Internationalizing Ottely: Exploring Business Opportunities and Cultural Dimensions in Germany

Introduction

Business strategic management refers to analysing the external business environment and developing the business strategic management to expand the organisation internationally (Singh, Garg and Luthra, 2018). The study aims at discussing the business environment of Germany so that the small manufacturing company in the UK Ottely can expand their business in Germany to internationalise the firm and gain high competitive advantage. Hereby, it is necessary to conduct PESTLE analysis of Germany so that it is possible to evaluate the business environment and assess the market opportunities and threats in Germany. Apart from that, the study also provides a scope to analyse the Hofstede's cultural model in the context of Germany which helps to analyse the business culture of Germany. The analysis and evaluation of the Germany business culture will further provides an opportunity to recommend some suitable suggestions to expand the business of Ottely by expanding their production location in Germany.

Organisational background

Ottely is small leather goods business in the UK which is efficient to manufacture designed and hand crafted leather products for satisfying the customers by delivering the quality products and efficient services. The company utilises finest leathers, sourced from the best tanneries in the world and it uses traditional as well as modern technology to create the leather items that have a timeless elegance and are made to last. The company is efficient to produce handbags, small leather goods and creative crafts such as wallets and iPad cases and belts as well as it has a huge range of high quality sandals to luggage straps for vintage cars and motorcycles. The prototype of creative product design and utilising quality leathers as well as collaboration with the artists and artisans will be helpful to run their business internationally and help the firm to get high market share by serving the customers with high quality and designed products. Extra stitching, brass or contrasting leather loops, interchangeable buckles, foil blocking with customers initiatives are effective for the firm to serve the customers innovatively and develop customise products to satisfy the consumers across the globe (Ottely, 2020).

The company Ottely is able to maximise their profitability and sales volume by satisfying the customers through delivering quality leather products with creative design and customise service which further maximise the expectation of the customers and create values through improving the shopping experience of the consumers across the globe. The business of Ottely hereby has the capability to expand their production sites in Germany, for which it is necessary for the firm to analyse and evaluate the market condition and business environment of Germany which can be useful to develop appropriate strategic planning to expand the production location to Germany and understand the business practice so that the firm would be able to run the organisational operational activities in the international market of Germany and grab the market share by strengthening their customers base in the new international market, Germany (Ottely, 2020).

PESTLE analysis of Germany

Through pestle analysis, it is effective to analyse the business environment of the country Germany where the firm tries to expand their business successfully. The factors such as political, economic and social as well as technological enhancement, legal structure of business and environmental sustainability will be analysed, which would be effective for understanding the external business environment of Germany (Peng, 2017).

Political:

Germany is among the leading political powers of Europe, where stable condition in political environment and government cooperation are effective for the small and medium sized business to run their operations efficiently (Johnson, 2016). Apart from that, According to Johnson (2016), The Social Democratic Party and the Christian Democratic Union leads the political system, where the government is collaborative with the business for enhancing international trade and welcoming more foreign investment in the country. After Brexit, there was slowdown in international trade, but the government is efficient to cope up with the situation and support the small sized business for better performance (Peng, 2017). Fair country and politically stable government structure are the positive factor for Ottely and on the other hand, there are hidden corruption and uncertainty in the market after the incident of Brexit which may deteriorate the performance of Ottely.

Economic:

The economic growth and high National Income are effective to support the business and grab the market opportunities to establish the brand. In this regard the service sector as well as manufacturing industry are growing rapidly and contribute positively in achieving future sustainable growth in the country (Khlif, 2016). As stated by Peng (2017), 30% contribution of industry on national income of the country is effective to develop suitable business environment and establish the manufacturing business in Germany. The largest annual international trade fair and congress are held in the German cities such as Frankfurt, Berlin and Hanover. It is considered to be second largest country in terms of business as well as 4th largest in terms of nominal GDP and fifth largest by PPP (PESTLE analysis, 2015). Large market and free market as well as economic growth and increasing FDI are the factors that boost the performance of Ottely in near future.

Social:

As per the social factors, the Germany society is well developed where the people are well knowledgeable and they are efficient to contribute positively in the organisational success (Peng, 2017). In this regard, high educational rate and research and development activities are effective to boost the performance of the individuals and enhance self esteem and actualisation while working in the organisation Ottely (PESTLE analysis, 2015).

Technological:

Germany is very advanced nation in terms of technological advancement and infrastructural development where the entrepreneurs are trying to develop their business through technological innovation and business creativity (Peng, 2017). Advancement in Information Technology further influences the small sized firm to restructure their business operations and develop proper infrastructure in order to enhance the business growth and maximise the performance of the organisations. Additionally, Germany contributes and supports the national research and scientist and laboratories for more research and development which further influence the business to improve efficiencies by enhancing creativity and technological innovation (Tekeş et al., 2018).

Legal:

Federal Republic of Germany set effective laws and legislations to run the business ethically. The contracts and business certification are effective for joint venture and acquisition where cooperation and collaboration are there for successful establishment of the organisation Ottely in the country (PESTLE analysis, 2015). Legal compliance provides a scope to the company to establish the brand efficiently and ethically in the market, by managing employment rules and legislations of intellectual property rights.

Environmental:

As per the environmental factors, the country contributes in more research and development program in order to improve environmental sustainability of the business. The government cooperation as well as business efficiencies in the country further influence the firms or the entrepreneurs to develop effective strategic planning to run the business of Ottely by providing positive environmental footprint (PESTLE analysis, 2015). As stated by Singh, Garg and Luthra (2018) the company can expand the business by providing green environmental footprint by creating values for the social communities.

Hofstede's cultural model

Hofstede's cultural dimension theory is the framework for analysing the cross cultural communication in the organisation where through this analysis, it is possible to identify the social culture and the values of its members and relate the values with the behaviour of the organisations (Singh, Garg and Luthra, 2018). Hereby, through the Hofstede's cultural dimension, it is possible to analyse the business culture of Germany and identify the business practice in the country so that the company Ottely can acknowledge the business culture and expand their operations through establishing the production sites in the international country, Germany. As per the model, there are different dimensions which are power distance, individualism, masculinity, uncertainty avoidance, long term, orientation and indulgence. In order to analyse the business culture of Germany, these dimensions will be evaluated further (Hofstede Insights, 2020).

Power distance:

As per the Hofstede's cultural model, power distance is defined as the extent to which the less powerful members of the institutions and the organisations within the country expect and accept that the power is distributed unequally. In this regard, the score for Germany as per the power distance is only which refers that there is less power distance and the country is dominated by strong middle class where the people do not like unequal power in the country (Hofstede Insights, 2020). However, the individuals are willing to share the workplace and contribute equally in the organisations, where the leadership is challenged and the control is disliked by the members of the organisations. Hereby, the people prefer individual rights and equal power in the organisational workplace and they are willing to be empowered in the organisational decision making behaviour and practice where everybody shares the same platform in the organisational workplace of Ottely (Huang and Crotts, 2019).

Individualism:

According to Peng (2017), this means the degree of interdependence that the society maintains in the organisations where the country score is 67, which in turn refers that, there is strong beliefs of ideals and self actualisation where everybody prefer to be self dependent person and it further raise the score of individualism. Honest review and improving engagement among the employees and the employers are seen in the context of the business in the Germany which influence Ottely to retain experienced staff for better performance (Hofstede Insights, 2020).

Masculinity:

The German culture is driven by competition, achievement and success and the score of masculinity is 66, which indicates that the country is considered to be masculine society. The people prefer to improve self esteem by working hardly and honestly in the organisational workplace. The managers in Ottely are expected to be deceive and assertive where the social status is shown by luxurious activities, cars and technical devices (Hofstede Insights, 2020).

Uncertainty avoidance:

the score for Germany in terms of uncertainty avoidance is 65 which indicates that there is created the belief and institutions to try avoiding the uncertain circumstances in the organisational context and thus Germany is considered to b uncertainty avoidance country to be scored at high end. In this regard, the people prefer to avoid uncertainty by strongly relying on expertise where higher in certain situations are managed by the organisational leader in Ottely (Hofstede Insights, 2020).

Long term orientation:

This dimension is related to the way that the society has to deal the challenges of the present and future. It is a pragmatic country and the score is 83, where the people believe to be dependent on the situation and time. The individual prefer to adapt traditions easily to change the condition and thus it is time taken activity to change the organisational situation (Christodoulou and Cullinane, 2019).

Indulgence:

It refers to the extent to which the individuals try to control their desires and impulse where relatively weak control is considered to be indulgence and the strong control is considered to be restraint. The country Germany scores 40, which indicates that the German culture is restraint where the individuals do not emphasise on leisure time and control their desires and impulse (Hofstede Insights, 2020).

Conclusion and recommendations

It can be concluded that, the business environment in Germany is suitable for the organisation Ottely to expand their production unit in the international country and run the business efficiently. Considering the PESTLE analysis, it can be stated that, the business external environment in Germany is suitable for the organisation Ottely where political stability, economic growth and social development further influence the small sized firms to invest in the country and establish their production unit with joint venture or direct export. As per the Germany culture, there is no preference for power distance, where every individual enjoy equal power which means that collaboration and internal communication are mandatory to work in the organisation. Additionally, the individualism and restraint society further influence the individuals to work honestly and improve self esteem and actualisation by achieving the organisational success. Hereby, the company has the capability to expand their production and enjoy the German culture for better establishment of the company and gain high market share in the leather industry of the country. The culture of Germany is suitable, where the leader and the managers of Ottely can expand their operations by enhancing cooperation and communication. The long term orientation of German culture is also influencing where the leaders and the managers can set up the business manufacturing unit by joint venture. The business culture of cooperation and high end communication further give the chance where Ottely can choose local firm in the leather industry to set up the business production unit. Through joint venture, the organisation Ottely can expand the business where high cooperation and long term orientation as well as individualism and low power distant cultural values are affecting the business operational activities positively where Ottely can establish the business successfully in near future.

Reference List

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Johnson, G., 2016. Exploring strategy: text and cases. London: Pearson Education.

Khlif, H., 2016. Hofstede’s cultural dimensions in accounting research: a review. Meditari Accountancy Research, 24(4), pp.545-573.

Peng, M.W., 2017. Cultures, institutions, and strategic choices: Toward an institutional perspective on business strategy. The Blackwell handbook of cross‐cultural management, pp.52-66.

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