GERMAN BUSINESS CULTURAL ANALYSIS
GERMAN BUSINESS CULTURAL ANALYSIS
1.0 Overview of the Country
German or Deutschland officially recognised as the federal republic of German is a federal republic found in central Europe. There are 16 states in the nation with Berlin as its captial city. The country covers 357,021km2 and has mostly temperate and seasonal climate. It is the most populated state in Europe with more than 80.4 million citizens. The country is also the main political and economic power in the continent of Europe and has proved to be a leader in many technical and theoretical fields (Hagen, 2009).
Since 1999, German has been included as one of the members in the euro area, Schengen Area, and NATO. In addition, it is also a member in UN, the G8, G20, OECD, Euorpean Council and UN Security Council. It is ranked fourth in the global economy by nominal GDP and fifth in terms of parity in purchasing power. Apparently, it is rated as the second largest exporter and third largest importer of products worldwide. The country is depicted by high living standards and comprehensive security systems. According to Hagen, (2009) German is the pioneer of the world’s social security systems including the universal health care. It is also the home of many inventors, philosophers, artists and composers, political history, scientists, political and cultural history.
With regard to political aspects, Kommers, and Tomuschat, (2010) explains that German is a representative, parliamentary and democratic republic. The political systems in German operate under the constitutional framework termed as Grundgesetz that were laid out in 1949. Amendments to this constitution necessitate a two third majority to affect these changes. The basic principle stipulated in this constitution guarantee separation of powers, human dignity, rule of law and the structure of the federal government. The head of state in this republic is the president who is vested with representative responsibilities and governing authority. The head of state is chosen through federal conventions. This is an institution, which constitutes Bundestag and similar number of state delegates.
2.0 Economic Outlook
As Ping, (2012) notes, German is characterized with high skilled workforce, social market economy, and large stock of capital, high innovation level, and low rate of corruption. The country’s economy is rated third in Europe, and fourth globally in terms of nominal GDP. With regard to PPE, it is rated fifth and it’s among the largest contributor in the EU market. The service industry in the country contributes 72% of the total GDP in the nation. On the other hand, the industry sector contributes 29% while agriculture has only 1%. The official report concerning the rate of unemployment indicates that 6.8% of citizens in the land are unemployed. However, this rate also includes people with part time jobs who are interested in finding full time jobs.
The country has consistently been advocating for an integration of European political and economic welfare. In addition, its commercial regulations are largely determined by collective agreements and legislation among other countries in the European Union. The main currency used in European Union was introduced by German on 2002. Its monetary policy is stipulated by the European central bank with it’s headquarter in Frankfurt. Gavin, (2010) observes that twenty years after reunification of German, the living standards and income per capital have apparently remained higher especially in West German States than East States. The country is home to well known international brands including: Volkswagen, Mercedes-Benz, Nivea, Audi, Siemens, BMW, Adidas, Allianz, Bayer, and Porsche. Other large corporations in the land include: MAN and Bosch Robert (diversified industrials); Merck and Bayer (pharmaceuticals); puma and Adidas (footwear and apparel), Deutsche Bank, and Commerzbank ( finance and Banking sector), Edeka and Ald, Lidl, (retail Sector) SAP (computer software), Hugo Boss ( luxury products), and Henke( household goods). This nation is also identified with regard to its small and medium specialized enterprises. More than 1000 of organizations in German are considered world market champions in their sectors.
Spiegel, (2011) reveals that Germany is not very good in production of raw materials. Only potash and lignite are available in economical measures. Lignite provides the major source of electricity in the country. Natural gas and oil are mainly imported from other nations. During the 2000s, the economy of German was practically at a standstill. The worst figures were realized in 2002 (+1.4%) 2003(+1.0%) and 2005(+ 1.4%). The rate of unemployment was apparently at a higher rate. These issues together with the aging population in German made the welfare systems to be strained. This subsequently led to the government to pushing through the wide ranging program economic reforms in 2010. These economic reforms also resulted into high economic growth rate and decreased rate of unemployment. Most of the exports from the country include: machinery, engineering, automobiles, metals and chemical products. German is also an extensive producer of wild turbines, and technology in solar power. Yearly congresses and trade fairs are held in different cities in the country. During 2012, the total amount of exports in German reached €1 trillion ($1.3 trillion). This was the highest figures ever recorded. The current number of people who are employed is more than 42 million, again, the highest recorded in German history.
3.0 Business Culture 3.1 Overview of the business culture in German
According to (Cyborlink, 2012), the attitudes of American citizens concerning casualness in business and bottom line instead of product awareness may be strange to Germans Citizens. German believes in creating equality and opportunity for all their citizens and the potential to adapt to and change with respect to the business environment. Germans dislike surprises in business matters. Abrupt changes to business activities are not welcome even if they may improve the business prospects. In business circumstances, it is required for one to shake hands at the start and end of the meetings. The hand shake should be followed by a slight bow. In addition, a nod should be reciprocated as away of making a good impression. Failure to reciprocate with a node or bow may get one into a bad start. It is also necessary to maintain eye contact when discussing with or shaking hands.
Gorril, (2011) affirms that in German, business is regarded as a serious matter and humor is not expected at all. Older persons deserves due respect from the young generation. For instance, in a group setting, the eldest person should enter first before the younger generations. Space between two people should be considered. However, there are some circumstances where the condition of space may not allow such as lining in a store care register. Handshakes are still very necessary even to people who have become used to one another. Though Germans are known for consuming much liquor, public drunkenness is prohibited. Therefore, an individual is expected to know his or her limits. One is supposed to pace himself/herself and follow the alcohol with plenty of health food. The following are the main elements of the business culture in German..
Punctuality in business aspects is one of the clichés commonly used by Germans. In fact, delaying even to a little extend can cause serious problems especially to subordinate staff. If lateness can not be avoided, then the one responsible should give reasonable excuses concerning the same. Emphasis on punctuality is also extended to business meetings. It is regarded as bad manners coming late to a business meeting. Punctuality indicates that one is responsible and reliable and gives an organization good reputation. “On time” is a common phrase which means arrival on advance. The perception concerning lateness in German is that one is not reliable and therefore, will make the business not to be successful (Communicaid, 2013).
Receiving and executing business decisions in a timely and punctual manner with careful planning and analysis assists in reducing the uncertainties that may be inherent in the business prospects. In Contrast, many business executives in US as Gorill further noted have no culture of punctuality. This “simple” matter will give them rough time with their German counterparts incase they are not willing to change. However, in recent times, more and more organizations in US have continued to emphasize on the aspect of punctuality in business meetings. As such, meetings and scheduled appointments ought to be attended in a timely manner.
3.3 Appointment Making
In accordance to Hagen, (1998) German is regarded as a closed door society, hence individuals or entities wishing to conduct business in German should think of making an appointment. There is very little probability that just a pop in will be welcomed by German operators. Normal business times in this country are between 10a.m and 1.pm and also 3.pm and 5pm. Making appointments at odd times such as weekends or after work hours will not augur well with one’s business prospects as most businesses would be closed by this time.
Mathis, (2012) adds that in most cases, Germans would not feel alright discussing important matters unprepared. Hence one may not expect to just pop into the office unannounced and initiate detailed business discussions. It may not work to your favor. An American Business man or woman would be required to make appointment prior to the actual meetings and provide agenda for such a meeting. This is also the same with regard to telephone conversations especially detailed ones. In case when they are no much time for preparation, it would be possible to organize a brief, introductory meeting by a few days notice.
It is not expected in German for one to change appointment time any anyhow. If it becomes too necessary to change the time, then one should give at least 24 hour time span for doing so. Again, the reason for such must be plausible. Unlike America where the project or profits anticipated is placed above the period or time of the year, Germans are much concerned on vacation and festivities. This means that Americans doing or wishing to do business in this site of the world should considerer this aspect when planning for visits or when making appointments (Flamini, 2012).
Mathis, further discloses that in German, there is a difference between individual and social time. Business visitors are not expected to regularly go out with their German counterparts. This is because, they assume that just like themselves, they also have personal things to do alongside the business endeavors. Topics such as Holocaust or World War 11 and personal private questions such as one’s salary are considered to be taboo in this land.
In business talks, preliminaries or small talk are usually not regarded. This is because, as we noted, businesses in German are strictly concerned with time. A German would want one to simply get down to business after some basic pleasantries. Therefore, one should avoid excessive talk in the business meeting. Again, one should avoid asking individuals concerning their personal matters such as their marital status, religion, political affiliation, personal income, or occupation. Rather one may talk general topics such as children, jobs, politics and sports, recent holidays, previous experiences and travels and beer (for those who take it).
In addressing an individual, first names are rarely used in a business setting, even if the parties know one another. This is because; they very much value their own privacy. It is also crucial to address Individuals by their full titles. This is because; titles are regarded highly by Germans (Cyborlink, 2012). An individual should endeavor to make a positive impression from the start of a meeting. The manner in which you walk, stand and express yourselves matters a lot to Germans. Good greeting will assist in creating a conducive and comfortable environment for a meeting. Hands should be shaken in a firm and quick ways. This according to German Perceptions depicts firm character. However, hand shaking should be gentle with ladies. Upon entering a room, everyone’s hands including children should be shaken. Americans tends to make an informal, friendly and self confident impression on their counterparts. For instance, they may initiate a small talk to warm up the meeting and tend to use first names in addressing an individual. This may appear odd to Germans.
3.5 Gift giving
Petersen (2012) explains that gift giving plays a significant role in business activities in German. Sekt, Wine, brandy, and schnapps are suitable means of acknowledgment that may be employed in complementing a business relationship. Other means may include but not limited to candy boxes, flowers, food or fruit baskets, company or products. However, business gifts are within the bounds of propriety and reason.
When giving such gifts, it is quite crucial for one to know the best time in offering the gift real value with regard to the relationship. Vogler, (2009), who also continues to explain that small gifts presented for first contacts indicates politeness, presents this information. Substantial gifts are uncommon and are particularly reserved until a deal is finalized. It is not expected to offer gifts in thanking the local staff for their hospitality and assistance during the stint in the company. However, they will not be rejected; gifts should not be given in private.
Places where gifts are expected include social events. This is where one is expected to present gifts to express his or her gratefulness after an invitation to dinner. However, as Tomuschat, and Kommers, 2010 noted, one should not select expensive things, since they may make the other party feel “obligated”. Gifts that should be avoided include red roses (for lovers), lilies (used in funerals), and heather (planted in cemeteries). Performs, toiletries and clothing are personal things and should be avoided.
3.6 Status and hierarchy Attention
In business matters, sending low ranking personnel to negotiate with senior personnel is considered rude. Another true fact is that females are not accorded the same respect as their male counterparts in international capacities. A typical German organization unlike in USA is strictly hierarchical and many employees will work extra hard to defend their status quo. Corporate rank necessitates a level of respect and privilege from the less senior persons. In most cases, rank differences may result into reduced communication channels. This culture is different than one found in America for instance. It would therefore be important to take into consideration that when and to whom one is introduced will portray on how you are introduced. In addition, it also portrays how the Germans fit well into organizational hierarchy (Vogler , 2009).
In case one is invited to have dinner in German home, Petersen also informs that it would be rude if the person doesn’t accept it. One is expected not to be tool early or too late for such a meal. 15 minutes to the scheduled time is quite alright. A closer attention should be paid to eating utensils. Knives, folks and glasses should be available on the table. Different glasses should be used for different drinks. Different wine is also used during various occasions. For instance, before the large banquet, individuals may be presented with sweet wine. On the other hand, red wine will be served alongside meat. White wine may be served during the banquet with cheese. During meal time, business topics should be left aside. Beer is always served before wine. This is because many Germans believe that doing vice versa will harm their health.
As rule, business decisions can not be made during meal time. This is revealed by Gavin, (2011) who continue to explain that the discussions should generally follow the patterns of their German host. Most German cuisines include: sauces and meats. This means that a foreigner with strict diets for health reasons, religious aspects, and allergies and so on will find it problematic in this kind of diet. These people will be required to inform the Germans host on such restrictions. Such needs should be communicated in advance, reasonably and politely. Germans will not always ask one if there are some foods, which he is not taking. Rather, they expect someone to point out their disagreement or dislike of something or issues. Inconvenience or irritation will come up when one remains silent and bring the issue at the last time.
Utensils are always used during eating. Very few types of foods may be taken using a hand. Americans may be surprised to find that even pizzas which are normally eaten with their hands are eaten using fork or knife. Audible slurping sounds while eating is prohibited as it is regarded as bad manners by Germans. Do not lean far from the plate, remain upright, slightly leaning forward when you bring your fork towards the mouth. Unlike American culture, Germans do not serve others. Rather, Petersen discloses that plates of food are passed through the table and each individual serves his or her own food. However, pouring of wine is done by the host. When the meal is over, the fork and knife should be placed parallel to each other and at the left side of the plate. This is a pointer that the dishes can now be cleared. Permission is always required if one wants to smoke.
3.8 Sales and Presentations
In most cases, Germans appreciate detailed statements. Flamini, (2012) affirms that they would like too much background information and historical facts. Humor is not acceptable. On price, it is expected that the price be directly said. Rather, than beginning from high to low. It would also be important for one doing or planning to do business in German to maintain a simple and direct language. Too much attention to diplomatic and indirect language may be irritating and confusing to Germans. In addition, this type of language may give an impression of beating around the Bush or insincerity. Over dramatic and exaggerated talk may inspire caution to the German counterparts.
There are many taboos in German. For instance, Fridays are not liked by many people. In fact, Fridays are popularly referred as “black Fridays”. Another thing to note is the number 13. Many people would avoid doing important things on a date which falls on 13th Friday. Noise is equally hated. One can’t be allowed to play loud noise from morning to afternoon. A neighbor should be alerted in case you want to hold a party and these should be done on weekends. Otherwise, the matter may be resolved with the police. Topics that are considered taboos include World war 11, the holocaust, personal and private issues such as salaries, marriage status, or personal objects (Flamini, 2012).
In accordance to Kimberley and Tailor, (2012), Germans are very much serious concerning the kind of attire they choose. They prefer, tidy, simple and clean attire, in casual instances. In Formal situations, men wear formal clothes while women wear sober but elegant dress. Business people prefer white shirts, conservative ties and dark suits. These people anticipate that there partners and colleagues also follow the same styles and not too trendy or “fashionable” attire. Provocative or sex clothing risks creating a negative impression by the hosts.
GlobalEDGE, (2013) found out that there is a tendency for Germans to dress more when going out than for instance their American counterparts. This includes even for such matters as when shopping, walking or going to the restaurant. Ladies should avoid excess jewelry or display of items of high value, as Germans do not tolerate them. Germans prefer simplicity. The display of items of affluent may indicate resentment, as the living standards in German are low. If one is invited with a requirement of “informal attire”, it may not necessarily mean putting on a sweat pant and a T-shirt. Rather, it may mean wearing, coordinated and tasteful clothes. On the other hand, “formal attire” may be the evening formal wear, which to Americans may appear as dressy.
Americans prefer dark colored business suits in navy and gray colors. For important formal meetings, they prefer white dress shirts, in less formal meetings, light blue shirts are preferred. Ladies wear dress or suit with jacket in major cities. They prefer classic colors of ivory, gray or navy blue. Unlike the German counterparts, American value cleanness and as such, their clothing, whether causal or formal are mostly neat and clean (Taylor and Kimberley, 2012).
3.11 Introduction and the First Meeting
Flamini, (2012) advices that in a first meeting with a German, it is expected that they may not become insouciant or excited. According to them, such actions depict bad behaviors and lack of respect. It is expected that individuals at higher rank are the ones who are supposed to conduct introductions to those who are in the group. For instance, one may be introduced to his or her comrades by his mentor or supervisor. A manager may introduce a new worker to their organization. In essence, one should wait until his or her host performs introductions to the group. This is unlike America where one is allowed to introduce himself herself irrespective of the status. Small talk or warm up talk typical of Americans is not expected of in German business meetings.
According to (Kommers, and Tomuschat, 2010), the “mingling” concept typical of American culture doesn’t really exist in German. In other words, strangers should not try to initiate a conversation with local people whom they do not know as they will find it odd. One coming from America should prepare himself or herself to be isolated by Germans. One’s appearance alone is enough to be treated as an outsider. Although it is allowed to sit with strangers, initiating a conversation with people, which you do not know, is archaic.
3.12 Telephone Conversation
Germans do like telephone conversations; they also like to make follow up call or faxes over the phone. However, permission is required to talk to a German executive over the phone. Phone ethics in the country expects the person answering the phone to identify himself/herself with the last name, both in office and at home. It is not expected to say a simple hello as it may put the caller in total confusion(GlobalEDGE, 2013). It will be therefore, important for foreigners to acquaint themselves with the basic courtesy expressions before planning to do business with Germans. For those who are planning to stay long in German, it is advisable to attend German language classes and acquire the language skills soon. The German bureaucracy will adversely affect a long-term foreign resident with no language skills. In particular, those residing in places other than large cities will be adversely affected.
3.13 Attention to Detail
Concerning decision-making process, Vogler, (2009) points out that the entire process goes at a slow pace in comparison to U.S. This may greatly affect business executives from U.S who are used to hastiness. The longevity of the decision making process is also instigated by decision makers and advisors who may not be visible and who are required to oversee and approve the transactions. The thought process in German appears to be thorough, with every aspect of the business project and decision being evaluated in great details. In essence, Germans are more detailed in their business operations. However, once they are through with the assessment and planning, the project will move at a faster rate and the set deadline are honored. The business culture in German emphasizes on the aspects of masculinity, individualism, and avoidance of uncertainty. On their part, most Americans are goal oriented and pragmatic. While German business meetings are much longer than those of the American Counterparts are, Americans are focused on obtaining positive outcome as fast as possible. Unlike German people, they do not pay attention to minor things.
In essence, the German business cooperation entails detailed and extensive planning. This aspect could turn out to be either a smooth marriage among the partners or result into the other partner feeling underrated by the other. In the point where technicalities and priorities are different, it would be very crucial for both parties to do preparations and perhaps plan for some informal meetings to address to address some elements and rules that could be agreed by the parties.
Compliments are not also necessary in German culture. Germans assume that things are alright unless one claims otherwise. One may find himself or herself looking awkward or embarrassed in such situations. Compliments especially from foreigners could be taken with a lot of suspicion. The conventional use of “How are you” by Germans requires a detailed answer by the respondent unlike the American use (Vogler, 2009). Hence, it would be awkward for one to ask the question and keep on moving instead of waiting for an answer. American visitors will find it the answer to this question irritating since they consider the statement as a mere casual greeting.
3.15 Communication Styles
When it comes to communication, Mathis, (2012) affirms that Germans go direct to the point and are not bothered by fillers or beating round the bush in their communications. On the other hand, American conversations are filled with these fillers even without intent. Because of this dissimilarity, most Americans may think that Germans are harsh or impolite people. In essence, there communication style is direct, clear and to the point. However, a direct eye contact is exhibited by both cultures. Lack of eye contact is a portrayal of dishonesty, sign of weakness or lack of self-esteem.
Education in German is similar to US except at the high school level. Most children in German start schooling at the age of six years at elementary school termed as Grundschule. By the time they reach ten years, they are categorized into four kinds of what is termed as secondary schools. This means that German children only spend four years together in the education system. After this, they in conjunction with their families have to choose the type of high school they would like to join. Since children are young at this stage, their families in most cases are the ones who undertake the selections. This is determined by the Child’s talent as well the wishes of the parents. In German, children only attend school in the morning hours. This means that lunch is not served either and also services for after school. If the parents are working, the child may not go home but rather to a sitter in the after noon. Another note to make is that there are few co curricular activities and more homework in German Schools. For children in age three to six, there are kindergartens that may be public, private or religious (Journey to German, 2013).
Another difference notable in German and American school system is their strategy in tracking. In America, tracking mostly happens in the schools. Klein, (2013) explains that there is the aspect of between classes tracking whereby, learners who are low performers take remedial classes. Moreover, there is within class tracking where learners are separated into groups based on their classroom performance. However, critics in this type of learning have been claiming that this system is not advantageous to low achieving learners. This is because as they argue, taking easier courses leaves the learners to fall behind high achieving students.
The entire school system in German is also based on the concept of tracking. The main mission in the German education system is to directly prepare the learners for job placement. While tracking in U.S begins in the middle school level, German’s systems starts at the fourth grade. From the fifth grade, the learners are moved to various high schools on the basis of their ability and talent. Those that are not performing well are moved to vocational courses whey undertake apprenticeships with respect to their anticipated jobs (Journey to German, 2013). Learners in high track level have the chance of going to college level schools.
It is unfortunate that German learners also face many of the issues of tracking affecting the American learners. Klein posts that in German, most of the native citizens are the ones who enter into high tracks in comparison to the non German counterparts. Family relation in the school community is the major reason for this dominance of high tracking by German citizens. On the other hand, non nations are regarded as outsiders. This indicates why the German nationals obtain more chances in education within the expanded network. Another notable determiner in being in a low track school is economic status, much like in US. However, according to studies, the effect in German is stronger in comparison to US. Interestingly, the tracking system in German does not receive many criticisms from the communities like those in US. Tracking is regarded as one of the German culture and is accepted by majority.
The goal of the tracking system in US is to provide more opportunities for all learners unlike in German. Apparently, fourth grade is still too early to determine the future of the child. Once a child is placed in the lower track, then it may not be possible to enter college. American children in lower tracks are also given the opportunity to better themselves and go to college. However, German children have an advantage in that they will be paid good money even from vocational courses. According to Klein, the aspect of going to school in order to be employed prevents unnecessary school dropping.
4.0 General Implications of German Culture to American Business Entities
Acordding to the explanation of Communicaid, (2013), German Contracts are finalized upon being signed by both parties. Maneuvering for more concessions is not allowed unless it has been accepted by the other party. Failing to honor the terms and conditions of agreement may lead to legal proceedings against the other party. American business men who may consider the contract as simply the “statement of intent” will come to realities as their German counterparts have no such thinking. Attempts of going on with negotiations even after the final decision will degenerate into suspicion and distrust by the other party. It may also be the ground for the termination of the agreement. Germans take rules and regulations extremely serious and as such, they will adhere to them.
Though Germans may not be afraid to criticize a foreigner, they are themselves very sensitive to criticisms directed at them. Having said that, it would therefore be important for one to consider what is being said to against them, lest you find yourself embarrassing them in public places. An American businessman or woman should undertake diplomacy if possible. This is in spite of if the other person is not prepared to do so. Effective diplomacy will facilitate the seizure of initiatives of taking the burden to create conducive environment for a good business relationship (Michigan University, 2013).
Non smoking sections in hotels and restaurants are not common in German. This is disclosed by Flammini who also articulates that American business persons will be forced to refrain from their “non smoking rights” as Germans do not support it. The ethics on who is expected to pay at the end of a meal differs substantially in the German culture. One extending the invitation is expected to pay and not the quest. This differs from the prescribed etiquette in American culture where one invited to dinner may offer to settle the bill. Efforts to settling the bill by the guest may cause embarrassment and confusion to a German host. If you really want to settle the bill, then it is better to do it before going for dinner (Flamini, 2012).
Before one crosses the street, it is expected that pedestrians be patient enough until the time when the light turns green. Where there are no traffic lights, one is expected to be more carefully when crossing. Before crossing the street, pedestrians are expected to wait patiently on the curb until the light turns green. Moreover, on streets where there are no traffic lights, be very careful when crossing, since German drivers will not always stop for you. Various factors for instance, density of population, and excessive rules and regulations are dominant in this country. Most German drivers are aggressively impatient. Reaction time in German roads is always shorter than for instance in America (Michigan University, 2013).
There are indeed many business cultural elements prevalent in German. Nonetheless, these issues may not necessarily stand out in business dealings between Germans and their counterparts from foreign nations. German has one of the most open economies in the world where citizens and business enjoy relationship with foreigners. It is evident that many people find German as not only being a beautiful place but also conducive business environment.
The business culture in German is mostly depicted by extensive use of German and English language in business transactions. Most of the companies in this country have also a global impact. However, there are some aspects of the business culture in this country which may not always be obvious to other states such as America. Since German is predominant on the world in business sphere, many organizations, not only those in US but also in other countries would like to do business in the country. Apparently, it would be proper for an individual or business firm to do preparation with respect to work and business culture aspects that differ with those in American perspective.