominance of expatriates in the employment sector affects the career and growth opportunities of the local Emiratis people a lot. (Suter, 2005)

The employee employer relationship within the country of Germany is strongly being regulated by strong and tightly controlled legal processes. Various amendments in the law have resulted to the Germany as the system focussing on the industrial democracy and harmony. But still there are some problems in the system which results to economic difficulties.

The above analysis depicts that strong labour laws and regulations must be followed by Al Ain to expand its operations in the country of Germany.


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