Socio-Economic Profile of a Switzerland - Essay Example

Switzerland Analysis of a country encompasses several components. From business point of view when a country is considered its socio-economic profiling becomes important. Socio-economic profile of a country is a culmination of several variables such as religion, personal communication, body language or etiquette, education, physical and material environment, political ideologies and legal system, intellectual property rights, taxation, ethics and social responsibility along with business and international relations. All these variables for Switzerland have been considered in the following paper with additional information on the concerned country’s status regarding Market Economy and Productivity, Purchasing Power Parity and Human Development Index. Religion Religion is an important social variable that often determines the associated risk factors with a certain form of business. Religious stubbornness of the people of a country might put many constraining factors on the business environment of that country. By December, 2010 the population of Switzerland was 7.9 million (Swiss population hits 7.9 million, 2011). According to a publicly funded study the foundation of religious belief in Switzerland is eroding at a fast pace. 32 percent of Swiss populations are Protestant and 31 percent of them are Catholics; 12 percent are of non-Christian religion and 25 percent does not have any religious beliefs. Forty years ago the scenario was lot different when only one percent of the Swiss population was bereft of any religious belief. In the year 2000 the same figure stood at 11 percent (Vogel-Misocka, 2011). Personal Communication Language is the most important form of personal communication. Since in business communicating with people is most necessary, hence having a clear knowledge of the official languages of a country before setting foot upon its soil is most important from the business point of view. The four official languages of Switzerland are German, French, Italian, and Rumantsch. The distributions of the languages are as follows – Language Public Use (%) Mother Tongue (%) German 74 63.7 French 21 19.6 Italian 4 6.6 Rumantsch 1 0.5 Source: Switzerland's Four National Languages, 2010 It’s pretty easy to understand why German speaking residents account for the majority of the nation with Germany and Austria as next door neighbors to Switzerland. Body Language/Etiquette The meaning of body language and etiquette along with corporate culture differs from country to country. Knowing the meaning of the same might make a difference regarding success or failure of a business decision. The Swiss value “cleanliness, honesty, hard work, and material possessions” (Bosrock, 2013). The Switzerland motto is “Unity, yes; Uniformity, no.” (Bosrock, 2013) The Swiss people are “proud of their environment and have long tradition of freedom. They value sobriety, thrift, tolerance, punctuality and a sense of responsibility.” (Bosrock 2013) Listed below are a few etiquette and body language customs that are appropriate in Switzerland; the list also comprises of the common corporate culture of the same country: Swiss people do not like poor posture and publicly stretching or drooping is looked down upon. Pointing the index finger towards own head is considered as an insult and should be abstained from doing. Handshake is considered with importance; should be firm and warm with eye to eye contact and addressed twice (both at the time of joining and leaving) towards everyone present in business or social meetings. While attending a party a guest should give the host enough time to introduce him/her to others. Since first names are only for near and dear ones, last names along with academic and professional titles are mostly used while addressing someone. Punctuality in both social and corporate meetings is honored. A prior phone call with explanation is expected if delayed in a meeting. English is accepted as a medium of communication in any business meeting. However, the presentation as well as discussion should be well planned and informative. Meetings are very professional in nature. It is advisable not to call a Swiss business person at home unless otherwise it is an absolute emergency condition. An invitation at a restaurant for a lunch might facilitate the business processes with a Swiss businessman. (Bosrock, 2013) Education The educational background and nature of a country is extremely important from business angle. This signifies the availability of skilled and unskilled labor in that country. The Swiss education system is a mark of decentralization and the cantons get importance in terms of decision taking regarding the running of the schooling system both in primary and secondary level (local division of country). The education system over cantons varies over the country; however certain similarities are also noticed. These similarities are mainly reflected in terms of “duration of the school year, and the number of years of compulsory schooling.” (The Swiss Education System, n.d.). All over the country work oriented course or training gets prime importance; though the country offers free university education to its residents. Switzerland flaunts the lowest rate of unemployment regarding young adults among thirty most industrialized countries of the world (Bachmann 2012). Physical and Material Environments Adequate knowledge on the physical and material environment of a country is required for any successful business venture. Switzerland is probably one of the most beautiful places in the world, with the Alps at its background the country is surrounded by many lakes and rivers and mountains. The temperature varies a lot within the country and climate also changes very fast (Nature and Climate in Switzerland, 2013). Switzerland is bereft of any coastline and this is considered as a negative aspect to business as it makes import and export hard to this country. However as the country lies along the borders of important countries like Germany, Italy, Austria, and France this short coming is usually ignored regarding business (Political Map of Switzerland, 2012). Political Ideologies & Legal system If a country is subject to political unrest or politically hostile to other countries of the world; business ventures in that country might become riskier. The presence of a strong legal body assures justified conclusion in case of legal dispute. Switzerland believes in peace and its political ideology has flourished providing peace and the right of its residence the center place. It’s a globally renowned neutral country that has maintained its neutrality even in two Great Wars. This neutral nature and peace loving feature together enabled the nation to act as a third party in many global peace negotiations. Switzerland is the second oldest federal state of the world. The most unique feature of its political system is its three level structure namely federal (national), cantonal, and municipal (Bovey, 2006). Switzerland’s government consists of a seven-member executive council which constitutes the federal government of Switzerland and serves as the Swiss collective head of state. While the entire council is responsible for leading the federal administration of Switzerland, each Councilor heads one of the seven federal executive departments (Switzerland Country Profile, 2012). The federal system can be found in many other countries like the U.S.A, Germany, Austria, and so on, but no other nation delegates so many competences to federal states and communes than Switzerland does. The cantonal level has its own constitution, parliament, government and courts. Switzerland is generally one of the safer countries in the world which has a civil law legal system where written law is the primary source of law. Just like in other civil law legal systems, Swiss law is divided into public and private law. Public law governs the organization of the State, as well as the relationships between the State and private individuals. “Private law governs the relationship between individuals.” (Bovey 2006). Intellectual Property Right The state of understanding and concern for the Intellectual Property Right in the concerned country of business interest can be of extreme importance regarding research and development. Intellectual property right theft is common issue in many countries and running research and developmental activities in those countries can result in huge loss in investment. However, in Switzerland Intellectual Property Right is dealt with extreme importance as explained by Eckert and Glarner (2011) “Intellectual property ("IP" or "IPR") protects applications of ideas and information that are of commercial value. Intellectual property rights thus grant to their owner certain exclusive rights to a variety of intangible assets, i.e. musical, literary or artistic works; inventions; signs, labels, etc. Under Swiss law, IPRs are subject to federal law and also regulated through a wide range of international treaties. A holder of IPRs is authorized to prevent any unauthorized use of its intellectual property and to exploit such property, in particular by licensing it to third parties.” (Eckart and Garlnier, 2011) Taxation The tax system of a country both at Individual and Corporation level is important for business purpose. The Swiss tax system is federal in nature; direct taxes are imposed from the federal, cantonal and communal level (The Swiss Tax System, 2012). In case of Individual taxation the residents of Switzerland should strictly adhere to the “unlimited liability to pay tax” (The Swiss Tax System, 2012). When taxing Individuals; people with at least thirty days living in the country with gainful employment; or at least 90 days living in the country with non-gainful employment are taken into consideration. If a married couple earns more than 30,600 CHF (Swiss Franc) or a person earns 17,700 CHF then they liable to pay taxes under any circumstances (The Swiss Tax System, 2012). For both Individual and corporation; taxation is more burdensome at the cantonal levels than at the federal level (Switzerland tax rates, 2012). Tax Rate Federal (%) Federal+Cantonal+Communal (%) Individual 11.5 22.42-42.28 Corporation 8.5 13-22 Source: The Swiss Tax System, 2012 Ethics and social responsibility The sense of ethical and social responsibility of the people of a country is an important factor to determine whether to make an investment in business purpose in that country or not. For long Switzerland was predominantly peasantry economy of below subsistence level. In chilled penury they used to sale their military prowess to other European Kings who were basically war mongers. Those days of hardship are long gone yet the culture of hard work still remains active. Hard working is morally essential for all Swiss people and it reflects in their successive complain when they are forced to remain idle. The love for work of Swiss people reflects from the fact that “The Swiss work long hours (1,844 hours a year), much longer than their neighbors (the Germans work a miserly 1,573 hours a year). The Americans take the cake with 1,904 hours a year. One would think that this strong work ethic is bred by Calvinism, a very demanding brand of Protestantism that makes people very hard working. However, the Catholic cantons work every bit as hard and feel no religious pressure at all.” (Micheloud, 2001, p. 37). The Swiss people are green loving and a combination of “advanced recycling programs and alternative means of heating and transportation” is used to minimize the carbon foot print owing to anthropocentric movements.” (CSR, 2013). The country’s “vast train, cable car, steam boat and cog wheel network” (CSR, 2013) is a constant fuel to environmental adherence with simultaneous efficient running of operations all over the country. Business and International Relations A country’s International and business relation with other nations provides quite an impact while taking any business decision. United Kingdom and Switzerland shares a strong trade tie. In terms of statistical data for the year 2010 Switzerland stands only after US and China amongst the non European Union trading partners of the United Kingdom. The total goods exported to UK for the same year stands at a staggering 5.2 billion Pound. Furthermore Switzerland is quite amicable as a foreign direct investor in UK. The total stock values of the Swiss companies (more than 2000) operating in UK are 27.8 billion pound. The Swiss companies are major job provider for the residents of the UK. It has been estimated that the 30 most renowned companies in UK allocates more than 200000 jobs to UK residents. The Swiss people are also large purchaser of goods produced in UK (Embassy of Switzerland-Country Profile, 2013). Switzerland believes in free operation of the market economy and stands fifth in terms of economic freedom index score among all the countries of the world. Among the European countries it stands first regarding the same index. As a whole the Swiss economy is multifaceted and modern. The country ensures strong protection for property right and renowned for its non-tolerance of corruption. The strong Judicial system that ensures fair and free play for all the investors worldwide stands as a guarding pillar of the competitive and flexible Swiss economy. Though the country has gone past nominal upheavals during the global financial turmoil, it has emerged and regained its previous position with ease (Switzerland, 2013). The presence of a sharp public sector that has been backed by sound fiscal position of the Swiss government over the years mostly owing to its famous “debt brake” has worked in favor of the flourish of a calm and responding business environment. Monetary stability and the presence of a skilled labor market have always baked the commercial operations in the country. Credits are plentiful and that is due to the presence of a super efficient financial sector in Switzerland and all these made the investor at ease (Switzerland, 2013). Market economy & Productivity The productivity and kind of economy existing in a country can make substantial differences regarding business decisions. As mentioned earlier Switzerland economy is a free market economy that depends on international trade and a strong financial sector. Switzerland is renowned for its efficiency of workers, high standard of living, brilliant educational structure, and advanced health care system that is highest among all the European Countries. Considering the fact that the country is bestowed with only 10 percent of land that is suitable for agriculture; the mentioned sector employees fewer than 5 percent of population. Products from primary sector mainly comprises of dairy products (chocolate and cheese). This signifies the industrial nature of the Swiss economy. Though it is true that the country is low in mineral resources and raw materials and they must be imported to get the industry running yet exporting high technological goods like “machinery, chemicals, watches, textiles, precision instruments” (Switzerland, 2013) etc, has assisted Switzerland to end as net exporter. Along with the above facts low inflation and unemployment rate has helped the Swiss economy to flourish (Switzerland, 2013). The financial sector of the economy is also very strong and that has its roots in “secrecy laws, which have led wealthy foreigners to evade taxes by hiding assets with Swiss banks. (Switzerland, 2013)” Along with mineral resources and raw materials; Swiss import also includes “manufactured goods, vehicles, clothing, and textiles. It’s most important trading partners are Germany, Italy, France, the United States, and Great Britain.” (Switzerland, 2013). Purchasing Power Parity (PPP) The purchasing power of a country reflects the effective demand existing there. Other things unaltered a country with higher purchasing power reflects a better business destination. The gross domestic product per capita in terms of purchasing power parity shows that Switzerland belongs to the higher income group of the countries. The following graph provides a support of the same and considers the per capita GDP in terms of purchasing power parity of Switzerland from 2004 to 2012. Source: Switzerland per capita GDP, 2013 Human Development Index (HDI) It has often been observed that a country though with high purchasing power owing to inequality is not that a lucrative business destination as it thought to be. In those countries fruits of development is restricted among only a few wealthy individuals and rest of the population lives in poverty and bereft of understanding and fruits of development. A country without a developed population might pose problem from business point of view. Switzerland occupies a high ranking at 11 in terms of human development index and thus is a safe business destination from that point as well. Human Development Index Related Statistics: Switzerland Variable Statistics Human Development Index 11 Life Expectancy at birth (Years) 82.3 Mean Years of Schooling of Adults (Years) 11 GNI per capita in PPP terms (constant 2005 international $) 39924 Inequality adjusted HDI value 0.84 Gender Inequality Index 0.084 Adjusted net savings (% GNI) 21.6 Non-income HDI Value 0.926 Source: Switzerland, 2013 Conclusion: As it reflects from the above analysis that Switzerland as a business destination can be a very lucrative place to consider. However, it is also true that to flourish in that country efficient operation is of utmost necessity. This efficiency or optimization of resources does not mean only maximization of productivity rather optimization of all the aforesaid variables considered. References Bachmann, H. (2012), Who Needs College? The Swiss Opt for Vocational School, retrieved on March 10, 2013 from: http://world.time.com/2012/10/04/who-needs-college-the-swiss-opt-for-vocational-school/#ixzz2N8EQ8EcW Bovey, G.M. (2006), The Swiss Legal System and Research, retrieved on March 10, 2013 form: http://www.nyulawglobal.org/globalex/switzerland.htm Bosrock, M. (2013), Switzerland, retrieved on March 10, 2013 from: http://www.ediplomat.com/np/cultural_etiquette/ce_ch.htm CSR (2013), Welcome Swiss, retrieved on March 10, 2013 from: http://www.welcome-swiss.com/cms/spip.php?article49 Eckar, M. and A. 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