KeepCup Analysis

KeepCup Company is an Australia private company, who are working in exporting reusable cups. KeepCup head office, which in Melbourne is recently exploring for the feasibility of introducing their product overseas to German. This business report provides a business analysis and consideration about the external environment in German. The purpose of this business report is to facilitate KeepCup in order to help the company to make decision for expanding their product exporting to German.

The observation will go through on the political, economic, socio-cultural, technological and legal environment of German. Besides reporting the environment condition in German, this report provide analysis about the external environment in relation to KeepCup. In addition, this business report will highlight the strengths, weaknesses, opportunities and threats according to the external environment in German related to KeepCup. The recommendations on the suitableness of this expansion will be based on the SWOT analysis.

The report found that expanding product distribution to German is a good decision. The opportunities regarded to German’s external environment supersede the threats. The rapid growth in modern technology, high economic growth, the socio-culture, also the political environment in German can be a convenient way for the company to operate in German. Also, the similarity between Labor and Business Law in German and Australia are considered as opportunities for KeepCup.

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The threat is contrasted in the some differences in socio-culture. However, it is recommended that KeepCup expand their business to German by exporting their reusable cups because of these findings regarding the strengths, weaknesses, opportunities and threats for expanding to German. This business report will provide relevant and empirical information on the political, economic, sociocultural, technological, and legal environments throughout SWOT analysis that impacts KeepCup for expanding their business to German.

Political Environment

Political Environment consists of the government system, stability, government relation and certain political policies. (Bartol and Martin 1998, 71)

Government Stability

German has been using democracy ideology from over 60 years ago. This makes a recently, democratic lifestyle and culture is embodied and implemented by every citizen in German (Make It In Germany 2013. The supreme authority in German is divided into 16 Länder and one central state. This kind of political government defined as a Democratic Federalist. Moreover, the stability of the government of German provides a suitable place for operating a business.

Government Relation

International relation is important for a big nation such as German. German has been joining six different international organizations, which are European Union (EU), United Nation (UN), North Atlantic Treaty Organization (NATO), OSCE, World Trade Organization (WTO) and International Monetary Fund (IMF). There are two organizations, which are maintaining about the trading relationship and the economic stability, WTO and IMF. With joining these two organizations, German has a good relation in politic issue, particularly in the foreign or international trade. German has been joining WTO since 1995, this makes recently German opens their economy for foreign investment (Tatsachen Ueber Deutschland 2013).

Analysis

According to the stability of the government of German, also the friendly and global political relationship, German is a good place to open a business. These two Political Environment characteristics provide an opportunity for KeepCup because German has a suitable Political Environment for opening business.

Legal Environment

Legal Environment contrasts about two major laws, business law and labor law (Bartol and Martin 1998, 71).

Business Law

German has a low level of corruption. This country ranks 13th within least corruption country based on the Corruption Perceptions 2012 (Transparancy International 2012). Open international businesses in German are free from teething restriction in the daily business. Overall, the business law in German creates no different or contrast between the local company and foreign company investment or the established company. Moreover, the reliable laws make the companies able to plan their investments in an effective way (Germany Trade and Invest 2013).

Apart from it, the business law in Australia has its own Guidelines and effective and consistent decision. The aim of the government regarding to the Guidelines is to give a positive impact to the business conduct for companies in Australia (Australian Government 2011). Similar with German, Australia also categorized as one of the world least corrupt by 2012 (Transparancy International 2012). Australian Government is concerned about corruption. Moreover, people in Australia also considered corruption as a harmful action for the environment (Bowman and Gilligan 2009, 438-452)

Labour Law

There are three main points according to similarity of the Labor Law in German and Australia. First of all, the legal working time for employee in German is eight hours per day (Liliane Jung 2011). Compared with Australia, which is eight hours per day, both countries have the same legal working hour (Work Place Info 2012). Secondly, the minimum working age in German are strictly applied by the government for employees in German. Hiring children for working, is forbidden by the law as stated in the YWPA (Young Workers Protection Act).

Children under 15 years old are not allowed to work (Liliane Jung 2011). The legal age for working in Australia is also above 15 years old (Lawstuff 2010). This makes there is no different between the legal working age in German and Australia. Thirdly, the working conditions in German are considered as a safe and obligated working environment. The companies in German have a great liability for a particular large social and community. In order to improve the working conditions in German, health and safety are considered (Encyclopedia of The Nation 2012). Same with the working conditions in Australia, health and safety are required by the government as stated in National Employment Standards (NES) (Australian Government 2009).

Analysis

According to the similarity about the Business Law and Labor Law in German and Australia, both of the laws provide good opportunities for KeepCup in order to expand their business to German. KeepCup can be easily adapted to the Germany Laws and regulations because they don not need to totally adapt with the laws in German.

Economic Environment

Economic environment includes the stability of business cycle, exchange rate and economic trends which include economic trends and growth (“The Business and The Technological Environment” 2008, 58-80).

Inflation Rate

In July 2013, the inflation rate of Germany is at 1.92 percent. Since 1950, the inflation rate of Germany has been fluctuating with average rate at 2.49 percent until 2013. With this percentage of inflation rate, German can be considered as a good place for investment. The current inflation rate shows that the economic condition in German is in a good condition (Trading Economics 2013).

Economic Trends and Growth

German is one of the heavily export countries in world (Trading Economics 2013). Since 10 years ago, the GDP of German has been fluctuating. From 2004 till 2008, the GDP of Germany was in positive number. Then in 2008 until 2010, there was an extreme decrease in the GDP of German which reached a peak at approximately -4.0. However, since 2010, the GDP of German has been going fluctuate at a positive number. Apart from it, recently the government of German is trying to maintain stability of GDP of Germany in the positive number. So, it can be a good condition for foreign investment in German, because they can make more profits if the economic condition in German growth (Randow 2013).

Analysis

In conclusion, both the inflation rate of German and also the economic trends and growth in German can be a good opportunities for foreign company to invest in German, particularly for KeepCup to expand their business to German.

Socio-cultural Environment

Socio-cultural environment shows how the values of society influenced the working conditions (The Hofstede Centre 2013).

The Cultural Dimension of Hofstede (The Hofstede Centre 2013)

Power Distance

Australia and German have a similar index of Power Distance. Both countries are considered as Low Power Distance countries. This culture creates a good leadership style between the managers and employees. Participative and democratic leadership are suitable for these two countries. Decentralized decisions making creates a good collaboration between team members and the leader.

Individualism vs Collectivism

Although the Individualism Index of Australia and German is slightly different, but both countries are considered as individualism country. Australia is more individualistic than German, it is considered as highly individualism country. Here people are more focused on their self-skills and individual performances. Moreover, Germany people are slightly more prefer to work as a team rather than working as an individual because the individualism in German is not as high as in Australia.

Masculinity and Femininity

Both Germany and Australian are considered as masculine. From the business point of view, people in both countries are more focus on performance in working and always try to do the best. Furthermore, with the masculine culture both people from these two countries are considered as hard worker.

Uncertainty Avoidance

Australia and German have different level of uncertainty avoidance. Germany can be considered as High Uncertainty Avoidance, whereas Australian is medium uncertainty avoidance. With the certain laws and legal policies in German, shows that Germany want to creates certainty by providing details and avoid risks. In contrast, Australian likes to try new things. People sometimes like to take a risk for creating a strategy.

Term of Orientation

German and Australia have the same term of orientation which is Short Term Orientation. In business point of view, both countries are using fast strategy and have a measureable payback. They also make a decision based on the recent condition. Logical thinking is using more than reach the consensus.

Analysis

There are three similarities and two differences between Germany and Australian socio-cultural based on Hofstede Cultural Dimensions. Germany and Australian have the similarities in Power Distance, Masculinity and Term of Orientation. In contrast, German and Australian have the differences in individualism and uncertainty avoidance. However, these socio-cultural dimensions can be opportunities for Keepcup to invest in German, because the similarities are outweigh the differences.

Technological Environment

The technological environment reflects the current technological infrastructure and communication technology (Mosley, Pietri, and Megginson 1996, 82)

Technological Infrastructure

German is going fast in improving their infrastructure since last decade. Based on Germany Trade and Invest, now German is the second best quality of infrastructure in the world, because German has some good logistic infrastructures. First of all, is the Port of Hamburg which the second largest port container in the world. Secondly, are the over 250 inland ports which are providing an efficient logistic distribution. Lastly, is the Frankfurt Airport which is the world seventh largest cargo airport and ninth largest passenger airport (Germany Trade and Invest 2011). These three logistic infrastructures creates a good opportunities and simplicities for foreign company to distribute their products to German.

Communication Network

Compared with Australia, German also has an ultra high speed internet with fiber optic network and also wide range of mobile coverage. These modern communication network make the economic transactions and communications to national segment or even international segment easier and more efficient. (SAG Germany 2013).

Analysis

The sophisticated technology infrastructure and communication network in German provide an opportunities for KeepCup to do investment in German. The simplicity of the logistic distribution makes KeepCup easily to distribute their product among German. Moreover, the wide coverage area for communication network in German provides and easy way to communicate between customer to the company or company to company.

Conclusions

Based on the SWOT analysis above, is highly recommended for KeepCup to expand their business to Germany. The strengths of KeepCup are greater than their weakness. This condition makes KeepCup can be easily to invest in German in this period of time. Moreover, it also supported by the opportunities that extremely overcome the threat that KeepCup will encounter. Is highly recommended for KeepCup to start their investment to German first of all with looking for certain local café to cooperate with them regarding to sell their reusable cups.

Recommendations

According to the weaknesses and the threat analysis, KeepCup will not be impacted with their weaknesses and threat in German. This happened because the strengths are overcome the weaknesses of KeepCup and the opportunities for KeepCup are outweigh the threat that the company will contend. These conditions provide three recommendations for KeepCup according to their plan to expand their business to German:

1. KeepCup should expand their business in this period of time.
2. KeepCup have to eliminate the weakness overcoming them with their strengths.
3. KeepCup need to avoid the threats by outweighing them with their opportunities.

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