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GermanyPESTLE.docx· Germany PESTLE :
· The Federal Republic of Germany consists of 16 states covering 357,021 square kilometers. The population is 81.8 million inhabitants. Germany is among the leading political powers of Europe. In some fields, it is also deemed as the technological leader.
· Germany has the 4th largest economy in the world. It is the 2nd largest exporter and 3rd largest importer.
· POLITICAL FACTORS
· Germany is a democratic republic. The political system functions under a system called Grundgesetz which was published in the 1949 constitutional document. The Social Democratic Party and the Christian Democratic Union leads the political system since 1949.
· https://www.marketingtutor.net/pestle-analysis-of-germany/
a. A global corruption index: Germany scored 80 points out of 100 on the 2018 Corruption Perceptions Index reported by Transparency International. Corruption Index in Germany averaged 79.35 Points from 1995 until 2018, reaching an all time high of 82.70 Points in 1996 and a record low of 73 Points in 2002.
b. A human rights index: Human rights in Germany enjoy a high level of protection, both in theory and in practice, and are enshrined in the Grundgesetz .
ECONOMIC FACTORS
Germany is the 4th largest economy in the world. With nominal GDP forecasts for 2019 set to the tune of $4.2 trillion, the country looks set for robust economic growth. However, a GDP decline in late 2018, coupled with shaky industrial growth, has left a shadow on the economic horizon of the nation.
Germany boasts a low unemployment rate of 3.2%, which is arguably one of the lowest worldwide. One of the top exporters in the world, Germany has a mixed economy with a budgetary surplus. And although the recent refugee crisis has left the country shaken, but with a strong economic foundation, Germany looks set to remain an established economic power.
Germany has comparatively low raw materials. It only has potash and lignite in a significant amount. The power plants which burn lignite are among the main sources of electricity for Germans.
Popular global brands are BMW, Mercedes Benz, Adidas, Porsche, Audi, DHL, Volkswagen, T-Mobile, Lufthansa, Nivea, and SAP. Between the years 1991 and 2010, local firms took part in 301 acquisitions and 40 mergers. Most products are in engineering. Automobiles, metals, machinery and chemical goods are some items they are proud of. German cities like Berlin, Frankfurt and Hanover hold the largest annual international trade fairs.
https://www.marketingtutor.net/pestle-analysis-of-germany/
a. GNI per capita (as a proxy for income)
This page provides the latest reported value for - Germany Gross National Income - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news. Germany Gross National Income - actual data, historical chart and calendar of releases - was last updated on October of 2019.
|
|
Actual |
Previous |
Highest |
Lowest |
Dates |
Unit |
Frequency |
|
|
|
878.52 |
874.74 |
878.52 |
390.99 |
1991 - 2019 |
EUR Billion |
Quarterly |
Current Prices, SA |
b. GDP ranking (as a proxy for market size):
|
Rank |
Country/Economy |
GDP (Nominal) (billions of $) |
Growth (%) |
GDP per capita (Nominal) ($) |
Continent |
|||||
|
|
|
2019 |
% Share |
diff |
2023 |
Rank |
|
2019 |
Rank |
|
|
1 |
United States |
21,482.41 |
24.4 |
- |
24,671 |
1 |
2.54 |
65,062 |
8 |
North America |
|
2 |
China |
14,172.20 |
16.1 |
7310 |
19,581 |
2 |
6.18 |
10,099 |
72 |
Asia |
|
3 |
Japan |
5,220.57 |
5.93 |
8952 |
5,908 |
3 |
0.94 |
41,418 |
26 |
Asia |
|
4 |
Germany |
4,117.07 |
4.67 |
1104 |
4,937 |
4 |
1.86 |
49,692 |
18 |
Europe |
c. GDP growth rate and direction:
The German economy contracted a seasonally-adjusted 0.1 percent on quarter in the three months to June 2019, unrevised from the preliminary estimate and following a 0.4 percent growth in the previous period. Net external demand contributed negatively to the GDP as exports fell faster than imports, while investment in construction declined markedly. GDP Growth Rate in Germany averaged 0.51 percent from 1970 until 2019, reaching an all time high of 4 percent in the second quarter of 1970 and a record low of -4.70 percent in the first quarter of 2009.
d. GINI or other indicator of income inequality/size of middle class:
The Gini coefficient refers to the way money is distributed across a nation, state, or whatever geographic region is in question. The reason for the Gini coefficient in the first place is for use of proof that there is significant wealth inequality. Before we dive into the different Gini coefficients for countries around the world, let's first talk about what the coefficients mean Germany 31.4%
SOCIO–CULTURAL FACTORS
Like I mentioned above, Germany has around 82 million residents. This means it is the largest EU country in terms of population. I would describe it as a modern, multicultural country. The society is molded by a variety of lifestyles. There are traces of some truly different ethnocultural diversity. Even though a lot of social changes took place, the family is still the most 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. The unique architectural styles of the country are the result of the fragmentation during centuries. Some mentionable sites include the Abbey Church of St. Michaels, the Speyer Cathedral, and the Cologne Cathedral. Germany has been home to many renowned classical music composers like Ludwig van Beethoven, Johannes Brahms, Johann Sebastian Bach and Richard Wagner. It is flourishing in the music market.
German literature dates back to the Middle Ages. It is world famous. Popular local authors include Johann Wolfgang von Goethe, Friedrich Schiller, Bertolt Brecht, Thomas Mann, and Hermann Hesse. Every year, the Frankfurt Book Fair, which is the biggest book fair ever, is held.
Some of the best art pieces were made in Germany. It is also popular for its old tradition in visual arts. Awesome German innovations include printmaking, Gothic art, and wooden engravings. Some of the Major renaissance artists like Hans Holbein the Younger and Matthias Grunewald were from Germany.
Many international sporting events have represented Germany in the past. This includes FIFA World Cup, Formula One, Summer Olympics, ice hockey and tennis tournaments. It is among the leading motor sports countries. It manufactures motor brands like BMW and Mercedes.
a. Population size in 2010 :
|
Population mid-2010 |
82 million |
b. Significant demographic trends (aging, migration, urbanization)
Almost 19 million people in the country come from migratory backgrounds.
c. Cultural evaluation based on Hofstede, Trompenaars, or other
POWER DISTANCE: This dimension deals with the fact that all individuals in societies are not equal – it expresses the attitude of the culture towards these inequalities amongst us. Power Distance is defined as the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally.
INDIVIDUALISM: he fundamental issue addressed by this dimension is the degree of interdependence a society maintains among its members. It has to do with whether people´s self-image is defined in terms of “I” or “We”. In Individualist societies people are supposed to look after themselves and their direct family only. In Collectivist societies people belong to ‘in groups’ that take care of them in exchange for loyalty.
MASCULINITY: A high score (Masculine) on this dimension indicates that the society will be driven by competition, achievement and success, with success being defined by the winner / best in field – a value system that starts in school and continues throughout organisational life.
A low score (Feminine) on the dimension means that the dominant values in society are caring for others and quality of life. A Feminine society is one where quality of life is the sign of success and standing out from the crowd is not admirable. The fundamental issue here is what motivates people, wanting to be the best (Masculine) or liking what you do (Feminine).
UNCERTAINTY AVOIDANCE: The dimension Uncertainty Avoidance has to do with the way that a society deals with the fact that the future can never be known: should we try to control the future or just let it happen? This ambiguity brings with it anxiety and different cultures have learnt to deal with this anxiety in different ways. The extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these is reflected in the score on Uncertainty Avoidance.
LONG TERM ORIENTATION: This dimension describes how every society has to maintain some links with its own past while dealing with the challenges of the present and future, and societies prioritise these two existential goals differently. Normative societies. which score low on this dimension, for example, prefer to maintain time-honoured traditions and norms while viewing societal change with suspicion. Those with a culture which scores high, on the other hand, take a more pragmatic approach: they encourage thrift and efforts in modern education as a way to prepare for the future.
Germany’s high score of 83 indicates that it is a pragmatic country. In societies with a pragmatic orientation, people believe that truth depends very much on situation, context and time. They show an ability to adapt traditions easily to changed conditions, a strong propensity to save and invest, thriftiness, and perseverance in achieving results.
INDULGENCE
One challenge that confronts humanity, now and in the past, is the degree to which small children are socialized. Without socialization we do not become “human”. This dimension is defined as the extent to which people try to control their desires and impulses, based on the way they were raised. Relatively weak control is called “Indulgence” and relatively strong control is called “Restraint”. Cultures can, therefore, be described as Indulgent or Restrained.
The low score of 40 on this dimension indicates that the German culture is Restrained in nature. Societies with a low score in this dimension have a tendency to cynicism and pessimism. Also, in contrast to Indulgent societies, Restrained societies do not put much emphasis on leisure time and control the gratification of their desires. People with this orientation have the perception that their actions are Restrained by social norms and feel that indulging themselves is somewhat wrong.
https://www.hofstede-insights.com/country/germany/
d. Language and communication styles (Hall’s high/low context)
Low-Context Cultures
· Association: Relationships begin and end quickly. Productivity depends on procedures and paying attention to the goal. The identity of individuals is rooted in themselves and their accomplishments. Social structure is decentralized.
· Interaction: Nonverbal elements are not significant. Verbal messages are explicit, and communication is seen as a way of exchanging information, ideas and opinions. Disagreement is depersonalized; the focus is on rational (not personal) solutions. An individual can be explicit about another person’s bothersome behavior.
· Territoriality: Space is compartmentalized. Privacy is important, so people stand farther apart.
· Temporality: Events and tasks are scheduled and to be done at particular times. Change is fast, and time is a commodity to be spent or saved. One’s time is one’s own.
· Learning: One source of information is used. Thinking proceeds from specific to general. Learning occurs by following the explicit directions and explanations of others. Individual orientation is preferred, and speed is valued.
e. Religion and potential influences
The majority of Germans mostly fall into two different religious groups: Christianity and Atheism.
f. Shopping behavior and lifestyle
Germany is a multicultural country although it has a homogenous bearing. Customs and traditions of people of various backgrounds maintain their distinct identity and so do foreigners residing there. German folk traditions are much alive these days and the Germans believe in maintaining a globalised outlook.
g. HDI ranking (2019)
The Human Development Index – or simply, HDI – is an index that is used to rank countries based on human development. Human Development Index is scored using indicators including expectancy, per capita income, and education. Nations that rank higher on this index have a higher level of education, a higher lifespan, and a higher gross national income per capita than nations with a lower score.
|
0.936 |
.
TECHNOLOGICAL FACTORS
· Germany is well known for its advancements in the field of science and technology . One of the leading car manufacturers in the world, the nation is home to global automobile brands such as Mercedes, Volkswagen and BMW. Globally, Germany is considered the 5th most technologically advanced nation, with expertise across multiple sectors such as engineering, medicine and infrastructure, just to name a few. The country is also a leading nation in terms of information technology and has already made significant advances in the fields of AI and machine learning.
Environmental factors
The business environment is very country specific in Germany. If a new business has to enter then it has to integrate itself with local retailers and distributors. Unless a company understands the local needs of the supply chain, it cannot set up its distribution network. Lot of policies set up by Government also need to be complied with.
a. Allowable levels of greenhouse gas emissions:
In 2007, the German government set a greenhouse gas reduction target of 40 percent by 2020, compared to 1990 levels, in line with the Intergovernmental Panel on Climate Change’s (IPCC) recommendation for industrialised nations outlined in its Fourth Assessment Report.
b. Regulations on recycling:
In 2009, Germany’s total recycling rate hovered at 70 percent. For 2015, the most recent year data is available, its recycling rate was a strong 79 percent.
Germany actually leads the EU when it comes to recycling municipal waste, according to Eurostat data. Here are the top five EU countries by municipal recycling rates for 2015:
· Germany: 66.1 percent
https://studymoose.com/pestle-analysis-of-germany-essay
c. Water pollution or other standards:
Water quality in Germany has been regulated by an effective water management division. The country’s water technology and purification processes are highly regarded internationally. The German government implemented water protection procedures such as water waste charges, the preservation of natural habitats and laws to penalize water pollution.
Germany has an abundance of fresh water; 2.2 percent of the country’s surface area is covered by 11 predominant rivers, 291 dams, and other natural lakes. Approximately 11.7 percent of the fresh water is assigned to drinking water protection.
https://borgenproject.org/water-quality-in-germany/
d. Geographic issues or considerations:
Environmental Issues of Germany
Like many industrialized nations, Germany has a significant air pollution problem, but unlike other Western countries it has worsened in recent years.
After the Fukushima nuclear disaster of 2011, Chancellor Angela Merkel and the German government adopted a policy of phasing out the country’s nuclear power plants. To do so, the government allowed for utilities to burn more coal and as a result, the air pollution levels in 2012 and 2013 were two of the highest since the 1980s.
Nuclear power plant in Grohnde near Hameln in Lower Saxony, Germany.
Nuclear power plant in Grohnde near Hameln in Lower Saxony, Germany. Image Credits: Thorsten Schier/shutterstock.com
In addition to air pollution, decades of open-cast mining in East Germany has resulted in significant water pollution in some rivers. During mining days, the areas around the mine were drain of water, but now that the mines are no longer in operation – water levels have risen and caused a brown sludge to start filling up the Spree River, killing wildlife in the popular tourist attraction and UNESCO biosphere reserve.
According to a 2018 pole by Statista, 36% of respondents believed that global warming was the most important environmental issue facing Germany today. Future energy sources and air pollution came a close second and third with 30% and 27% respectively.
One of the largest environmental topics of discussion in 2018 is the legal battle between Germany’s main energy provider, RWE and BUND, a German environment non-profit trying to defend the Hambach forest. Approximately 37% of the country’s electricity is generated by lignite coal though the country is attempting to replace this need with renewable energy. The Hambach forest is 12000 years old and has been slowly destroyed, leaving on 300 hectares remaining.
The mining company need to expand lignite mining into the forest area in order to need coal energy needs of the ever-growing populations for the coming years, however this would mean sacrificing yet another portion of a significantly declining forest.
Legal environment
Follow a Civil law Tradition
The legal system in Germany prescribes strict labour laws with stringent rules against lay-offs. The law also makes it compulsory for the business to publish financial reports even if the business is not publicly listed. The wage standards allow the central bargaining of wages unlike most developed countries.
a. Taxation
The Personal Income Tax Rate in Germany stands at 45 percent. Personal Income Tax Rate in Germany averaged 48.06 percent from 1995 until 2019, reaching an all time high of 57 percent in 1996 and a record low of 42 percent in 2005.
b. Regulations
1. It’s illegal to run out of fuel on the Autobahn
TRUE. As a motorist in Germany you have to observe a gamut of laws. One of your obligations as a driver is to make sure to always fill up the tank on time
2. It’s forbidden to work in an office without window
FALSE! You don’t have a right to an office with window in Germany.
3. It’s forbidden to tune the piano at midnight
TRUE. Germans love their silence, even if it needs to be upheld by a battery of laws, rules and regulations. For example, the Federal High Court of Justice has ruled that making music or practicing your instrument in rental apartments is only allowed between 8:00-12:00 and 14:00-20:00.
4. It’s forbidden to keep urns at home
TRUE. The German law of Friedhofszwang (“cemetary compulsion”) demands that any mortal remains have to be deposited in a designated space, i.e. either on a cemetery or as part of an official burial at sea.
5. It’s illegal to hang the laundry on Sunday
FALSE! There’s a myth floating around on the Internet that there’s a German law which forbids the hanging of laundry on Sundays.
7. It’s forbidden to make noise at lunchtime
FALSE! Contrary to popular opinion there is no (unified) national law regulating the Mittagsruhe (quiet-time around lunch).
10. It’s forbidden to wear masks in public
FALSE! It’s not generally forbidden to wear masks in public, a good example being the Carnival .
https://learnoutlive.com/crazy-german-laws/
c. IP protection
Germany has an ample legislation regarding the protection of intellectual property (IP). The regulations refer to copyright, trademark, design, utility model and patent protection. An intellectual property lawyer from our team can help investors understand the principles of IP protection in this country and can help with IP protection services.
All the laws have been drafted before Germany became an European Union member state but were subsequently modified and amended to be compatible to EU regulations regarding the protection of intellectual property. Here are the main laws providing the grounds for intellectual property protection in Germany:
· - the Copyright Act (UrhG),
· - the Patent Act (PatG),
· - the Trademark Act (MarkenG),
· - the Utility Model Act (GebrMG),
· - the Designs Act (GeschMG),
· - the Act Against Unfair Competition (UWG).
d. Workplace safety
The German system for safety and health at the workplace has a dual structure. It encompasses state (at Federal and Land level) safety and health provision and the autonomous accident insurance institutions. The state (at Federal and Land level) enacts legislation, and promulgates regulations and the rules of state boards. After examination of their needs, and with the approval of the Federal and Land governments, the accident insurance institutions release their own accident prevention rules.
https://osha.europa.eu/en/about-eu-osha/national-focal-points/germany
e. Worker benefits and protections
Under Regulation (EC) 593/2008 on the law applicable to contractual obligations, employers and employees can agree on the law that governs their employment relationship. However, the agreed choice of law must not exclude mandatory provisions under German law if they are more favourable to the employee in comparison to the agreed laws. The question of which regulations are more favourable to an employee will vary from case to case. For example, the following German employment laws are usually more favourable to an employee:
· Termination protection.
· Applicable collective bargaining agreements.
· Holidays.
In addition, German statutory regulations cannot be ruled out if they are considered as public order law. These include provisions on:
· Maternity pay.
· Sick pay.
· Notifications concerning mass redundancies.
· Protection of disabled employees.
· Working time.
Therefore there may be cases where the laws of a foreign jurisdiction will apply to the employment relationship, but German social security or tax laws can also apply.
