detailed PEST analysis of Germany and data on eaise of doing business in Germany as a country

1. Presented By -
Neel Lalwani
Dilip Jain
Deepank Sahai
P.S.Chaithanya Purushottama
GERMANY

2. INTRODUCTION TO GERMANY
Capital and the largest city -Berlin
Official Language -German
Government
- President
- Chancellor
-Federal Parliamentary Constitutional
Republic
-Joachim Gauck
-Angela Merkel
Area -357,168 km2
Population
- 2014 82,282,988
- Density 230 per sq. km
GDP (ppp) 2015 estimates - Total $3.815 trillion
- Per capita $46,896
GDP (nominal) 2015 estimate - Total $3.413 trillion
- Per capita $41,955
Currency Euro (€)
United Nations membership Joined on 18th September 1973

3. • Throughout The years , Germany has
gone through endless separation and
unification.

4. 1871
• unification of southern &
northern German states by
chancellor otto won
Bismarck

5. 1919
• Germany defeated in
WWI & forced to sign
the treaty of versailles

6. 1933
• Hitler becomes chancellor of
Germany & began dictatorship rule
in German

7. 1939
•Germany invades
Poland & out break of
WWII

8. 1945
Germany surrenders & separated into E & W Germany,
Berlin fall under 4 power’s ruling
1961
communists build the Berlin wall, separated
eastern & western Berlin

9. 1990
• Berlin wall collapsed &
Germany reunited

10. HISTORY INFLUENCE NATION
1.Extreme Nationalism -> racism
2. Aryan race VS Jews-> Concentration camps @ WWII
3.totalitarian rule VS democracy-> great leaders

11. THE FALL OF THE BERLIN WALL
After the fall of Berlin fall (9, November, 1990)
->Famous Tourists Spot
Number Of Tourists In Berlin increased 370% from 1993 to
2008
Attract tourists
-> Tourists Are attracted by the historical wall
-> Many hotels have been built since then
Nowadays: 1,095 hotels in Berlin
Favor the relationship between Germany and other countries
->Segments have been given to various institutions around the
worlds

12. PLACES TO VISIT
 Neuschwanstein Castle
• In the Bavarian Alps the former home of Ludwig II .
• This beautiful castle is a throwback to romantic period in German
history .

13. Leipzig
• Leipzig is the city known
for its vibrant arts and
culture scene.
• Tourists from different
places come to St. Thomas
Church to enjoy the
performances of Bach’s
music .

14. Philharmonic Orchestra
• The Philharmonic Orchestra is considered one of the best in the world .
• There is no better place to sample the delightful sounds of classical and contemporary
German music than in berlin’s opera house.

15. Cologne
• The city offers a vibrant array of attractions, buzzing
nightlife and a stellar arts and culture scene .
• The city is situated on the Rhine River in the German
federal state of North Rhine-Westphalia .

16. Oktoberfest
• Germany's most famous
festivals.
• Munich's annual
Oktoberfest beer festival
which actually begins in
September .
• From Weiss wheat beers
to alt dark ales, you'll be
able to sample any type of
tipple that takes to
individual’s fancy.

18. • Germany is a federal parliamentary republic and federal legislative power
is vested in the Bundestag (the parliament of Germany).
• Norbert Lammert is the current president of the Bundestag and the
representative is directly elected, usually every 4 years.
• The German political system operates under a framework laid out in the
1949 constitutional document known as the grundgesetz (Basic Law).
• The legislature, the judiciary, and the executive are the 3 wings which
make up Government of Germany.
• German electoral system makes it very difficult for any one party to form a
government on its own.

21.  Political climate :
• Since 1949, the party system has been dominated by the Christian
Democratic Union and the Social Democratic Party of Germany (
strong political groups ).
• Other political groups such as Alliance '90/Greens, Free
Democratic Party, Christian Social Union have played important
roles in influencing government policies.
• The political pressure groups are business associations and
employers' organizations,
trade unions, religious, immigrant, expellee, and veterans groups.
• The political climate is also affected by the international
participation such as BSEC, BIS, CBSS, Arctic Council, ITUC,
etc.
• The government of Germany has changed several times but all
the parties aim effective functioning of business.

22.  Political stability in the country :
• The political stability of a country is all the more determined by
the stability of government policies.
• Though the political parties in Germany has changed several
times the major change in rules came only during reunification.
• German political groups continue to maintain ODA to help
business to group mostly helpful to MNC’s.
• Recently the chancellor Angela Merkel decided to use government
spending to stimulate growth and to pump some money into the
lethargic German economy.
• In principle, business activates are free from regulations
restricting day-to–day business.

23.  Politically sensitive products :
• Political sensitive goods in Germany are referred to those that invariable
affects its economy and also proves to hamper the welfare of its people.
• Germany does not have a very long range of goods in politically
sensitive products but few of it are :- - products that have focus on
racial or class discrimination.
- violating national flag or national anthem of the country, etc.

24.  International financial flow :
• Germany is a country that efficiently attracts the foreign
investment and being the fifth largest economy it has high rate of
return on investment .
• Germany has very low taxes charge for the return on investment
and therefore several investors invest in Germany.

26.  Law :
• Germany has a civil law system based on Roman law with some references
to Germanic law.
• The Bundesverfassungsgericht (Federal Constitutional Court) is
the German Supreme Court responsible for constitutional
matters, with power of judicial review.
• Germany's supreme court system is specialised: for civil and
criminal cases.
• For other cases such as labor issues, financial issues, etc., there
are separate courts such as Federal Labour Court, Federal Administrative
Court, etc.
• For resolution of the business related issue the victim company has to go
either for international judiciary such as ICJ or ICCT or respective courts.
• Germany has similar laws for international as well as national business.

27.  Foreign relation :
• Germany maintains a network of 229 diplomatic missions abroad and
holds relations with more than 190 countries.
• Germany having strong business bond with other countries such France,
USA, Italy, etc.
• Germany is a member of the NATO defence alliance, the Organisation
of Economic Co-operation and Development the World Bank, the
International Monetary Fund, European union.
• Germany also has diplomatic representation in US and diplomatic
representation from US.
• Germany’s foreign relations are sound also because of its indiscriminate
laws towards international business .
• Germany had been funding many countries and one of them is Greek,
France, etc.

28.  Economic Overview :
• The fifth largest economy of the world.
• Worlds 2nd largest exporter in machinery, vehicles, chemicals, and
household equipment and benefits.
• The country has highly skilled labor.
• After the launch of several reforms to reduce the unemployment rate
and the decrease to 5.3% in 2013 the new government decided to provide
$11 per hour.
• Till may 2011 Germany relied on nuclear power for 23% of its electricity
but now Germany is more dependent on renewable energy.
• By 2022 Germany expects to shut down all of its nuclear reactors.

29.  GDP and GDP per capita :
• The 2014 GDP of Germany is $3.486 trillion and the per capita is $39717.70.
• The 2015 estimates of GDP as per PPP is - Total $3.815 trillion
- Per capita $46,896
• The service sector contributes approximately 70% of the total GDP
(including information technology), industry 29.9%, and agriculture 0.9% .
• The estimated GDP growth is 1.6% 2015 and 1.5%
recorded in the forth quarter of 2014 .
69%
30%
1%
GDP contribution
sevice
sector
industry
agriculture

30. GDP: Gross domestic product (million current US$) 2012 3425956
GDP: Gross domestic product (million current US$) 2010 3304439
GDP: Gross domestic product (million current US$) 2005 2766254
GDP: Growth rate at constant 2005 prices (annual %) 2012 +0.7
GDP: Growth rate at constant 2005 prices (annual %) 2010 +4.0
GDP: Growth rate at constant 2005 prices (annual %) 2005 +0.7
GDP per capita (current US$) 2012 41376.2
GDP per capita (current US$) 2010 39804.2
GDP per capita (current US$) 2005 32996.0

31.  Unemployment rate :
• The total labor forces of Germany as per the data of 2013 was 44.2 million.
• This labor force is occupied in three different sectors as :- service sector - 73.8%
industry - 24.6%
agriculture - 1.6%
• The unemployment rate of Germany is 4.8% as per count on January 2015. This 4.8%
includes 7.1% of the youth ( age 15-24).
• Reforms launched by the government deemed necessary and has contributed to strong
growth and falling unemployment, government subsidy, reduced working hour scheme,
etc.
• 3.1 million workers in Germany receive below country’s poverty threshold. In 2013 the
German poverty line was a salary of about $1,097 per person .

32. year % Age group
Unemployment (% of labor force) 2015 4.8 Age group 15 to 74 years.
Unemployment (% of labor force) 2012 5.5 Age group 15 to 74 years.
Unemployment (% of labor force) 2010 7.1 Age group 15 to 74 years.
Unemployment (% of labor force) 2005 11.2 Age group 15 to 74 years

33.  Inflation rate :
• The current inflation rate that was recorded in June 2015 was 0.30%
.
• This is the lowest figure in this year due to the decline of energy price
and a slow down in cost of food and services.
• Germany over the period has experienced hyper-inflation, glopping
inflation and mild inflation.
• The average inflation rate in Germany is 2.45% from 1950 to 2015.
• The highest inflation in Germany was at 11.54% in October of 1951.

34. Average inflation Inflation (%)
CPI Germany 2015 0.30
CPI Germany 2014 0.91
CPI Germany 2013 1.51
CPI Germany 2012 2.01
AVERAGE INFLATION GERMANY (CPI)-BY YEAR

35.  Consumer and investor confidence :
• Germany is a social market economy.
• The companies in Germany are highly innovative and the
competition takes place on the bases of innovations and technology.
• Germany is part of the European single market which represents
more than 500 million consumers.
• Germany in terms of business has several successful brands world
wide.
• Germany is the 2nd largest exporter of the world.
• Resources – high skilled labor with large capital resources.

36.  Currency exchange rate :
• The rate of euro is 1 Euro (EUR) = 1.11 USD .
• The currency of Germany is not only dependent on
German economy but also on 18 other sound
functioning countries .
• The Euro Dollar Exchange Rate- EUR/USD averaged
1.35 from 1957 until 2015 .
• The currency of Germany also has an backing from the
European union (EU).

37.  Balance of payment :
• Germany has business spread world wide which makes its
international transaction large in number.
• The current account surplus that is recorded in may 2015 was
11,100 EUR million.
• Exports of Germany account for more than one-third of national
output. This makes its credit high .
• Germany has exports in motor vehicles, machinery, chemicals,
computer and electronic products, electrical equipment,
pharmaceuticals, metals, transport equipment, foodstuffs, textiles,
rubber and plastic products.
• Due to low resources availability Germany has to make high
amount of imports and the as per recent data it is 76340 EUR
million .
• Germany’s imports have largely been in machinery, data
processing equipment, vehicles, chemicals, oil and gas, metals,
electric equipment, pharmaceuticals, foodstuffs, agricultural
products.

38. • Germany was in deficit for a quite a period because of its 2008-09 recession
and its reforms to reduce unemployment .
• Germany does not have a very high degree of self-sufficiency.
Germany Trade Last recorded on may 2015
(EUR MILLION)
Balance of trade 19,600
exports 11,100
Imports 76,340
External debt 49,42,767
Foreign direct investment 3,991
Gold reserves 3,383.41
Foreign exchange reserve 19,0705 ( US dollar in millions)
Tourists arrival 32,999

40.  Structure of the economy :
• Talking about the structure of the economy three pillars are most important
:- Primary sector
Secondary sector
Tertiary sector
• The primary sector of Germany is weak as it has less fertile land but its secondary and
tertiary sector function most efficiently .
• The skilled labor of Germany is mostly occupied in secondary and tertiary sector.
• Germany’s principal agricultural products are potatoes, wheat, barley, sugar beets, fruit,
and cabbage which take care of 90% of its nutritional needs.
• German automotive companies enjoy an extremely strong position in the so-called
premium segment with a combined world market share of about 90%.

41.  Economic policy of Germany :
• Germany’s economic policies such as
- monetary policy is set by the European Central
bank.
- domestic commercial policies are determined by
agreements among European union.
- Germany has very cooperative export and import
policy.
- Countries fiscal policy is designed to help
business grow and therefore 2.6% of the GDP is
provided for RnD.
- Taxes include personal and corporate income
tax , value added taxes, excise taxes, and tariffs.
- official development assistance (ODA)

42.  Socio – cultural overview :
• Germany can be described as a modern, multicultural country. The
society is molded by a variety of lifestyles.
• There are traces of some truly different ethno cultural diversity.
• Even though a lot of social changes took place, the family is still a
important social reference unit . Young people have really good
relationships with their parents.
• Local architecture, music, literature, art and sports are fields which
reflect the socio-cultural scene of Germany.
• Some of the best art pieces were made in Germany. It is also popular
for its old tradition in visual arts, German literature, etc.

43.  Language :
• German is the official and predominant spoken language in Germany. It is
one of 24 official and working languages of the European Union.
• The most used immigrant languages are Turkish, Kurdish, Polish, the
Balkan languages, and Russian.
• Germans are typically multilingual: 67% of German citizens claim to be able
to communicate in at least one foreign language and 27% in at least two.
• The above statistics show that if business wants to communicate with
German populace then language is of at most important.
• German language is a combination of several languages such as Latin,
Greek, French, etc.
• the situation is much better for business as all German's follow a common
language compared to countries such as India, Bhutan, Italy, nether land,
etc.

44.  Consumer preference and mind set :
• Trend for the world.
• The German's are technological are very sound and therefore
they leave in advance type of world.
• German’s have expertise in designing appeals, handicrafts, show
pieace,etc.
• When it is about food and cuisine Germans' like to have healthy
food as Germans' are very concerned about there health.
• International varieties such as pizza, sushi, Chinese food,
and doner kebab are also popular and readily available.

45.  Values and beliefs :
• Values of Germans have strong religious foundation.
• This values are important to German's as it guides
there day to day living.
• Business if want to do successful business in Germany
the must note that German’s are well organized people.
• German’s value time to a very higher degree and
therefore they believe that there is system and time for
every activity.

46.  Social trends :
Women in work force
Seats held by women in
national parliament
Women are provided with equal
opportunity to work (56.5%).
36.5%(2014).
Education level Primary and secondary level-
basic level
Sex ratio 1.06
Life expectancy 79 years
Income level USD 31,252 per annum ( Average
income level )
Birth rate 8.21 births/1000 population
Infant mortality rate (per 1 000 live
births)
3.1 (2010-15)
Internet connectivity High connectivity to internet

48.  Demographic factors :
Age structure 0-14 years: 13.7%
15-64 years: 66.1%
65 years and over: 20.3%
Family type Usually nuclear family
Occupation pattern Agriculture- 0.9%
Industry- 29.1
Service sector:70%
Rural urban distribution Urban: 74% of population
Rural :26% of population
Rate of Urbanization 0.1% annual rate of change
Labor supply 44.2 million (constant)

49. • Statics of 2014 show that
74% of the population of
Germany is urban category
but the rate of change from
rural to urban is too low in
Germany.
• Though a huge mass of
people live in rural
atmosphere modernisation is
very much connected to
them.
• In rural areas as well people
are equipped with knowledge
of modern activities, tools
and equipment's.

50.  Culture :
• Cultural background of Germans is very rich as it had great philosophers,
architects, artists, etc.
• Germans have a very strong sense of regional pride .
• Reputation for being industrious, thrifty and orderly.
• Interest in academic credentials but not personal life.
• Time cultures of Germans.
• Germans usually express their thought and opinions in a direct way.
• Germans have a very strong view points and hold strong stand points.

51. o Corporate culture :
• Highly hierarchal with strongly defined roles.
• Once the roles are assigned to the employee they continue to perform
there roles and in the stated company rules.
• Commands are more from top to bottom then from bottom to top.
• German teamwork is perceived as consensus seeking.
• Decision making process slow in business as opinions are taken from
both employers and employees.
• Continuous investment in human resources.
• Highly quality and innovation orientated.
• Companies seek market share rather than market domination.

52.  Religious affiliation :
• Religion provides the insight as why do people behave in a
particular way .
• In Germany there is complete religious freedom.
• Protestant (33%), Roman Catholic(33%), Muslim (4%), 108,000
members of Jewish communities, and others.

53.  Medical care and old age scheme :
• German government has made proper medical facilities available for its
public.
• Germany is one of the countries with best medical care.
• Health care is the largest employment sector in Germany.
• Key pillar is the Health fund.
• Federal government’s long term aim is to enable more autonomy with
regard to contributions and greater regional differentiation.
• Old pension and schemes are always there for government employees.
• “Riester pension” and “Rurup pension” are models for self-employed
already in existence.

54. • Stubborn & Argumentative
• Tradition
• Coldness
• Humor
• Creative
• orderly

55.  Technical overview :
• Germany is an advanced technological nation
• Germany backs many nations in the field of technology & science
• Germany has numerous universities and many colleges offering
courses in basic as well as applied sciences
• The major technical strength of this nation is its automobile
industry

56.  Infrastructural efficiency :
• Germany has the best of the best infrastructure in various fields
such as :
Transport
Communication
Energy

57.  Technology transfer :
• Since Germany is an Advanced Technological nation only there is an
Outgoing process
Of technology and Germany shall not import any of the foreign technology
• Germany is known as the HUB of Research & Technology
• Even though Germany being one of the largest & innovative Economies in
the world
Some amount of AUTOMOBILE TECHONOLOGY is recently being
transferred from JAPAN

58. • R&D is the cornerstones of the future of the German Economy
• Both Public & Private sectors have made a significant commitment to
spend around 3% of the national GDP per year on these R&D activities
• The German government spends on an average of 70 billion Euros
annually for the R&D assistance

59.  Change in production process and productivity :
• The Industrial produce in Germany has increased from 0.66 to 1.55 in the
month of June 2015
• With the help of the increased investments & productions German Trade
Surplus hits the record
• This has gradually decreased the INFLATION has increased the
EMPLOYMENT rate by 4.7 %

60. EFFECT OF TECHNOLOGICAL CHANGE