MarketEntryStrategy:Germany

NatalieDeNike
November10,2010
 Goal

Toanalyzeandunderstandtheeconomic,social,
andculturalclimatethatimpactsbusiness
practicesinGermany.Thefollowinganalysiswill
highlighttheopportunitiesandthreatsfor
introducingtheclientsproductintotheGerman
market.
 Overview
History PoliticalStructure
Demographics
LegalStructure
GeographicalLocation
Religion
NaturalResources
Trade
InterculturalCommunication
Industry Culture
Economy BusinessEnvironment
Technology Negotiations
Education Outlook
LaborForce SWOTAnalysis
GermanConsumer Recommendations
 History
1871:GermanEmpireformed
19141918:WorldWarI
1929:GlobalDepression
19391945:WorldWarII
1949:GermanydividedintoEastandWestregions
1961:ConstructionoftheBerlinWall
1973:EastandWestGermanyjointheUN
1989:FalloftheBerlinWall
1990:GermanyjoinstheEU
2005:FirstfemaleChancellor,AngelaMerkelelected
2008:Germanyofficiallydeclaresrecession
2009(Feb):Parliamentsigns$63billionstimuluspackage
2009(Aug):Germanycomesoutofrecession
 Demographics

Population:82,282,988
Populationgrowthrate:0.061%
Birthrate:8.21births/1,000population
Lifeexpectancy:79years
2ndmostpopulousEuropeancountry
Populationdensity:230persq.km=597persq.mi
 Demographics

Medianage(male):42.6
Medianage(female):45.2
Agestructure:
014years:13.7%
1564years:66.1%
65yearsandover:20.3%
 Demographics

PopulationofcapitalcityofBerlin:3,440,441
Urbanization:
Urbanpopulation:74%ofpopulation
Rateofurbanization:0.1%annualrateofchange
GeographicalLocation
 GeographicalLocation
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
 GeographicalLocation
Germanyismadeupof16
differentstates
BadenWrttemberg,
Bavaria,Berlin,
Brandenburg,Bremen,
Hamburg,Hesse,
MecklenburgVorpommern,
LowerSaxony,NorthRhine
Westphalia,Rhineland
Palatinate,Saarland,Saxony,
SaxonyAnhalt,Schleswig
Holstein,Thuringia
 GeographicalLocation
Climate:temperateandmarine;cool,cloudy,rainfall
duringsummerandwinter
Terrain:lowlandsinnorth,uplandsincenter,Bavarian
Alpsinsouth
Naturalhazards:flooding
Majorcities:Berlin,Hamburg,Munich,Cologne
GeographicalLocation
 NaturalResources

Coal,lignite,naturalgas,ironore,copper,nickel,uranium,
potash,salt,constructionmaterials,timber,arableland
Landuse:
arableland:33.13%
permanentcrops:0.6%
other:66.27%
 Trade

Exports$1.159trillion(3rdhighestintheworld)
Machinery,vehicles,chemicals,metalsand
manufactures,foodstuffs,textiles
ExportPartners:France10.2%,US6.7%,Netherlands
6.7%,UK6.6%,Italy6.3%,Austria6%,China4.5%,
Switzerland4.4%
 Trade

Imports$966.9billion(3rdhighestintheworld)
Machinery,vehicles,chemicals,foodstuffs,textiles,
metals
ImportPartners:Netherlands12.71%,France8.3%,
Belgium7.19%,China6.89%,Italy5.88%,UK4.76%,
Austria4.55%,US4.25%,Switzerland4.07%
Trade
Trade
 Industry
Oneoftheworld'slargestandmosttechnologically
advancedproducersof:
Iron,steel,coal,cement,chemicals,machinery,
vehicles,machinetools,electronics,foodand
beverages,shipbuilding,textiles
Industryandconstructionaccountedfor29%ofgross
domesticproductin2008,andemployed29.7%ofthe
workforce.
 MajorGermanCompanies

Volkswagen MercedesBenz
Allianz Audi
Daimler TMobile
Siemens Nivea
Metro Porsche
DeutscheTelekom
Merck
BMW
Adidas
 Economy

LargestnationaleconomyinEuropeand5thlargestinthe
world
Monetarysystem:monetarypolicywastransferredtothe
EuropeanCentralBankin1999
Currency:Euroestablishedin1999
 Economy

GDP:$3.353trillion
GDP(PPP):$2.81trillion(6thin
theworld)
GDPpercapita:$34,100
GDPgrowthrate(2009):4.9%
GDPgrowthrate(2005):2.5%
FDI:503billionEUR(2009)
 Technology
105millionmobilecellularphoneusers(8thintheworld)
61.973millioninternetusers(6thintheworld)
Germancompaniesrepresent15.6%ofresearchadvanced
goodsworldwide,ranking2ndintheworld(followingUS)
TheFederalGovernmentprovidesfundingthroughannual
grantsorendowmentcapital
In2010theFederalMinistryofEconomicsand
Technologycreatedabudgetof2.3billioneurosfor
technologyresearchanddevelopment
Technology
 Education
99%literacyrateamongmalesandfemales
Approximately4.4%ofGDPinvestedineducation
250universities,100ofwhichfocusonappliedsciences
95%ofuniversitiesandhighereducationarepublic
Schoollifeexpectancy:15years
 LaborForce

Laborforce:43.5million
Laborforcebyoccupation:
Agriculture:2.4%
Industry:29.7%
Services:67.8%
Unemploymentrate:7.5%(2009)
MuchhigherunemploymentrateinEasternGermanythan
WesternGermany
LaborForce
LaborForce
 LaborForce

Averageworkweek:37.5hours
Normalbusinesshours:9am5pm
Retailhoursvary,limitedhoursonSunday
Averagewage:27.9EUR(WesternGermany)and17.4
EUR(EasternGermany)
Typicalannualleave:2030workingdays
 GermanConsumer

ThetypicalGermanconsumerrejectstheideadiscounts
shopsandplacesvalueonquality
Emphasisonsafety,quality,comfortandreliability
Householdconsumption(2008):1,143,489USD
Householdconsumptionpercapita(2008):13,926
GermanConsumer
GermanConsumer
 PoliticalStructure

Governmenttype:federalrepublic
Chiefofstate:PresidentChristianWulff
Headofgovernment:ChancellorAngelaMerkel
Elections:presidentelectedfora5yearterm(eligiblefor
2ndterm)
 LegalStructure
Legalsystem:civillaw
Valueaddedtax:19%
Valueaddedtaxforfood:7%
Corporatetax:15%
ProfitgeneratedinGermanycanbesubjecttocorporatetax,
solidaritysurcharge,andtradetax
 Religion

Religiousfreedom
Protestant(33%),RomanCatholic(33%),Muslim(4%),
108,000membersofJewishcommunities,andothers
InterculturalCommunication
HostedesCulturalDimensions

PowerDistance Individualistic
35 67
Low High

Masculinity UncertaintyAvoidance
66 65
High High
 Culture

Germanshaveastrongsenseofregionalpride
Reputationforbeingindustrious,thrifty,andorderly
Germansusuallyexpresstheirthoughtsandopinionsina
directway
Separationbetweenprivateandpublicrelations
Interestinacademiccredentialsbutnotpersonallife
Formalcommunicationandgreetings
 Culture

Businessdealisusuallymutuallybeneficialandthecentral
focusisjustthetask.
Attentiontobepaidtotargetsandtimeschedules.
Appointmentsaretobetakenbeforemeetingsomeone
Decisionmakingisaslowdetailedprocess.
CorrespondenceshouldbeinGerman
 BusinessEnvironment

StartingabusinessinGermanyisranked88outof183
economiesbyTheWorldBank
TostartabusinessinGermany:
Itwilltakeapproximately15days
9differentprocedures
4.8%ofincomepercapita
 BusinessEnvironment

GermanAmericanbusinessgroups:
GermanAmericanBusinessAssociation
AmericanGermanBusinessClub
GermanyUSACareerCenter
 Negotiations

Negotiationstypicallyfollowstrictagendaandprotocol
Avoidconfrontation
Onceadecisionismade,itisfinal
Decisionmakingcanbeaslowprocess
ToenforceacontractinGermanyitrequires
approximately:
30differentprocedures
394days
 Outlook
Increasedresearchandfundingforscienceandtechnology
Economicclimateimprovingsince2008recession
GrowthinEasternGermany
ProductivityinEasternGermanyhasmorethandoubled
since1991:eachemployeecontributesmorethanEUR
50,000totheoverallGDP.
SalesintheGermansecuritytechnologyareexpectedto
growbymorethan50percentby2015
Growthintechnologyindustries
ITproductsandservicesareprojectedtoreachUS$58.0
bnin2010andUS$66.6bnby2014
 SWOTAnalysis
Strengths Weaknesses
Increasingconsumer Hightaxrates
consumption Slownegotiations
Efficientandeducatedwork Demandingemployees
force
LargestEuropeaneconomy
Opportunities Threats
Location Maturemarket
Taxincentives Competition
IntroductionintoEuropean
market
 ClientRecommendations
FocusbusinesspracticesinEasternGermany
GrowingopportunitiesinEasternGermany
Higherunemployment
Possibletaxincentives
Lowerlaborcost
UseGermanyasastartingpointforEuropeanbusiness
GermanyiskeytosuccessfullyenteringtheEuropean
market
Payattentiontoconsumerpatterns
Avoiddiscountandsaleapproach
Boastproductquality
 ClientRecommendations
Usesocietalvaluestoclientadvantage
Importanceoneducation
Qualityproduct
Increasedawarenessofsocialresponsibilityand
sustainability
Specifictargetmarket
Informationandcommunicationstechnology
Responsiblefor80%ofGermaninnovations
Beawareofadvancementsintechnology
Competitivemarket
 ClientQuestions

Foranyadditionalquestionspleasedonothesitateto
contactmeatnldenike@gmail.com
 WorksCited

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/VorausberechnungBevoelkerung/Vorausber
echnungBevoelkerung.
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/
 WorksCited

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