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Management article
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Reference no. 92509
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 1992

Abstract

Most American managers have a hard time making sense of Germany. It has a fraction of the resources and less than one-third the population of the United States. Labor costs are higher, paid vacations are at least three times as long, and strong unions are involved at all levels of business, from the local plant to the corporate boardroom. Yet German companies manage to produce internationally competitive products in key manufacturing sectors, making Germany the greatest competitive threat to the United States after Japan. In their review of recent research on the German business system, Wever and Allen argue that managers can learn an important lesson from Germany. In a global economy, competition exists not only between companies, but also between entire socioeconomic systems. Germany''s ability to design a cohesive economic and social system that adapts continuously to changing requirements goes a long way toward explaining its competitive success.

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Abstract

Most American managers have a hard time making sense of Germany. It has a fraction of the resources and less than one-third the population of the United States. Labor costs are higher, paid vacations are at least three times as long, and strong unions are involved at all levels of business, from the local plant to the corporate boardroom. Yet German companies manage to produce internationally competitive products in key manufacturing sectors, making Germany the greatest competitive threat to the United States after Japan. In their review of recent research on the German business system, Wever and Allen argue that managers can learn an important lesson from Germany. In a global economy, competition exists not only between companies, but also between entire socioeconomic systems. Germany''s ability to design a cohesive economic and social system that adapts continuously to changing requirements goes a long way toward explaining its competitive success.

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