Germany’s Legal Environment for Business

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Table of Contents

Introduction
Discussion
Conclusion
Work Cited

Introduction

Germany is one of many European countries in the developed world and one of the most influential countries in Europe. Existing as a parliamentary democracy, the nation is well known for its progressive policy and a strong economy. For this work, a look at the legal environment surrounding Germany will be attempted.

Discussion

First, Germany is a liberal democracy. The will of the people is represented by several elected officials, from who the prime minister plays a central role. To manage the power of the state, its responsibilities and duties are split between legislative, executive, and judiciary roles. In addition, the laws within the nation can be put into place on the local, state, and federal levels. The rule of law is strong in the nation, making it an example of a strong democracy. Arguably, the country abides by the rule of law, with German legislation being more important than one’s authority as an individual. In business, this manifests as strict regulation of business relations or disputes, with organizations being able to sign arbitration agreements to reach a satisfactory verdict. Other options are available, too, with individual company lawyers handling the matters instead. When discussing the country’s economy, it is necessary to mention the relationship to foreign direct investment within the nation.

Currently, Germany presides as one of the leading choices for foreign direct investment. With an abundance of available resources, trade partners, and the existence of current economic prosperity. Foreign direct investments are more likely to pay off in this nation. The Foreign Trade and Payments Act and the Foreign Trade and Payments Regulation are the two documents that control the process of receiving foreign direct investments, allowing Germany to choose a specific list of sectors that it allows FDI’s to be relevant to (“Germany | Global Rules on Foreign Direct Investment”). Depending on the needs of the economy and the surrounding economic situation, the country changes its policies.

There are several business sectors that Germany excels at, allowing it to attract both specialists and interests to these areas. In particular tech companies, retail organizations and existing communication giants are likely to work in Germany, expanding their reach and finding new clients. Therefore, American organizations that work within these sectors will likely find success by investing in Germany. However, it should be noted that the prospect of foreign direct investment, as with any other, is one done with considerable risk. When investing in another nation, its customs, traditions, and business practices must be weighed against the knowledge of the investor. It is necessary to study other cases of foreign direct investment within any business area a company chooses to penetrate, and also critically examine how national differences may impact business success. By displaying care and thoughtfulness in choosing how to approach the German market, it would be possible to avoid losses.

Conclusion

Furthermore, there is a need to ensure that the practices of any given company that attempts to work in Germany are up to the German labor standards. This includes work conditions, employee contracts, pay, and benefits provided to workers. A good example of a business that failed to consider such differences is Walmart, and its failure to emerge in the German market (“Why Did Walmart Fail in Germany?”). The field of worker’s rights is far more expansive in this country, placing American businesses that are used to the lack of regulation in jeopardy.

Work Cited

“Germany | Global Rules on Foreign Direct Investment.”Norton Rose Fulbright | Canada | Global Law Firm.

“Why Did Walmart Fail in Germany?”ViaTravelers, 2022.

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Germany’s Legal Environment for Business

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