Challenges of Doing Business in Germany

Matthew MacLachlan

31 Aug 2010

Most people associate German business culture with efficiency, quality and high technical standards. With the fifth largest economy in the world and a great degree of openness to international trade and business, Germany has established itself as a key economic power on the global stage making doing business in Germany more attractive than ever.

Doing Business in Germanywithout adequate cross cultural awareness, however, is a risky proposition. The cultural values of German business culture at the root of the country’s economic success can also prove a source of cross cultural misunderstanding for global companies doing business in Germany. Cross cultural awareness training courses highlight the cultural risks your organisation is likely to encounter when doing business in Germany.

These stem from a number of factors, some of which are described in more detail below.

Hierarchical Company Structures

German business culture places a great value on hierarchy. German businesses therefore follow a strict hierarchical structure, where decisions tend to be made at the top and communication is usually vertical. Status is acquired and assigned on the basis of merit, and the highest positions in a German company will be held by the most technically qualified and experienced employees. For international organisations doing business in Germany this hierarchical structure can affect negotiations and meetings which may seem to take longer than expected. You may perceive the plethora of procedures and policies as excessively slowing things down and creating mistrust. In truth, your German counterparts are most likely looking closely at all details and waiting for decisions to be made at the appropriate level. While decision making processes may be slow, the final result will be of the highest quality, as German products are renowned to be.

Strong Departmental Rivalry

When doing business with German companies, you should be aware that you may come across strong departmental rivalry. This may be actively encouraged by German managers in order to get the best out of their employees and staff. While it arguably contributes to a competitive product and high levels of efficiency, it means that you should be sure of communicating and sharing information with exactly the right parties and people within the German company with which you are doing business. Make communication channels clear from the start and ensure you are aware of who the key decision makers are on the German side.

Direct Communication Style

German businesspeople tend to communicate in a very direct manner. They will give you their opinion openly and straightforwardly and they will expect the same from you and your colleagues. Humour does not tend to be valued or used in business, so be aware that using humour can be inappropriate and unprofessional. You and your organisation need to be aware of this cross cultural difference as your German counterparts can otherwise be seen as blunt and undiplomatic. In negotiations, you should read any criticism as a constructive contribution to improve the outcome, rather that an attack of the person in charge. If you are working under a German manager, don’t expect praise, as a good job done is the minimum you will be required to do.

Understanding German business culture and developing the cross cultural skills to decipher its influence on business relationships with your German counterparts makes the difference between a profitable venture and a failed one when doing business in Germany. Cross cultural awareness can help you tip the balance of negotiations with German businesses in your company’s favour, greatly contributing to your company’s global success. Cross cultural awareness should form part of the know-how of all internationally focused organisations and can be developed and harnessed through Communicaid’s bespoke cross cultural training solutions.

 



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