Country analysis-Germany

GoalTo 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 clients product into the German market.

OverviewHistoryDemographicsGeographical LocationNatural ResourcesTradeIndustryEconomyTechnologyEducationLabor ForceGerman Consumer

Political StructureLegal StructureReligionIntercultural CommunicationCultureBusiness EnvironmentNegotiationsOutlookSWOT AnalysisRecommendations

History1871: German Empire formed1914 - 1918: World War I1929: Global Depression1939 - 1945: World War II1949: Germany divided into East and West regions1961: Construction of the Berlin Wall1973: East and West Germany join the UN1989: Fall of the Berlin Wall1990: Germany joins the EU2005: First female Chancellor, Angela Merkel elected2008: Germany officially declares recession2009 (Feb): Parliament signs $63 billion stimulus package2009 (Aug): Germany comes out of recession

DemographicsPopulation: 82,282,988Population growth rate: -0.061%Birth rate: 8.21 births/1,000 populationLife expectancy: 79 years2nd most populous European countryPopulation density: 230 per sq.km = 597 per sq.mi

DemographicsMedian age (male): 42.6Median age (female): 45.2Age structure:0 - 14 years: 13.7%15 - 64 years: 66.1%65 years and over: 20.3%

DemographicsPopulation of capital city of Berlin: 3,440,441Urbanization:Urban population: 74% of populationRate of urbanization: 0.1% annual rate of change

Geographical Location

Geographical LocationTotal: 357,022 sq kmLand: 348,672 sq kmWater: 8,350 sq kmLocated in central EuropeArea comparison: slightly smaller than MontanaBordering countries: Austria, Belgium, Czech Republic, Denmark, France, Luxembourg, Netherlands, Poland, SwitzerlandWater: borders the Baltic Sea and the North Sea

Geographical LocationGermany is made up of 16 different statesBaden-Wrttemberg, Bavaria, Berlin, Brandenburg, Bremen, Hamburg, Hesse, Mecklenburg-Vorpommern, Lower Saxony, North Rhine-Westphalia, Rhineland-Palatinate, Saarland, Saxony, Saxony-Anhalt, Schleswig-Holstein, Thuringia

Geographical LocationClimate: temperate and marine; cool, cloudy, rainfall during summer and winterTerrain: lowlands in north, uplands in center, Bavarian Alps in southNatural hazards: floodingMajor cities: Berlin, Hamburg, Munich, Cologne

Geographical Location

Natural ResourcesCoal, lignite, natural gas, iron ore, copper, nickel, uranium, potash, salt, construction materials, timber, arable landLand use: arable land: 33.13%permanent crops: 0.6%other: 66.27%

TradeExports $1.159 trillion (3rd highest in the world)Machinery, vehicles, chemicals, metals and manufactures, foodstuffs, textilesExport Partners: France 10.2%, US 6.7%, Netherlands 6.7%, UK 6.6%, Italy 6.3%, Austria 6%, China 4.5%, Switzerland 4.4%

TradeImports $966.9 billion (3rd highest in the world)Machinery, vehicles, chemicals, foodstuffs, textiles, metalsImport Partners: Netherlands 12.71%, France 8.3%, Belgium 7.19%, China 6.89%, Italy 5.88%, UK 4.76%, Austria 4.55%, US 4.25%, Switzerland 4.07%

Trade

Trade

IndustryOne of the world's largest and most technologically advanced producers of:Iron, steel, coal, cement, chemicals, machinery, vehicles, machine tools, electronics, food and beverages, shipbuilding, textilesIndustry and construction accounted for 29% of gross domestic product in 2008, and employed 29.7% of the workforce.

Major German CompaniesVolkswagenAllianzDaimler SiemensMetroDeutsche Telekom BMWMercedes BenzAudiT-MobileNiveaPorscheMerckAdidas

EconomyLargest national economy in Europe and 5th largest in the worldMonetary system: monetary policy was transferred to the European Central Bank in 1999Currency: Euro established in 1999

EconomyGDP: $3.353 trillionGDP (PPP): $2.81 trillion (6th in the world)GDP per capita: $34,100GDP growth rate (2009): -4.9%GDP growth rate (2005): 2.5%FDI: 503 billion EUR (2009)

Technology105 million mobile cellular phone users (8th in the world)61.973 million internet users (6th in the world)German companies represent 15.6% of research advanced goods worldwide, ranking 2nd in the world (following US)The Federal Government provides funding through annual grants or endowment capitalIn 2010 the Federal Ministry of Economics and Technology created a budget of 2.3 billion euros for technology research and development

Technology

Education99% literacy rate among males and femalesApproximately 4.4% of GDP invested in education250 universities, 100 of which focus on applied sciences95% of universities and higher education are publicSchool life expectancy: 15 years

Labor ForceLabor force: 43.5 millionLabor force by occupation:Agriculture: 2.4%Industry: 29.7%Services: 67.8%Unemployment rate: 7.5% (2009)Much higher unemployment rate in Eastern Germany than Western Germany

Labor Force

Labor Force

Labor ForceAverage work week: 37.5 hoursNormal business hours: 9am - 5pmRetail hours vary, limited hours on SundayAverage wage: 27.9 EUR (Western Germany) and 17.4 EUR (Eastern Germany)Typical annual leave: 20-30 working days

German ConsumerThe typical German consumer rejects the idea discounts shops and places value on qualityEmphasis on safety, quality, comfort and reliabilityHousehold consumption (2008): 1,143,489 USDHousehold consumption per capita (2008): 13,926

German Consumer

German Consumer

Political StructureGovernment type: federal republicChief of state: President Christian WulffHead of government: Chancellor Angela MerkelElections: president elected for a 5 year term (eligible for 2nd term)

Legal StructureLegal system: civil lawValue added tax: 19%Value added tax for food: 7%Corporate tax: 15%Profit generated in Germany can be subject to corporate tax, solidarity surcharge, and trade tax

ReligionReligious freedomProtestant (33%), Roman Catholic (33%), Muslim (4%), 108,000 members of Jewish communities, and others

Intercultural CommunicationHostedes Cultural Dimensions

Power Distance35LowIndividualistic67HighMasculinity66HighUncertainty Avoidance65High

CultureGermans have a strong sense of regional prideReputation for being industrious, thrifty, and orderlyGermans usually express their thoughts and opinions in a direct waySeparation between private and public relationsInterest in academic credentials but not personal lifeFormal communication and greetings

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

Business EnvironmentStarting a business in Germany is ranked 88 out of 183 economies by The World BankTo start a business in Germany:It will take approximately 15 days9 different procedures4.8% of income per capita

Business EnvironmentGerman-American business groups:German American Business AssociationAmerican-German Business ClubGermany-USA Career Center

NegotiationsNegotiations typically follow strict agenda and protocolAvoid confrontationOnce a decision is made, it is finalDecision making can be a slow processTo enforce a contract in Germany it requires approximately:30 different procedures394 days

OutlookIncreased research and funding for science and technologyEconomic climate improving since 2008 recessionGrowth in Eastern GermanyProductivity in Eastern Germany has more than doubled since 1991: each employee contributes more than EUR 50,000 to the overall GDP.Sales in the German security technology are expected to grow by more than 50 percent by 2015Growth in technology industriesIT products and services are projected to reach US $58.0 bn in 2010 and US $66.6 bn by 2014

SWOT Analysis

Strengths Increasing consumer consumption Efficient and educated work force Largest European economyWeaknesses High tax rates Slow negotiations Demanding employeesOpportunities Location Tax incentives Introduction into European marketThreats Mature market Competition

Client RecommendationsFocus business practices in Eastern GermanyGrowing opportunities in Eastern GermanyHigher unemploymentPossible tax incentivesLower labor costUse Germany as a starting point for European businessGermany is key to successfully entering the European marketPay attention to consumer patterns Avoid discount and sale approachBoast product quality

Client RecommendationsUse societal values to client advantageImportance on educationQuality productIncreased awareness of social responsibility and sustainabilitySpecific target marketInformation and communications technologyResponsible for 80% of German innovationsBe aware of advancements in technologyCompetitive market

QuestionsFor any additional questions please do not hesitate .

Works Cited

http://news.bbc.co.uk/2/hi/europe/country_profiles/1053880.stm

http://www.countryreports.org/people/overview.aspx?Countryname=&countryId=91

http://www.populstat.info/Europe/germanyg.htm

http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/EN/Navigation/Statistics/Bevoelkerung/VorausberechnungBevoelkerung/VorausberechnungBevoelkerung.psml;jsessionid=92DC8F43948C823158298A7D3C91D160.internet

http://www.bmbf.de/en/1869.php

http://www.mynewsdesk.com/us/view/pressrelease/germany-information-technology-report-q3-2010-502588

http://www.buyusa.gov/germany/en/doing_business_in_germany.html

http://www.mapsofworld.com/germany/german-economy-and-business/germany-business/

Works Citedhttp://www.doingbusiness.org/data/exploreeconomies/germany

http://www.laposte-export-solutions.co.uk/uk/markets/country-profiles/germany/consumption-trends

http://www.gtai.com/homepage/german-business-location/foreign-direct-investment/

https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html

http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/power-distance-index/

http://www.kwintessential.co.uk/resources/global-etiquette/germany-country-profile.html

http://www.nationmaster.com/red/country/gm-germany/edu-education&all=1

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