Details
Mini Case Code : CLIBE008
Publication date : 2005
Subject : International Business Environment
Length : 03 Pages
Price : Rs. 50
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Key words:
General Motors (GM), Volkswagen, DaimlerChrysler, job security, Siemens, GDP, deutsche mark, EU limits, German economy, globalization
Note
* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US
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Abstract
This caselet explains the effect of globalization on the German economy, especially its labor market. It delves into the issues of job cuts and employee concern over job security. It details the reasons for the decline of the German economy.
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Issues:
» Job cuts and reduced wages in German companies.
» Is the economic turmoil a result of globalization?
» Slow economic growth in Germany.
Introduction
Globalization seems to have hit Germany, especially its labor market. Many automakers like General Motors (GM), Volkswagen, and DaimlerChrysler, have been hinting at reducing labor costs.
On October 19, 2004, thousands of workers of GM in Germany marched through the streets of Russelsheim
to protest the company’s proposal to cut 12,000 jobs across Europe.
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The US-based GM, had been incurring losses in its European operations since 2000 and its total losses were estimated at around $2 billion (1.6 billion euros). The firm, which has about 63,000 employees in 11 factories across Germany, the United Kingdom, Belgium, Poland, and some other countries, has been seriously contemplating cutting down its costs to make up for the losses.
Workers, who previously resorted to strikes for wage hikes, are now more worried about protecting their jobs.
The German workforce is seeking job security beyond 2010 but GM is unlikely to
agree to this....
Questions for Discussion:
1. Do you think globalization is responsible for the present condition of the German economy? Explain.
2. Discuss the reasons for the slow economic growth in Germany.