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Country analysis-Germany

Goal
To analyze and understand the economic, social, and cultural climate that impacts business practices in Germany. The following analysis will highlight the opportunities and threats for introducing the client’s product into the German market.

Overview
• • • • • • • • • • • History Demographics Geographical Location Natural Resources Trade Industry Economy Technology Education Labor Force German Consumer

• • • • • • • • • •

Political Structure Legal Structure Religion Intercultural Communication Culture Business Environment Negotiations Outlook SWOT Analysis Recommendations

History
• • • • • • • • • • • • • 1871: German Empire formed 1914 - 1918: World War I 1929: Global Depression 1939 - 1945: World War II 1949: Germany divided into East and West regions 1961: Construction of the Berlin Wall 1973: East and West Germany join the UN 1989: Fall of the Berlin Wall 1990: Germany joins the EU 2005: First female Chancellor, Angela Merkel elected 2008: Germany officially declares recession 2009 (Feb): Parliament signs $63 billion stimulus package 2009 (Aug): Germany comes out of recession

282.21 births/1.988 Population growth rate: -0.km = 597 per sq.Demographics • • • • • • Population: 82.mi .061% Birth rate: 8.000 population Life expectancy: 79 years 2nd most populous European country Population density: 230 per sq.

Demographics • Median age (male): 42.7% – 15 .2 • Age structure: – 0 .64 years: 66.3% .14 years: 13.1% – 65 years and over: 20.6 • Median age (female): 45.

441 • Urbanization: – Urban population: 74% of population – Rate of urbanization: 0.440.Demographics • Population of capital city of Berlin: 3.1% annual rate of change .

Geographical Location .

Belgium.350 sq km • Located in central Europe • Area comparison: slightly smaller than Montana • Bordering countries: Austria. Netherlands. Poland. Switzerland • Water: borders the Baltic Sea and the North Sea . Czech Republic.672 sq km – Water: 8. Denmark.Geographical Location • Total: 357.022 sq km – Land: 348. France. Luxembourg.

Bavaria. Saxony-Anhalt. Mecklenburg-Vorpommern. Berlin. Lower Saxony. Saarland. SchleswigHolstein. Bremen. North RhineWestphalia. Brandenburg. Thuringia . Hesse.Geographical Location • Germany is made up of 16 different “states” – Baden-Württemberg. Saxony. RhinelandPalatinate. Hamburg.

Cologne . rainfall during summer and winter • Terrain: lowlands in north. cool. Hamburg. uplands in center. Bavarian Alps in south • Natural hazards: flooding • Major cities: Berlin. Munich.Geographical Location • Climate: temperate and marine. cloudy.

Geographical Location .

6% – other: 66. uranium. lignite. natural gas. arable land • Land use: – arable land: 33. timber.13% – permanent crops: 0. iron ore. nickel.Natural Resources • Coal. salt. copper. construction materials. potash.27% .

Austria 6%. US 6. UK 6. China 4.3%.7%. Netherlands 6. foodstuffs. vehicles.159 trillion (3rd highest in the world) – Machinery.Trade • Exports $1. metals and manufactures.6%. Switzerland 4. chemicals.5%.2%. Italy 6.4% . textiles • Export Partners: France 10.7%.

UK 4. chemicals. Italy 5. Belgium 7. Austria 4. Switzerland 4.89%. metals • Import Partners: Netherlands 12.Trade • Imports $966. foodstuffs.76%. US 4. France 8.3%.55%.9 billion (3rd highest in the world) – Machinery.71%.07% . China 6.88%. vehicles. textiles.19%.25%.

Trade .

Trade .

shipbuilding. machinery. steel. . coal. electronics. and employed 29. textiles • Industry and construction accounted for 29% of gross domestic product in 2008. cement. vehicles. machine tools.7% of the workforce. chemicals.Industry • One of the world's largest and most technologically advanced producers of: – Iron. food and beverages.

Major German Companies • • • • • • • Volkswagen Allianz Daimler Siemens Metro Deutsche Telekom BMW • • • • • • • Mercedes Benz Audi T-Mobile Nivea Porsche Merck Adidas .

Economy • Largest national economy in Europe and 5th largest in the world • Monetary system: monetary policy was transferred to the European Central Bank in 1999 • Currency: Euro established in 1999 .

100 • GDP growth rate (2009): -4.81 trillion (6th in the world) • GDP per capita: $34.5% • FDI: 503 billion EUR (2009) .Economy • GDP: $3.9% • GDP growth rate (2005): 2.353 trillion • GDP (PPP): $2.

3 billion euros for technology research and development . ranking 2nd in the world (following US) • The Federal Government provides funding through annual grants or endowment capital – In 2010 the Federal Ministry of Economics and Technology created a budget of 2.973 million internet users (6th in the world) • German companies represent 15.6% of research advanced goods worldwide.Technology • 105 million mobile cellular phone users (8th in the world) • 61.

Technology .

4% of GDP invested in education 250 universities. 100 of which focus on applied sciences 95% of universities and higher education are public School life expectancy: 15 years .Education • • • • • 99% literacy rate among males and females Approximately 4.

5 million • Labor force by occupation: – Agriculture: 2.4% – Industry: 29.Labor Force • Labor force: 43.7% – Services: 67.5% (2009) • Much higher unemployment rate in Eastern Germany than Western Germany .8% • Unemployment rate: 7.

Labor Force .

Labor Force .

4 EUR (Eastern Germany) • Typical annual leave: 20-30 working days .Labor Force • • • • Average work week: 37. limited hours on Sunday Average wage: 27.5pm Retail hours vary.5 hours Normal business hours: 9am .9 EUR (Western Germany) and 17.

quality.German Consumer • The typical German consumer rejects the idea “discounts” shops and places value on quality • Emphasis on safety.926 .143. comfort and reliability • Household consumption (2008): 1.489 USD • Household consumption per capita (2008): 13.

German Consumer .

German Consumer .

Political Structure • • • • Government type: federal republic Chief of state: President Christian Wulff Head of government: Chancellor Angela Merkel Elections: president elected for a 5 year term (eligible for 2nd term) .

solidarity surcharge.Legal Structure • • • • • Legal system: civil law Value added tax: 19% Value added tax for food: 7% Corporate tax: 15% Profit generated in Germany can be subject to corporate tax. and trade tax .

and others .Religion • Religious freedom • Protestant (33%). 108. Muslim (4%).000 members of Jewish communities. Roman Catholic (33%).

Intercultural Communication Hostede’s Cultural Dimensions Power Distance 35 Low Masculinity 66 High Individualistic 67 High Uncertainty Avoidance 65 High .

thrifty. and orderly • Germans usually express their thoughts and opinions in a direct way • Separation between private and public relations • Interest in academic credentials but not personal life • Formal communication and greetings .Culture • Germans have a strong sense of regional pride • Reputation for being industrious.

• Correspondence should be in German .Culture • Business deal is usually mutually beneficial and the central focus is just the task. • Appointments are to be taken before meeting someone • Decision making is a slow detailed process. • Attention to be paid to targets and time schedules.

8% of income per capita .Business Environment • Starting a business in Germany is ranked 88 out of 183 economies by The World Bank • To start a business in Germany: – It will take approximately 15 days – 9 different procedures – 4.

Business Environment • German-American business groups: – German American Business Association – American-German Business Club – Germany-USA Career Center .

Negotiations • • • • • Negotiations typically follow strict agenda and protocol Avoid confrontation Once a decision is made. it is final Decision making can be a slow process To enforce a contract in Germany it requires approximately: – 30 different procedures – 394 days .

000 to the overall GDP.6 bn by 2014 .0 bn in 2010 and US $66.Outlook • Increased research and funding for science and technology • Economic climate improving since 2008 recession • Growth in Eastern Germany – Productivity in Eastern Germany has more than doubled since 1991: each employee contributes more than EUR 50. • Sales in the German security technology are expected to grow by more than 50 percent by 2015 • Growth in technology industries – IT products and services are projected to reach US $58.

SWOT Analysis Strengths Weaknesses • High tax rates • Slow negotiations • Demanding employees • Increasing consumer consumption • Efficient and educated work force • Largest European economy Opportunities • Location • Tax incentives • Introduction into European market Threats • Mature market • Competition .

Client Recommendations • Focus business practices in Eastern Germany – Growing opportunities in Eastern Germany – Higher unemployment – Possible tax incentives – Lower labor cost • Use Germany as a starting point for European business – Germany is key to successfully entering the European market • Pay attention to consumer patterns – Avoid discount and sale approach – Boast product quality .

Client Recommendations • Use societal values to client advantage – Importance on education – Quality product – Increased awareness of social responsibility and sustainability – Specific target market • Information and communications technology – Responsible for 80% of German innovations – Be aware of advancements in technology – Competitive market .

.Questions • For any additional questions please do not hesitate .

destatis.bbc.de/jetspeed/portal/cms/Sites/destatis/Internet/EN/Navigation/Statistics/Bevoelkerung/VorausberechnungBevo elkerung/VorausberechnungBevoelkerung.de/en/1869.Works Cited • • • http://news.com/us/view/pressrelease/germany-information-technology-report-q3-2010-502588 • • • • http://www.psml.org/people/overview.buyusa.html http://www.stm http://www.info/Europe/germanyg.countryreports.populstat.mapsofworld.gov/germany/en/doing_business_in_germany.com/germany/german-economy-and-business/germany-business/ .uk/2/hi/europe/country_profiles/1053880.internet http://www.co.php http://www.mynewsdesk.aspx?Countryname=&countryId=91 http://www.bmbf.jsessionid=92DC8F43948C823158298A7D3C91D160.htm • http://www.

kwintessential.html http://www.co.co.clearlycultural.laposte-export-solutions.nationmaster.Works Cited • • • http://www.html http://www.doingbusiness.gtai.cia.com/geert-hofstede-cultural-dimensions/power-distance-index/ http://www.uk/resources/global-etiquette/germany-country-profile.com/red/country/gm-germany/edu-education&all=1 .uk/uk/markets/country-profiles/germany/consumption-trends http://www.com/homepage/german-business-location/foreign-direct-investment/ • • • • https://www.org/data/exploreeconomies/germany http://www.gov/library/publications/the-world-factbook/geos/gm.