PESTEL Analysis GERMANY

Presented by –

Abhishek Puri 207/12

Shrey 227/12

Ankit Saxena 235/12

Ratika Sood 239/12

Prachi Singhai 268/12

Flow Of PresentationIntroductionPolitical Economy Social Technology EnvironmentLegalReferences

GERMANY

Capital - BerlinArea  - 357,021 km2 (63rd)Population(2010) - 81,799,600 (16th) Density - 229/km2 (57th)GDP (PPP) - $3.194 trillion (5th)GDP (Nominal) - $3.367 trillion (4th)Per Capita - $39,059 (17th)Currency - Euro (€)President - Joachim Gauck Chancellor - Angela Merkel

GERMANYOfficially the Federal Republic of Germany , it

is a federal parliamentary republic in west-central Europe.

Germany comprises sixteen states which are collectively referred to as Länder. Each state has its own state constitution and is largely autonomous in regard to its internal organisation.

Germany was a founding member of the European Community in 1957, which became the EU in 1993.

It is part of the Schengen Area. It is a member of United Nations, NATO, the G8, the G20, the OECD and the Council of Europe, and took a non-permanent seat on the UN Security Council for the 2011–2012 term.

Germany is a federal parliamentary republic, and federal legislative power is vested in the Bundestag (the parliament of Germany) and the Bundesrat (the representative body of the Länder, Germany's regional states).

The German federal state is a complex entity. It consists of a central Federal Government and 16 federal states.

The German electoral system makes it very difficult for any one party to form a government on its own.

This has only happened once in 56 years. An alliance of parties is the general rule.

The Basic Law for the Federal Republic of Germany is the constitution of Germany.[4] It was formally approved on 8 May 1949, and, with the signature of the Allies of World War II on 12 May, came into effect on 23 May

Head of State : President of Germany◦ The duties of the Bundespräsident (Federal President)

are largely representative and ceremonial. He is not a member of the government. The President is elected every five years by the Federal Assembly (Bundesversammlung)

Head of Government : Chancellor of Germany◦ The Bundeskanzler (Federal Chancellor) heads the

Bundesregierung (Federal Government) and thus the executive branch of the federal government. He or she is elected by and responsible to the Bundestag, Germany's parliament.

Cabinet◦ The members of the government are the Federal

Ministers; they are chosen by the Chancellor.

Political Structure

Foreign relations Germany maintains a network of 229

diplomatic missions abroad and holds relations with more than 190 countries.

It is the largest contributor to the budget of the European Union (providing 27%) and third largest contributor to the United Nations (providing 8%).

Germany is a member of the NATO defence alliance, the Organisation of Economic Co-operation and Development (OECD), the G8, the G20, the World Bank and the International Monetary Fund (IMF).

Germany has maintained a strong alliance with France since the end of World War II.

The governments of Germany and the United States are close political allies.

The 1948 Marshall Plan and strong cultural ties have crafted a strong bond between the two countries.

The two countries are also economically interdependent: 8.8% of German exports are U.S.-bound and 6.6% of German imports originate from the U.S.

Economy German GDP $3.577 trillion and

GDP growth of 0.7% (2012).It is a social market economy.It is the largest national economy

in Europe and is the world's second largest exporter with $1.408 trillion exported in 2011.

The most important trading partners are France, the Netherlands, the USA and Great Britain.

Contdd..  Exports account for more than one-third of national output.  Most of the country's products are in engineering, especially

in automobiles, machinery, metals, and chemical goods. Well-known global brands are Mercedes

Benz, BMW, Adidas, Audi, Porsche, Volkswagen, Bayer, BASF, Bosch,Siemens, Lufthansa, SAP and Nivea

Germany is the leading producer of wind turbines and solar power technology in the world.

Germany is relatively poor in raw materials and imports about two thirds of its energy.

Germany currently spends around 2.6 percent of its GDP , clearly above the EU average of 1.9 percent on R&D.

Export goods-motor vehicles, machinery, chemicals, computer and electronic products,.

Import goods - machinery, agricultural products ,data processing equipment, oil and gas

Sector wise contribution to GDP

70

29

1

Contribution to total GDP(%)

Service

Industry

Agriculture

 •More than 29 million people work in the service sector.  Banking and insurance are a pillar of the service sector.•The most important sectors of industry are automotive manufacture, mechanical engineering, electrical engineering and chemicals.  Automotive manufacture is the innovation engine room : Around 30 percent of all internal company spending on R&D is in this sector

Culture and Creative industry on the up This sector embraces fields such as music,

literature, art, cinema and the stage, as well as radio/TV, the press, advertising, design and software and numbers some 238,000 companies employing almost one million people.

It is a model for a modern economy: It offers above-average employment opportunities, is playing a pioneering role on the way to a knowledge-based economy and is a significant source of original innovative ideas.

International investors rate Germany as one of the most attractive centre. Direct investment from outside the country now stands at EUR 460 billion

Demographics

Population: 82,282,988Population growth rate: -0.061 %Birth rate: 8.21 births/1000 populationLife Expectancy: 79 years2nd most populous European countryPopulation density: 230 per sq km

Median 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%

Demographics (Conttd…)

Population of capital city of Berlin: 3,440,441

Urbanization:Urban Population: 74% of

populationRate of Urbanization: 0.1%

annual rate of change

Average work week: 37.5 hoursNormal business hours: 9 am – 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

Labour Force

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

Religious freedomProtestant (33%), Roman Catholic

(33%), Muslim (4%), 108,000 members of Jewish communities, and others

Religion

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.

Culture (Conttd…)

Germany is one of the countries with the best medical care

Health care is the largest employment sector in Germany

Key pillar is the Health fundFederal government’s long term

aim is to enable more autonomy with regard to contributions and greater regional differentiation

Medical Care

Fundamental changes in provisions for old age

“Riester pension” and “Rurup pension” are models for self-employed already in existence

Reform of the accident insurance scheme is still outstanding

Pensions

What do aspirin, the electron microscope, the MP3 music format, and LCDs have in common?

Germany’s reputation for engineering excellence and innovation means that consumers buying German goods are typically looking for that little bit extra: be it cutting-edge technology or that special, perfectly designed something that simply can’t be found elsewhere.

Innovation and new technologies are of vital importance for maintaining Germany's international competitiveness as an economic performer.

Germany ranks eighth out of 139 countries for innovation in the World Economic Forum’s (WEF) “Global Competitiveness Report 2010-2011.”

According to the WEF, Germany is the international leader in terms of capacity for innovation, occupies fourth place for company spending on R&D, and secures sixth spot for quality of scientific research institutions.

Germany ranks third, after Japan and Sweden, for patents filed simultaneously with the U.S., Japanese and European Union trade offices.

Germany is among the top five of 17 analyzed countries — including the U.S. and U.K. — for the development and marketing of high technology.

Collaborations between the Federal Government, federal state and the economy to invest three percent of GDP in R&D until 2015.

Germany – R&D In 2009, research and development accounted for a 2.8% share

of German GDP. This is one of the highest R&D rates in the world, surpassing the United States for the first time since 1989.

German companies work in close partnership with universities and research institutions. They cooperate in a number of areas including mechatronics, microelectronics, power electronics, telematics, environmental and process engineering, and materials research.

Over 31,000 companies in Germany engage in ongoing R&D activities, and this provides a strong basis for a positive climate of innovation.

The main funding for R&D comes from the private sector. Businesses financed 68% of R&D expenditure in 2007, according to Eurostat, the EU’s statistical body.

Germany - Automobile Due to the world wide popularity towards

German cars, Leading automobile manufacturers in this segment including Audi, BMW, Daimler or Porsche are domiciled in Germany and each produce with several production plants locally.

Also volume-manufacturers like Ford, Opel/GM, and Volkswagen each produce with several plants in Germany.

Germany follows a concept of “Lust auf Technik” (Passion for Technology) to raise the count of innovative and researching companies in Germany.

Environmental Technology Germany's environmental technologies industry

is expected to reach a higher sales volume than automotive or mechanical engineering by 2020.

The German environmental technology industry has an internationally leading position, particularly in the fields of air pollution control, noise mitigation and recycling.

In addition to traditional services in the areas of waste management and water resources management, the field of environmental technologies includes all technological products and processes that promote a sustainable and forward-looking economic orientation.

The relevant fields of technology in this context are   ◦environmental protection,◦air pollution control,◦water conservation and water

resources management,◦waste management,◦soil conservation and the◦protection of limited resources.

2011- Germany is world’s 6th largest and Europe’s largest carbon emitter After signing Kyoto Protocol: 23% reduction in carbon emissions 39% of wind energy of world’s requirement Committed to use renewable energy

sources 2013 – Initiative for SMEs, “Energiewende” to

boost transformation of German energy system

LegalLaw enforcing system is divided at 3

levels Federal, State & LocalMore powers at state level whereas

federal police intervene only at National & international level

The German Supreme Court namely the Federal Constitutional Court monitors maintenance of rights and preservation of justice.

Legal System Historically speaking German law in part goes

back to Roman law The administration of Justice is divided into 5

branches: -Ordinary -Labor -Administrative -Social & -Financial Courts In surveys on political and legal stability foreign

investors put Germany second only to Britain This legal stability attracts foreign companies

and benefits entrepreneurial activities in Germany

Business Environment Policy towards private enterprises and competition 2012-13 – Retains its involvement in financial sector through

ownership of two bad banks 2014-16 – State continues to be involved in banking sector

but gradual liberalization in others electricity, gas, petrol ,rail

Policy towards FDI 2012-13 – Welcomes FDI; hostile takeovers create

controversy 2014-16 -Centre left parties might discourage some

investment

Foreign Trade & exchange controls 2012-13 – Eurozone crisis bears risk of trade and flow of

capital if it leads to break up of currency area; global trade deal unlikely

2014-16 – EU likely to shift to bilateral free-trade agreements

Referenceshttp://www.tatsachen-ueber-deut

schland.de/en/head-navi/home.html

http://performance.ey.com/2012/08/16/germany-business-environment-at-a-glance/

http://www.bundesregierung.de/Webs/Breg/EN/Homepage/_node.html

http://en.wikipedia.org/wiki/Economy_of_Germany