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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 clients 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

Demographics
Population: 82,282,988 Population growth rate: -0.061% Birth rate: 8.21 births/1,000 population Life expectancy: 79 years 2nd most populous European country Population density: 230 per sq.km = 597 per sq.mi

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

Demographics
Population of capital city of Berlin: 3,440,441 Urbanization: Urban population: 74% of population Rate of urbanization: 0.1% annual rate of change

Geographical Location

Geographical Location
Total: 357,022 sq km Land: 348,672 sq km Water: 8,350 sq km Located in central Europe Area comparison: slightly smaller than Montana Bordering countries: Austria, Belgium, Czech Republic, Denmark, France, Luxembourg, Netherlands, Poland, Switzerland Water: borders the Baltic Sea and the North Sea

Geographical Location
Germany is made up of 16 different states Baden-Wrttemberg, Bavaria, Berlin, Brandenburg, Bremen, Hamburg, Hesse, Mecklenburg-Vorpommern, Lower Saxony, North RhineWestphalia, RhinelandPalatinate, Saarland, Saxony, Saxony-Anhalt, SchleswigHolstein, Thuringia

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

Geographical Location

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

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

Trade
Imports $966.9 billion (3rd highest in the world) Machinery, vehicles, chemicals, foodstuffs, textiles, metals Import 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

Industry
One 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, textiles Industry and construction accounted for 29% of gross domestic product in 2008, and employed 29.7% of the workforce.

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

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

Technology
105 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 capital In 2010 the Federal Ministry of Economics and Technology created a budget of 2.3 billion euros for technology research and development

Technology

Education
99% literacy rate among males and females Approximately 4.4% 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

Labor Force
Labor force: 43.5 million Labor 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 Force
Average work week: 37.5 hours Normal business hours: 9am - 5pm Retail hours vary, limited hours on Sunday Average wage: 27.9 EUR (Western Germany) and 17.4 EUR (Eastern Germany) Typical annual leave: 20-30 working days

German Consumer
The typical German consumer rejects the idea discounts shops and places value on quality Emphasis on safety, quality, comfort and reliability Household consumption (2008): 1,143,489 USD Household consumption per capita (2008): 13,926

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)

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, solidarity surcharge, and trade tax

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

Intercultural Communication
Hostedes Cultural Dimensions

Power Distance 35 Low Masculinity 66 High

Individualistic 67 High
Uncertainty Avoidance

65 High

Culture
Germans have a strong sense of regional pride Reputation for being industrious, 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
Business 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 someone Decision making is a slow detailed process. Correspondence should be in German

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 4.8% of income per capita

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

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 50,000 to the overall GDP. 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 $58.0 bn in 2010 and US $66.6 bn by 2014

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 .

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/VorausberechnungBevo elkerung/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 Cited
http://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