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COMPARATIVE MANAGEMENT SEC A

NATIONAL FOODS IN GERMANY


Management Proposal to enter International Market

PREPARED BY: FARAZ ANJUM MAIMOONA MUMTAZ MEHRA JEHANGIR SYEDA SUMBUL FATIMA FACULTY: MR.ABDULLAH PATOLI DATE: 28TH NOV, 2010

MAN-508 COMPARATIVE MANAGEMENT

NATIONAL FOODS

November 28, 2010

Mr. Abdullah Patoli, Professor, Comparative Management, Institute of Business Management, Korangi Creek, Karachi.

Dear Mr. Patoli, We take immense pleasure in submitting you the detailed report for the course Comparative Management. Our report is based on the application of a local company across borders, National Foods in Germany. This report gives immense detail about the most common concept in the world today- globalization. Companies in one country have expanded to their cities and have now realized the vast potential of the international markets and wish to expand their operations there. However, in doing so, many companies remain unsuccessful subject to the factors studied in this report. And we are certain that you will find ample information needed to understand the concept of international management and the importance of understanding the diverse cultures and values of different countries as well as the application of a national company across the borders. Complying with all your requirements, we hope that you will find the report complete in content and framework. However, if you require any help in interpreting the report, we are eager to assist you. If the need arises, you could contact us at mumtaz_maimoona@hotmail.com or 0300-2676586.

Sincerely,

Maimoona Mumtaz Compilation Incharge.

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TABLE OF CONTENTS
Letter of Acknowledgement ................................................................................................................................... 4 Executive Summary ................................................................................................................................................ 4 Mission .................................................................................................................................................................. 6  About The Company ...................................................................................................................................... 6  Developments Today ..................................................................................................................................... 6 Why Germany ........................................................................................................................................................ 7 Organizational Culture ........................................................................................................................................... 8 Transition From Family Culture To An Eiffel Tower Culture ..................................................................................... 8 Inside Germany's Eiffel Tower Culture .................................................................................................................... 9  Difficulty Handling Organizational Changes .................................................................................................... 9  German Leadership And Motivation Style ...................................................................................................... 9  Comparison Of Cultures ............................................................................................................................... 10 Geert Hofstede Cultural Dimensions..................................................................................................................... 11 Trompenaars Cultural Dimensions ....................................................................................................................... 12 Communication Style ........................................................................................................................................... 14  Characteristics Of Verbal Styles.................................................................................................................... 14  Communication Flow ................................................................................................................................... 15  Communication Barriers .............................................................................................................................. 15 Cultural Issues-Life & Business.............................................................................................................................. 16 Structure And Hierarchy In German Companies .................................................................................................... 16 Working Relationships In Germany ....................................................................................................................... 17 German Business Etiquette (Do s And Don ts)....................................................................................................... 17 Political Risk Analysis............................................................................................................................................ 18 German Corporate Governance............................................................................................................................ 19 Organizational Structure ...................................................................................................................................... 20 Negotiation Tips ................................................................................................................................................... 21 Risks And Expropriation........................................................................................................................................ 23 Patterns Of Internationalization ........................................................................................................................... 24 Conclusion ........................................................................................................................................................... 25 Bibliography ......................................................................................................................................................... 25

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ACKNOWLEDGEMENT

We are truly indebted to Mr. Abdullah Patoli for giving us this incredible opportunity to gain exemplary knowledge of applicative study; local business going international.

We also owe our deepest gratitude to Mr. Patoli for his constant support and encouragement which provided me the inspiration to complete this analysis with much enthusiasm.

He showed a commendable gesture of believing in our potentials and guided us through the completion of this report. He had faith in us, which helped us overcome all the obstacles and develop passion with regard to the report.

And, last but not the least; we would also like to extend our gratitude to Mr. Waqar Hussain- manager National Foods for sparing his precious time and helping us, complete this report with perfection.

Thank you very much!

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EXECUTIVE SUMMARY

The study in this report reflects complete information on the commonly used practice of firms expansion into international markets. It mentions the entire essentials imperative for each business to know prior to stepping into foreign markets. The report extensively covers: Developments of National Foods, The organizational structure, The culture within the organization, Motivational style of NFL, The Hofstede and Trompenaar s cultural dimensions, Corporate Governance, Communication issues in Germany, Political analysis of German economy, Negotiation tactics under consideration. The report contains detailed information on the aforementioned topics and also explains the milestones in the NFL journey years after its establishment. Germany was our primary consideration due to the diversity of culture that was integral to understand. Throughout the analysis, relevance, objectivity and simplicity in vocabulary is the objective.

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MISSION
National Foods Limited has a mission to provide consistent and out-class quality service to its retailers and manufactures for its array of brands & products. National Foods is committed to satisfy market s demand and supply of its product range. National Foods is determined to improve their services and processes on continuous basis.

ABOUT THE COMPANY National Foods Limited is a Pakistani company founded in 1970 which started out as a Spice company. In 1988, National Foods became the certified vendor of McCormick, USA. In the same year, National Foods, then a Private Limited company was converted into a Public Limited, listed in all the three stock exchanges of Pakistan. With a range of over 110 products in 12 major categories, National Foods is one of the largest food companies. National Foods marked its beginning in a rented warehouse in Dinar Chambers with initial sales amounting to Rs. 16,487 in its first fiscal year. Later, the company established a spice mill and a packaging plant that eventually evolved into a large factory complex. In this innovative age of ever changing lifestyles, fuelled by the rampant development of technology; consumers have been compelled to change their eating habits. National Foods responds to this challenge of developing innovative food products based on convenience and fast preparation in line with modern lifestyles and yet retains traditional values through its impressive collection of food products.

DEVELOPMENTS TODAY Today, National Foods provides a complete food experience to its customers in 33 countries around the world. National Foods produces over 300 SKUs in 12 major product categories including meal solutions, pickles, sauces, ketchups, jams and desserts. National Foods is reaching out to the voice of its customers by delving further into the convenience food segment and adhering to their philosophy of offering superior taste and quality. It has been 30 years since National Foods was formed. Today, it is well established, in fact a household name. Its products are sold not only domestically, but also in far-flung corners of the globe. Despite these feats, National Foods has not reached the end of its growth path. There are still many horizons to conquer, and National Foods will continue to progress, and to offer quality food to its consumers. International Distributors 1. North Atlantic (USA, Canada) 2. Europe (UK, Greece) 3. Asia Pacific (South Korea, Japan, Hong Kong, Singapore) 4. Australia (Australia) 5. Africa (Egypt, Mauritius) 6. Middle East (Saudi Arabia, UAE, Kuwait, Bahrain, Oman) 7. South Asia (Afghanistan, India, Bangladesh)

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WHY GERMANY
We recommend National Foods to introduce itself in Germany via exports. The reason for choosing Germany is that spices like basil, sage, oregano, and hot chili peppers have become popular in recent times. Garlic was long frowned upon as "making one's breath smell bad and ghastly" and thus never played a large role in traditional German cuisine, but has risen in popularity in recent decades due to the influence of French, Italian, Spanish, Portuguese, Greek and Turkish cuisine. The wide assortment of national brands would suit well with the German food. Since unification in 1989, Germany is Europe s most populous nation and the continent s largest economy, the fourth-largest by nominal GDP in the world, and fifth by GDP. Germany is the largest national economy in Europe. Entering Germany through exports will enable the company to expand itself into North America with a minimum of investment. Furthermore, it enjoys a level of stability and commercial opportunity unparallel with the region s major economies. Situated at the heart of the European continent, and fundamentally shaped by Europe s history, it is characterized by deep regional identities while at the same time also conveying a national German culture.

Foreign Trade Indicators for Germany Imports of Goods (million USD) Exports of Goods (million USD) Imports of Services (million USD) Exports of Services (million USD)

2005 777,073 970,914 209,790 157,342

2006 906,684 1,108,107 224,591 184,574

2007 1,054,983 1,321,214 259,449 216,958

2008 1,185,067 1,446,172 289,676 241,590

2009 931,434 1,120,927 253,110 214,799

As a country, Germany is filled with different types of people. According to statistics, there are approximately 7 million foreign people called themselves as guest workers . Most of them are Turks; they were invited by Germany around 50 s and 60 s to be labors, who remained in Germany. Other ethnics that exist in Germany are Danish minority who lives in the north, and a small Slavic minority known as the Sorbs lives in eastern Germany. It can be clearly seen how Germany is an intercultural country. Common terms used to describe Germany include humorless, aggressive, distant, stubborn and obsessed with details.

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ORGANIZATIONAL CULTURE

NATIONAL FOODS

GERMANY

 National Foods Organizational Culture Organization culture at National Foods is in the transition phase from an Eiffel Tower like at present. Transition from Family Culture to an Eiffel Tower Culture The company is moving towards an Eiffel Tower Culture as the culture is predominantly power oriented at present though the employees interests are well catered. From power-oriented they want to move towards being more role-oriented. High degree of bureaucracy has made the hierarchical structure tall with regard to role orientation and power of position. The brand delivers its ultimate promise by consistently delivering value to its consumers. National Foods enriches family relationships by bringing people together for family traditions, feasts, seasonal holidays and of course - everyday life. In National Foods, Getting the job done with the right man in the right place have been the favorite expressions since long. National has adopted continuous process improvement as a way of life. Achievement and effectiveness are highly weighed and Cross departmental teams are formed to discuss ways of improving the quality of work. Being a global firm, National Foods needs both an internal and external diversity focus. To be effective, it needs to develop cross-cultural skills that allow it to work effectively with internal personnel as well as external customers, clients, and suppliers. China, India, Madagascar, Indonesia, Vietnam, Brazil, Spain, Guatemala and Sri Lanka are principal supplying countries of spices in the global world market.

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 Germany s Organizational Culture: Countries around the globe have to adapt to what is known as the "German filter", which reflects Germany's nationalistic management methods. Germany's rule-oriented, hierarchical focus on task accomplishment is an Eiffel Tower management style. While it is true that German subordinates rarely disobey or openly question orders from higher level authority, corporate power structures in Germany are typically more flat than they are tall. That's because German businesses are collections of highly specialized teams. Thus, Germany's Eiffel Tower structures aren't very tall. Inside Germany's Eiffel Tower Culture The Eiffel Tower culture is most common in Northwest European countries, including Germany. The way in which Germans learn and work differs strikingly from other cultures, including those of neighboring European nations. In Germany, jobs are well-defined while assignments are fixed and limited. German employees know what they are supposed to do within an Eiffel Tower culture that is hierarchical, with orders coming down from the top with very little upward communication. Difficulty Handling Organizational Changes When changes need to be made, the German culture is often ill-equipped to handle the complex burdens that a rule-based Eiffel Tower bureaucracy demands. Manuals must be rewritten, procedures changed, job descriptions altered, promotions reconsidered and qualifications reassessed. However, Germany's superiority complex sometimes leads to an ethnocentric style of management in which strong nationalism compels German headquarters to maintain control of key international management positions. German Leadership and Motivation Style Systems integrators that they are, Germans have evolved a unique leadership and motivation style that integrates the features that most closely fit with the strongest German cultural characteristics. Therefore, German leadership and motivation style synthesizes the most pertinent characteristics from Authoritative Theory X, Paternalistic Theory Y and Participative Theory Z. Below is a summary of Theory G, based on the most relevant features from the above three theories. From Theory X: y Germans like to be directed. y In Germany, job security is primary. From Theory Y: y Since Germans are committed to goals, they exercise high self-control. y No threats of punishment are required to ensure task completion. From Theory Z: y Germans are motivated by a strong commitment to be part of a greater whole in general, and more specifically to their German organization y Through teamwork, Germans derive self-satisfaction while contributing to their company s success.

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COMPARISON OF CULTURES

Factor

Pakistan

Germany

Overtness of messages Locus of control attribution for failure Use of communication

y Many overt and explicit messages that y Many covert and implicit are simple and clear. messages, with use of metaphor and reading between the lines. and y Inner locus of control and personal acceptance for failure y Outer locus of control and blame of others for failure y More focus on verbal communication than body language y Visible, external, outward reaction iny Flexible and open grouping patterns, changing as needed

non-verbal y Much nonverbal communication

Expression of reaction

y Reserved, inward reactions

y Strong distinction between Cohesion and separation of group and out-group. groups y Strong sense of family. People bonds

y Strong people bonds with affiliation to family and community

y Fragile bonds between people with little sense of loyalty.

y Low commitment to relationship. y High commitment to long-term y Task more important than relationships. relationships. Level of commitment to y Relationship more important than relationships task. y Time is open and flexible. Flexibility of time y Time is highly organized.

y Process is more important than y Product is more important than process product

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GEERT HOFSTEDE CULTURAL DIMENSIONS


Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster." Prof. Geert Hofstede, Maastricht University

Germany is a relatively individualistic (IDV=73) society in which the ties between individuals are loose: everyone is expected to look after him/herself and his/her immediate family. Germany also has a high Uncertainty Avoidance (UAI) (71), indicating the society s low level of tolerance for uncertainty. In an effort to minimize or reduce this level of uncertainty, strict rules, laws, policies, and regulations are adopted and implemented. The ultimate goal of this population is to control everything in order to eliminate or avoid the unexpected. As a result of this high Uncertainty Avoidance characteristic, the society does not readily accept change and is very risk adverse

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TROMPENAARS CULTURAL DIMENSIONS


Universalism vs. Particularism Germany demonstrates a society with very high universalism attitude; with focus on rules, processes and procedures. Contracts and agreements are adhered to very strictly and formal procedures are followed rigidly. To the Law USA Ger UK NL Obligation Fra Jpn Spa Bulg To the Person Rusia Venez

Neutral vs. Emotional Cultures Germany is an extremely neutral culture; feelings aren t expressed naturally and openly. Neutral is characterized by: not revealing what one is thinking or feeling, hidden emotions that may occasionally explode out and lack of physical contact, gesturing or strong facial expressions.

Specific vs. Diffuse Culture The German culture is relatively diffused in nature, characterized by a large private life that includes a relatively large number of people; small public space that is difficult to enter (e.g. an outsider needs a formal introduction from a mutual friend in order to do business with a particular manager). There s no clear distinction between work and private life. Specific USA NL UK Involvement in Relationships Fra Ger Pol Jpn Rusia Diffuse Hungary

Achievement vs. Ascription Cultures Germany is a predominantly achievement based society; people are accorded status based on how well they perform their functions. High achievers are given status in achievement-oriented countries such as Germany but achievers must continue to prove their worth, as status is accorded based on their actions. Achievement USA UK Swe Involvement in Relationships Hungary Ger NL Ita Spa Ascription Rusia Austria

External - Environment Inner vs. Outer Directed People The Germans are inner directed people; they focus on living in harmony with nature and they believe that they have little control over what happens to them by fate. Internal USA Ger Spa NL UK Ita Poland External Chi

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Sequential vs. Synchronous use of Time In Germany, sequential use of time is prevalent; people tend to do one activity at a time. Appointments are strictly kept, with a strong preference for following plans. Factor Actions Focus Attention to time Priority Respect for property Timeliness Germany Do one thing at a time Concentrate on the job at hand Think about when things must be achieved Put the job first Seldom borrow or lend things Emphasize promptness Pakistan Do many things at once Are easily distracted Think about what will be achieved Put relationships first Borrow and lend things often and easily base promptness relationship factors

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COMMUNICATION STYLE
 National Foods: The communication style prevalent in National Foods is very similar to that found in collective and high context cultures where sense of belonging and hierarchy are emphasized more. 1. Indirect: Verbal messages across the organizational members in National Foods are implicit and indirect. There conversations at times are more for the purpose of relationship building than for just exchanging information. They do not have to rely on language alone to communicate as voice intonation, timing, and facial expressions, all play a role in conveying information. Succinct: Verbal communications among the organizational members in National is characterized by precise words but more expressions. Contextual: People in National use words that reflect their hierarchical relationship within the organization and this is why speakers choose words that well define their position. Affective: Verbal communication within the organization is high context, i.e. the listener is expected to carefully note what is being said and to observe how the sender is presenting the message. Quite often the meaning conveyed is non verbal and requires the receiver to use his or her intuitive skills in deciphering what is being said.

2.

3.

4.

 Germany Germany on the other hand, is an intercultural country. Germans are well known for their strong cultural values in business among other European countries. Germany is an example of a typical European country that has a lowcontext culture. Their individualism reflects their philosophical meaning, which is having the sense of achieving one s goal in order to provide good for the community. They have little social hierarchy observed in the organization as they focus on their personal achievements. Truth and directness are two important aspects in business, therefore criticism and other strong comments are not considered as personal disapproval. Nonetheless, their communications are very explicit, they believe that they solve their problem by explicitly speak up their thoughts.

Characteristics of Verbal Styles Pakistan Indirect Succinct Contextual Affective Germany Direct Thorough Personal Instrumental

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Communication Flow National Foods has a top down communication approach whereby there is transmission of information from managers to subordinates. On the other hand, Germans prefer direct communication approach, where orders and information should be let out explicitly.

Communication Barriers Language Barriers: One common barrier to effective communication in Germany s business is language. It is better to be able to speak German when dealing with Germans, as they are strong in their culture. Problems come in the process of learning the language, because learning a language is the same thing as learning its culture. Cultural Barriers: One important thing in the world of Germany s business is about humor. Business people do not appreciate humor to their works, and it can be one of the problems in understanding Germany s business culture. Business situations in Germans context call for several important points such as shaking hands and slightly bow, being punctual, and do not sit until invited. Perceptual Barriers (in Advertising Messages): National Foods marketing activities should be customized according to the perceptions of the host country. This calls for understanding the German culture, their language and their life style.

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CULTURAL ISSUES-LIFE & BUSINESS


Ordnung: Most aspects of German living and working are defined and regulated by structures, for example, through laws, rules, and procedures, which are evident in all economic, political and even social spheres. In German business culture, for example, this is reflected in adherence to prescribed rules and, consequently, a low degree of flexibility and spontaneity. Focus on Facts: Objective facts are considered essential in decision-making and problem solving; in business negotiations, for example, the preferred approach to successful decision making is based on logic and analysis of information, rather than on intuition and well developed personal networks. Focus on Tasks: In their approach to work, Germans tend to focus on achieving the task at hand. This, coupled with their well-defined structures, implies that interpersonal relationships play a secondary role in business dealings. The attention paid to targets to be achieved is evidenced, for example, in the precision of timetables, meeting planning and achievement of milestones. Close adherence to time schedules is also considered vital. Communicating: A vital component to understanding business negotiations is the direct, seemingly confrontational, German communication style. In business discussions or planning, for example, openly-expressed criticism tends to be directed at aspects of the problem, project, or business at hand; it should not be considered as personal disapproval. Individualist, yet consensus-seeking: As most Western European cultures, Germany is marked by a strong sense of individualism. Nevertheless, the desire to achieve one s own goals and successes is coupled with a keen sense of responsibility for the good of the community; for example, in many business decisions, not only the financial benefits to the company are important, but also those of its employees. The structure of much German business decision-making requires consensual input from both employers and employees which can render decisions comparatively slow.

German Working Practices  Punctuality is essential. Arriving even five or ten minutes after the appointment time is considered late and disrespectful. If running late for an appointment, it is best to notify the person.  Appointments are made for most situations, and sometimes several weeks in advance.  Decision-making is often a slow and detailed process. Do not expect significant conclusions to be reached based on spontaneous or unstructured results.

Structure and Hierarchy in German Companies  German business culture has a well-defined and strictly observed hierarchy, with clear responsibilities and distinctions between roles and departments.  Professional rank and status in Germany is generally based on an individual s achievement and expertise in a given field. Academic titles and backgrounds are important, conveying an individual s expertise and thorough knowledge of their particular area of work.  In formal German business meetings, it is customary for the highest-ranking person to enter the room first. However, in more informal business situations this is less important.

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Working Relationships in Germany  The Germans are very private, evidenced, for example, in the strict separation between private life and work. It therefore takes time to forge more personal relationships.  Business relationships are often based on mutual advantage, with the overall task as the central focus.

Business Practices in Germany  First names are generally only used with family and close friends and colleagues. Therefore, always use last names and appropriate titles. You will often find that colleagues who have worked together for years still maintain this level of formality.  Business meetings follow a formal procedure. German managers work from precise and detailed agendas, which are usually followed rigorously; moreover, meetings always aim for decisive outcomes and results, rather than providing a forum for open and general discussion.  German business protocol requires that colleagues should be greeted with a firm but brief, handshake on both arrival and departure.  In German business dealings, it is important to provide solid facts and examples to back up proposals, given the German preference for analytical thinking and rational explanations.

German Business Etiquette (Do s and Don ts)  DO take plenty of business cards with you and ensure they include full details of your background, qualifications, and titles.  DO maintain direct eye-contact when addressing German colleagues, especially during initial introductions.  DO use the formal version of you ( Sie ), unless someone specifically invites you to use the informal Du form. It is usually best to let your German counterpart take the initiative of proposing the informal form of address (this implies readiness to develop a personal relationship).  DON T discuss personal matters during business negotiations, as this is considered to deviate from the task at hand.  DON T attempt to continue negotiations after a contract has been signed. Your German colleagues may view this with suspicion, which could lead to an unsuccessful business agreement.  DON T use exaggerated or indirect communication styles during business meetings with you German counterparts. It creates an impression of insincerity and dishonesty.

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POLITICAL RISK ANALYSIS


Germany has a fairly stable government, with minimal political risk for international businesses, and with little to no corruption. Their government and political policy generally tends to provide a safe environment for businesses, with little risk of expropriation. Their court system generally upholds contracts and treats foreign business investments much the same as German investors.

Risk Assessment by Ducroire | Delcredere Sa.NvGERMANY- Export transactions Political risk Commercial risk

Low

High risks

Low

High risks

Corruption Perceptions Ranking Of Countries by Transparency International Country Denmark Finland Canada Germany Japan United Kingdom Rank 2010 1 4 6 15 17 20 CPI SCORE 2010 9.3 9.2 8.9 7.9 7.8 7.6 CPI SCORE 2009 9.3 8.9 8.7 8 7.7 7

Like all other nations, Germany does have companies and industries it protects, such as armaments, railroad, and utilities, but is generally considered a safe environment for international business and investment. It is a leading member of the European Union as well as has the largest economy within the European Union Its political system is open to international business and strives to find ways in which to attract new businesses and investors, such as recently lowering its corporate profit taxes Many assessments have classified Germany s political risk as low.

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GERMAN CORPORATE GOVERNANCE


y y y y y y y y The board must be comprised of between 5 and 20 members. Independent directors must comprise at least 25% of the board (companies are not required to make determination as to the independence of its directors). Companies are not required to have a corporate governance committee, nominating committee or a compensation committee. The audit committee must provide an opinion regarding any transaction with a related party that is outside of the ordinary course. No requirement exists to provide proxy materials for meetings of shareholders. Shareholder approval is not required for the adoption or amendment of an equity compensation plan. There is no requirement that independent directors meet regularly in executive sessions at which only independent directors are present. The Code of Best Corporate Practices calls for a minimum number of outside directors, requirements for information disclosure, the strategic function of the board, and the separation of the CEO position from the board chairmanship. The following is a compilation of the more significant Mexican corporate governance standards as proposed under the Code: The board should be comprised of between 5 and 15 members. Independent directors shall comprise of at least 20% of the board. Independent and patrimonial directors (directors with significant stock ownership in the company) should represent 40% of the board. The annual report must set forth independent directors and patrimonial directors and a brief resume for each. A company's board of directors must meet four times a year. Board members must attend at least 70% of the board meetings. Generally, under the Mexican Securities Market Law, a director is not independent if such director (i) is an employee or officer of the company; (ii) is a shareholder that has influence over the company or (iii) is a person that has a significant direct or indirect relationship with the company.

y y y y y y y

Corporate Governance for Non-Listed Companies in Germany y y y y A formal Board with some external and independent members; Implementation of an Audit Committee similar in composition to that requested by the Sarbanes Oxley act Pressure to have a succession plan, approved by family members and/or by the controlling groups (in some instances approved by external investors and financial supporters) Applying high-tech control actions, like implementation of modern internal control practices supported by much more modern and sophisticated information technology systems Pressure by external auditors to use information technology as part of their auditing procedures.

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ORGANIZATIONAL STRUCTURE

International Division

Country

Germany

Country 3

Office Operations

Marketing

Government Relations

Entry Mode National Foods will opt for export arrangement and it will export its spices to Germany.

International Division Structure y The international Division Structure of National Foods in Germany will mainly comprise of office operations, marketing and government relations department. y The work of the office operations department will be to manage the daily operations including the management of all the processes. y Marketing department will be mainly concerned with the selling and promotion aspect of National Foods in Germany. y Government Relations department will oversee all the legal requirements of working in Germany and ensuring that National Foods is working legally and complying with all German laws.

NOTE: Germans do not entertain clients at home, so an invitation to a German manager s home is a special privilege and always should be followed with a thank you note.

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NEGOTIATION TIPS
Adapt to German Mindset Germans deeply believe in group consensus and teamwork. They believe that in serving the customers and society one will automatically achieve his personal goals. Respecting the German perspective and adapting one s communication style to meet those distinct needs goes a long way in breaking down perceptual and cultural barriers that defeat about 70% of international trade deals with prospective German partners. Only the Most Senior and Qualified Should Negotiate in Germany Authority is an essential component of the hierarchical corporate culture in Germany. German workers are conditioned to following orders from above, so it is imperative that German negotiators understand a foreign executive s title and rank in relation to their own. Negotiation team can improve its chances of success by sending its top executives with the most seniority to deal with German representatives. Schedule Meetings Weeks in Advance Germans often plan every minute of their working day months ahead of time. Out of respect, foreign negotiators should schedule meetings with their German counterparts at least three weeks in advance. Be on Time for Meetings Because they are master planners, Germans are prompt and are insulted by anyone rude enough to show up late. Germans also dislike people who arrive for business meetings too early since this shows that the visitors have not planned their day well enough. Prepare Detailed Agenda and Minutes Partly because of an aversion to risk, Germans insist on detailed documentation to back up their decisions. Consequently, foreign negotiators should provide a well-organized, detailed agenda that leads logically to desired conclusions. After a meeting, the German audience also appreciates detailed minutes that document discussions, issues and action items. Organize Written Documentation Documentation presented to a German audience should include a detailed table of contents with headings and subheadings clearly numbered. An index is also appreciated. Carefully Select Examples German communication is direct and precise, and does not accept verbosity or repetition. When providing case studies to illustrate a position, negotiators should carefully select one or two of the strongest and easily visualized examples for each point. Respect the Native Language While most German executives can communicate in English, German is the primary language for 95% of the population. As a courtesy, international negotiators should ask whether a native German translator is required.
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Another tactic is to have business cards printed in German or as bilingual cards, with the foreign business person s title and academic degrees listed. Be Formal and Serious Germans expect their visitors to dress formally and conservatively, which traditionally means a dark suit. At meetings, visitors will be told where to sit since each seating place signifies rank and status. Foreign executives must maintain eye contact and stick to business at hand. German executives must be addressed by their titles and never by their first names unless invited. Where the visitors have scheduled a return trip home and negotiations are dragging out, the foreign negotiators can ask for a group decision that will enable them to plan the next level of discussions. By acting like German planners, the negotiators may well get maximum results from their German partners.

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RISKS AND EXPROPRIATION


Macro Risk Factors: The Macro level risk factors include placement of limits on the remittance of profits or capital, currency devaluation, political turmoil and government corruption etc. Germany is very less risky in terms of all these macro risk factors because the currency Euro is used in Germany and so the currency has been stable over the years. Furthermore, when it comes to political corruption, it is almost non-existent in Germany.

Micro Risk Factors: Micro risk factors include industry regulations, taxes, restrictive local laws and government policies etc. Again Germany is less risky in terms of all these micro risk factors as those who are exporting products to Germany are legally responsible and so they have to ensure a high quality product. Furthermore, Germany is very lucrative for investment as it provides protection for foreign investors.

EXPROPRIATION RISK: German government does not seize assets and property without compensation even though laws do exist.

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PATTERNS OF INTERNATIONALIZATION
The first question that comes to anyone s mind is that why National Foods thought of going international? y y y Expand markets (exporting) Acquire resources (labor, materials, capital) Diversification/minimize competitive risk

National Foods is a big brand in masalas and readymade food and wants to further expand its market. It is a multi category food company with over 250 different products in 12 categories to suit the taste of different people. National Food is sold over 35 countries (expansion). To make place in peoples mind and then stay there for lifetime is not an easy task, their product should me known throughout the world, 35 countries is not theirlimit- Acquire resources (labor, materials, capital. Thus exporting is the best idea and through exporting product to different parts of the world National Foods can compete with its competitors and the most important aspect is that National Foods see the world through the eyes of customers so where ever it see customers, it moves in the same direction (Diversification) Advantages of exporting products to Germany y y A new country with more customer as National foods has always looked for. The brand name will further get expansion.

Limitations of exporting to Germany: y y Reliance on foreign distributors and suppliers for the promotion and distribution of the product. It s a new country and u need to rely on them in the initial stages. The company will also face competitive risk. The brands that have already reached their and are our competitors will have a stronger position.

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CONCLUSION

After a detailed analysis on the National Foods Company as well as the international country, Germany, it is evident that without such cardinal steps for the study of the economy can cause serious damage not only to the brand but also the company going international. It is crucial for the company to carefully examine the country s economic, political and social imperatives prior to advancing into their economy with a national product. On the completion of our study, we were able to recognize the importance of diverse cultures that can cause business failure. The report s primary focus was the change of culture in comparison to the culture followed in the national country. The cultures explain extreme polarity and our study examined each aspect of the German culture. The report also critically analyzed the negotiation tactics followed in Germany that are considered as preliminary effort when a firm goes international. The negotiation tactics in itself also reflect extreme extents as compared to the negotiation style followed in the East. This report has indeed been an eye-opener for organizations that self-destruct themselves by going international without prior analysis of all of the economy s aspects.

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BIBLIOGRAPHY
 http://www.nfoods.com/nfl/nfl_home.asp  http://www.germanlanguageguide.com/german/culture/  http://en.wikipedia.org/wiki/German_cuisine  http://www.germanculture.com.ua/  http://www.transparency.org.pk/report/cpi2010/cpi2010_report.pdf  http://www.corporate-governance-code.de/index-e.html  http://hbr.org/product/internationalization-globalization-and-capability-/an/CMR244-PDF-ENG  http://internationalbusiness.wikia.com/wiki/Germany_Political_and_Legal_System:_Political_Risks_and_Expro priation

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