GBMP 518: Global Business Strategy - 1

COUNTRY REPORT: GERMANY

SUBMITTED BY:
HARI PADMAKUMAR JIJO FRANCIS NAVTEJ SINGH SRAN

Country Profile Report

Global Business Strategy - 1

INDEX

I.

INTRODUCTION.

II.

PEST ANALYSIS

III.

SWOT ANALYSIS.

IV.

REPRESENTATIVE EXAMPLES.

V.

CONCLUSION

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VI.

REFERENCES..

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I.

INTRODUCTION

Germany or the Federal Republic of Germany is a federal parliamentary republic in western-central Europe. It is also one of the major economic as well as political powers in Europe and has been widely regarded for their contributions in many theoretical and technical fields. Germany is also the worlds fourth largest economy in terms of nominal GDP and the fifth largest by measures of purchasing power parity. As a global leader in several manufacturing and technical sectors, it is the second-largest exporter and third-largest importer of goods. It is a developed country with a very high standard of living, featuring wide-ranging social security that includes the world's oldest complete health care structure. Germany follows a social market economy with a highly capable and diverse labor force. Some of the highlights of this economy are a large capital stock, low corruption levels and high standards of innovation. With Germany being the most powerful and richest economy in Europe, it is also one of the biggest contributors to the EU budget. Germany is also known for having 37 out of the Fortune Global 500 companies of the world. Some of the major multinational companies in the world such as Mercedes Benz, BMW, Siemens, Audi and Adidas are all from Germany.

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II. PEST Analysis

It is very important for any organization or firm to consider a countrys environmental factors before it commences its production there. Hence, a PEST analysis is consistently needed and is an essential feature of planning. Political Factors: Germany, officially known as the Federal Republic of Germany consists of 16 states in which Berlin is the capital and the largest state. The political framework is established under a constitutional document known as the Grundgesetz. It explains the fundamental structure of the government and the value system it should incorporate. The president is the formal executive head of the state even though the Chancellor is the major decision maker of the country and is elected by a majority vote of the Bundestag. Economic Factors: Majority of Germanys products are related to engineering goods such as automobiles, chemical goods, metals and machinery. It is also the largest producer of solar power technology in the world which includes wind turbines. However, Germany is relatively poor in
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energy sector as it imports two thirds of its energy. This is mainly due to the fact that it is relatively poor in raw materials, with only materials such as lignite and potash salt being economically available in significant quantities. However 37 firms out of the Fortune 500 Global (measured by revenue) have their headquarters in Germany. Social Factors: Germany is one of the most modern countries in the world which is characterized by a diversity of lifestyles and inspite of social changes, family remains the most important social building blocks. Germany, even today still continues to be a major front runner in various sectors such as music, arts, architecture etc. Technological Factors: Germany has been always acclaimed for its special attention to education, research and development. Also the country has various learning societies dealing with sectors such as medicine, natural science, agriculture etc. However, the real strength of Germany lies in its automobile sector in which it has been always a pioneer in the technology. For example, German Auto manufacturers have recently adopted computer based assistance systems, a system that is still yet to be developed in many countries. (pest analysis)

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III. SWOT Analysis

A SWOT analysis is a way of analyzing the strengths, weaknesses, opportunities and threats associated with a particular objective. Majority of the countrys SWOT characteristics are the following:

Strengths: Booming Economy. Leader in engineering technology Strong member of the European Union
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Usage of the Euro Strong political stability Perfect geographical location (with respect to adjacent countries and surrounding rivers). Weaknesses: High labor cost and restrictions ( labor unions and income tax) Declining birthrate Over-reliance on imports Military (Lack of budget spending makes it to lag behind several military powerhouses). Opportunities: FDI continues to increase Growth in the manufacturing sector ( Germany continues to be the leader on technological products). Largest market of Europe ( Strongest economy ) Open Market (Around 22,000 foreign firms are established in Germany).

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Threats: Increase in the governments debt with an equal number of bailouts being happening around. Critics pointing out another crash of the Euro in the near future. Higher fuel standards (Considering the fact that Europes commitment to reducing greenhouse gases emissions could negatively affect the production of automobiles).

(SWOT Analysis), (germany swot analysis)

IV.

Representative Examples

As stated above, some of the top multinational corporations of the world have their headquarters in Germany. Some of them are:

Mercedes Benz: The world famous automobile manufacturer which is known for its brand loyalty and its emphasis on luxury and quality is in fact a multinational division of the

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German manufacturer, Daimler AG. Some of their products are cars, trucks, buses and coaches with the majority of them falling into the luxury segment. It is also one among the three best-selling luxury car manufacturers in the world (the other two being Audi and BMW, which are also German companies.) Daimler also distributes their cars and services in mostly all countries and has production units in around five continents around the world. It is also the only car producer in the world, which lays emphasis on investing in hybrid and electric engines. Siemens AG: It is a German multinational corporation headquartered in Munich and Berlin. It is also the largest electronics and electrical engineering company in the whole of Europe. Siemens have been known to be well placed in sectors such as transportation, healthcare, energy and industry. It has operations in around 190 countries in which there around 360,000 employees. (siemens info)

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Adidas: It is one of the worlds leading manufacturers of sports clothing and accessories and is a German multinational corporation. It is also the largest sportswear manufacturer in Europe and the second biggest in the world. Some of the prominent products manufactured are bags, watches, eyewear, shirts and other clothing apparels. They have also been renowned throughout the world for their focuses on several sports equipments which are used by sports teams throughout the world, ranging in areas of tennis, cricket, football etc. (adidas info), (adidas company)

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V. Conclusion
Even though Germany continues to be the economic superpower among the European countries, the growth rate is slowing down after an superlative rebound from the 2008 recession. However, the labor market still remains in perfect shape. This is mainly due to the fact that there has been a decrease in unemployment as well as an increase in the number of working hours. Another reason to worry is the increasing public debt even inspite of the low budget deficit. Germany still continues to score on the measures of well-being which have been determined by factors such as healthcare and education. However, an increase in the ageing population with respect to the decrease in birth rate is another reason to worry. Handling a further decrease in greenhouse emission levels and the decisions that are aimed at making environmental changes could be seen as a challenge to economic production. Germany should compromise on meeting these challenges and enabling a wide-range of reform efforts that would make Germany to retain its position as well as being a major economic superpower in the world.

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VI.

References

adidas company. (n.d.). Retrieved from http://en.wikipedia.org/wiki/Adidas adidas info. (n.d.). Retrieved from https://www.google.ca/?gws_rd=cr&ei=WGNvUp61I4TCywG7koBg#q=adidas economics factors. (n.d.). Retrieved from http://www.oecd.org/eco/49616833.pdf germany swot analysis. (n.d.). Retrieved from http://www.mindomo.com/mindmap/germany-swotanalysis-477c5ca2986f487aa6710be56cf260d8 pest analysis. (n.d.). Retrieved from http://www.slideshare.net/caryl711/pestal-analysis-of-germany siemens info. (n.d.). Retrieved from http://en.wikipedia.org/wiki/Siemens SWOT Analysis. (n.d.). Retrieved from http://www.wikiwealth.com/swot-analysis:germany

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