Case Study made by Nora Kovacs, Pablo Gil and Sergio Stanga about what the German companies must take into consideration entering the US market with the aim of doing business there.

1. GERMAN FIRMS ENTERING IN THE US
MARKET:
CHALLENGES AND OPPORTUNITIES
1
N O R A K O VA C S - G O D A
PA B L O G I L M A R T Í N E Z
S E R G I O S TA N G A
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

2. LAYOUT
2
 INTRODUCTION
 OPPORTUNITIES & THREATS
 EXAMPLES
 HIDDEN CHAMPIONS
 CONCLUSION
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

3. German companies in the U.S:
3
 Strong bilateral relationship
 In 2007/2008 66% of the German companies registered high
sales
„The center of the world’s trade and investment economy”
 German business contributes to:
 U.S. economic growth and jobs
 U.S. economic health
 U.S. economic prosperity
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

4. German companies in the U.S:
4
 German firms employed approx. 615,000 people in 2008
 Wages are higher than the national average
Employment by Foreign-Owned Affiliates
1000
900
800
700
600
500
400
300
200
100
0
Sources: U.S. Bureau of Economic Analysis and Office of Trade and Economic Analysis
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

5. Foreign Direct Investment
5
 More than 3,000 German enterprises have investment in
the U.S.
 First ranking by Capital Stock Investment and R&D
expenditures
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

6. Future plans for the German companies:
6
 Barack Obama: massive stimulus package
 Create 2.5 million new jobs
 Infrastructure projects
 Focus on promoting green technologies
Germans are the beneficiaries
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

7. OPPORTUNITIES & THREATS
7
 Internal market:
 Geographic dimension:
 Area of ​9,372,614 km2
 Distance of 4,500 km
 The population: 307.212.123 (2009)
 Threat: not product adaption
 Economic dimension:
 World's largest GDP (Gross Domestic Product)
 $14.3 billons in 2009 (1/3 of world production.)
 Corporate structure:
 Small and medium enterprises domination
(99.7% of all companies in 2003)
 Threat: High competiveness
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

8. OPPORTUNITIES & THREATS
8
 Legal framework:
 “Open and deregulated” in general.
 Restrictions: agricultural
properties, telecommunications, nuclear energy, mining and restrictions
on the acquisition of property.
 Foreign capital is subject to the same conditions as national.
 Foreign investment incentives:
 A foreign company have the same benefits and obligations as a U.S.
company
 Foreign Direct Investment
 EU investment flows to the US in 2008: €121.4 billion
 US investment flows to the EU in 2008: €50.5 billion
 Threats: necessary high knowledge in U.S. Law & Tax.
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

9. OPPORTUNITIES & THREATS
9
 Currency:
 €1=$1.4508
 Propensity to import:
 European Union
 NAFTA (Canada and Mexico)
(2003, China has overtaken Mexico )
 Trade in goods
 EU good exports to the US in 2009: €204.4 billion
 EU goods imports from the US in 2009: €159.8 billion
 Trade in services
 EU services exports to the US 2009: €119.4 billion
 EU services imports from the US in 2009: €127.0 billion
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

10. Big German companies in U.S:
BMW North America
10
 1975 effort to be released in the U.S., focusing on the IMSA Series. Result: the
number of people who knew BMW Bayerische Motoren Werke meant were much
higher.
 70´s: new serie 5 because of clients demand
 1980: they sell 895 units.
(During the next years BMW won reputation because of the competitions cars and M1
serie.)
 1986: new M3 and Deutshe Tourenwagen Mastes champion, growing their
reputation .
 In following years, the reputation of the brad will grow improving,innovating and
creating new models… reinforcing their reputation alway with Car tournaments.
 Case of the BMW Serie 5 GT :
 8,000 units expected.
 2,848 real units sell.
 Error: Not choose BMW Serie 5 family.
 “The director himself has said that potential buyers wanted the Serie 5 family opted for the Serie 5
GT, but the result is that buyers have absorbed the Serie 7 ($ 14,000 more expensive)”
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

11. German Biomass Companies in the U.S. Market
11
 2nd German American Energy Conference.
 German Energy Agency GmbH
 The German American Chambers of Commerce
 US and the European Union: strong policy incentives to
support bioenergy development.
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

12. HIDDEN CHAMPIONS
12
 Herbert Simon
 “Mittelstand” or SMEs
(=small and mid-sized enterprises)
- UNKNOWN
- LEVERAGE OF OBSCURITY
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

13. HIDDEN CHAMPIONS
13
 CHARACTERISTICS:
 OWNERSHIP AND
GOVERNANCE STRUCTURE
BASED ON FAMILY BUSINESS
 LONG-TERM RELATION WITH
KEY STAKEHOLDERS
 LONG-TERM ORIENTATION (NICHE FOCUSED)
 FOCUS ON OPERATIONAL EFFECTIVENESS
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

14. HIDDEN CHAMPIONS
14
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

15. HIDDEN CHAMPIONS (EXAMPLES)
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 SAP has sales and development locations
in more than 75 countries worldwide.
 Fresenius is a global health care group
with products and services for dialysis,
the hospital and the medical care
of patients at home.
 The core business of the Würth group is the
global trade with connecting and assembly
technology that is implemented through an
international network of group companies.
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

16. CONCLUSION
16
 Large single market:
 Challenges
 Opportunities
 340,000 export companies 600,000 jobs
 100,000 FDI for Americans
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

17. SOURCES
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 German American Chambers of Commerce (Deutsch-Amerikanische Handelskammern)
 German American Trade Magazine
 H. Simon, Hidden Champions, Lessons from 500 of the World’s Best Unknown Companies
 http://www.manufacturingnz.org.nz/news-and-info/latest/?a=19364 (How Germany’s hidden champions stay
ahead in the global economy)
 http://www.arpem.com/racing/bmwsport/r_bmwsport_p.html
 http://www.google.com/#q=bmw+company+history+eeuu&hl=en&prmd=ivns&tbs=tl:1&tbo=u&ei=m97wTfnGO
8vfsgbY04SIBw&sa=X&oi=timeline_result&ct=title&resnum=11&ved=0CHIQ5wIwCg&bav=on.2,or.r_gc.r_pw.&
fp=3c571b42131dab45&biw=1280&bih=642
 http://www.amchamchile.cl/sites/default/files/Guia%20Doing%20Business-rev.pdf
 http://ecologic.eu/3564
 http://www.olafbohlke.com/public/Top50GermanCompaniesUSA.pdf
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011