Germany as a business environment
Germany is at the center of Europe with eight countries bordering it. It is the most
populous nation in the whole of Europe and has a population density of 225 people per square
kilometer (CIA, 2015). The location gives Germany a temperate climate. The country
experiences all the four distinct seasons in all of its parts. It has a coastline with the Baltic,
and the North, Sea and there are several large rivers and quite a few lakes. Germany is, as of
2014, one of the most forested countries in Europe with environmental protection being a
critical issue. The country boasts of enough arable land to feed itself and export food and
produces coal, lignite, and natural gas.
With an estimated population of more than eighty million, Germany has the largest
population on the continent. An overwhelming number of these, more than 90%, are
Caucasian German. The largest minority is Turkish, and there are many more minority groups
especially in the cities. The median age is just over 46 years, and the population is aging. The
predominant language is German, which is also the official and national language. Most of
the residents identify as Christians with only 3.7% being Muslim (CIA, 2015). A significant
number, more than 28% do not identify as either Christian or Muslim. The fertility rate is at
1.44% per woman and does not look set to increase. Germans enjoy a high standard of living,
but there are increasing instances of poverty. The infant mortality rate is among the lowest in
the world while the literacy rate is at 99% putting the country almost at the top.
With a GDP of $3.72 trillion, the country also has the largest economy in the
European Union. It has fared much better than others as the whole world recovers from the
crisis of 2008. It has a labor force of 42.65 million, and it is aging (CIA, 2015). That is a
problem with which the government will have to deal. Inflation is at a respectable 0.8% as the
present government has put in place fiscal policies to stabilize the economy. At 5%, the
unemployment rate is favorably compared with the rest of the union. Its trading partners are
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mainly in the EU, but it exports and imports goods from as far as Australia. With a healthy
trading balance, the country is able to develop its industries that range from automobiles to
pharmaceuticals. Suffice it to say that the economy is performing much better than those of
the nation’s neighbors.
The government structure is simple and complex at the same time. The nation has a
ceremonial president. It then has a Chancellor, who actually runs the government. The
government is a representative democracy with the chancellor coming from the party or
coalition that prevails in parliamentary elections (CIA, 2015). There are sixteen federal states,
and all of them have their own governments. The democracy can be unstable at times as
coalitions collapse, but there has not been a serious breakdown during the rule of the present
chancellor; she has held her won politically.
Business environment
The European giant has one of the most stable and friendly business environments in
the European Union (OECD, 2015). First of all, the political situation has stabilized more
since Angela Merkel came to power. The present refugee crisis can be a spoiler, though. The
society is economically well-off with substantial amounts of disposable income. The legal
environment is one of the best with the justice system trusted and functioning. The country is
strict when it comes to environmental controls, so foreign companies have to take that into
consideration. With all points considered, Germany presents a feasible and attractive business
environment.
Political and cultural risks
At present, experts say that the political risk is low. The current government has put in
policies that are more or less agreeable to the mainstream of society. There might be some
upheavals as the extreme right gains traction. However, these instances will not have much of
an effect on business. All of the parties likely to form a government are pro-business, and
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they want to encourage foreign direct investment. Culturally, the risk depends on where the
company is from. Germans are used to having foreign companies operating in their country
because the nation is at the center of the European Union. Non-European companies might
experience a culture shock but not that much.
Economic risk
Germany has been rated by the International Monetary Fund and the World Bank as
stable with the budget balanced in 2014 (OECD, 2015). The economy is picking up, and the
country’s fundamentals have improved much since the economic crisis. It has a manageable
debt load and will look to decrease that further. The country does not envision doing any new
borrowing past 2015, and that is an excellent indicator of the health of the economy.
Domestic demand is strong even though the country is still export-oriented. An incoming firm
will not lack a market in Germany. Business operating in the country face no foreseeable risk
of an economic collapse.
References
http://www.oecd.org/eco/outlook/germany-economic-forecast-summary.html
https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html
