Germany

FINAL PROJECT
SUBJECT: INTERNATIONAL BUSINESS

COUNTRY: GERMANY

SUBMITTED BY:
NASIR MEHMOOD (16-ARID-4088)

NOMAN KHELGI (16-ARID-4092)

MUHAMMAD HUZAIFA (16-ARID-4076)

MUHAMMAD ANWAR (16-ARID-4064)

MAHNOOR RIAZ (16-ARID-4058)

TOOBA RIAZ (16-ARID-4133)

MOMINA KHAN (16-ARID-4066)

SUBMITTED TO: MADAM HAFIZA AMTUL HAFEEZ

SUBMISSION DATE: 17-6-2019

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Contents
INTRODUCTION OF GERMANY ......................................................................................................... 4
KEY STATISTICS.................................................................................................................................. 4
THE BOARD OF MANAGEMENT OF DIAMLER AG ......................................................................... 5
TOP FIVE COMPANIES OF GERMANY THAT ARE GLOBAL .......................................................... 6
Volkswagen Group (Automotive Manufacturing Company) ................................................................. 6
Daimler AG (Automotive Manufacturing Company)............................................................................ 6
Allianz (Financial Service Company)................................................................................................... 7
BMW Group (Automotive Manufacturing Company) .......................................................................... 7
Siemens (Industrial Manufacturing Company) ..................................................................................... 8
COMPONENTS OF INTERNATIONAL BUSNIESS ............................................................................. 9
Political Factors ................................................................................................................................... 9
Economic Factors ................................................................................................................................ 9
Socio-Cultural Factors ....................................................................................................................... 10
Technological Factors ........................................................................................................................ 10
Environmental Factor ........................................................................................................................ 11
BUSINESS ENTITIES RUNNING IN THE COUNTRIES ................................................................... 11
The Limited Liability Company ......................................................................................................... 11
Joint Stock Company ......................................................................................................................... 11
General Partnership ........................................................................................................................... 12
Limited Partnership ........................................................................................................................... 12
Limited Partnership with Limited Liability Company as General Partner ........................................... 12
Subsidiary ......................................................................................................................................... 12
Branch ............................................................................................................................................... 12
PARTNERSHIP WITH COUNTRIES................................................................................................... 13
CURRENCY USED IN FOREIGN BUSINESS .................................................................................... 13
TRADE POLICIES ............................................................................................................................... 13
Trade Barriers.................................................................................................................................... 13
Import Tariff ..................................................................................................................................... 14
TARIFF RATES OF GERMANY ......................................................................................................... 14
PRICING STRATEGY OF GERMANY ............................................................................................... 14
PRODUCT STRATEGY OF GERMANY ............................................................................................. 14

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BUSINESS ETHICS (DOING BUSINESS WITH GERMANS) ............................................................ 15

SUMMARY .......................................................................................................................................... 15

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INTRODUCTION OF GERMANY
Germany officially called, as the Federal Republic of Germany is a country in Central and Western
Europe. It borders Denmark to the north, Poland and the Czech Republic to the east, Austria and
Switzerland to the south, France to the southwest, and Luxembourg, Belgium and the Netherlands to
the west. Germany is the most important member state of the European Union. Germany is a very
decentralized country. Its capital is Berlin, while Frankfurt serves as its financial capital and has he
country’s busiest airport.
Today, the sovereign state of Germany is a federal parliamentary republic led by a chancellor. It is a
great power with a strong economy; it has the world’s fourth largest economy by nominal GDP, and
the fifth largest by PPP. In 2016, Germany recorded the highest trade surplus in the world worth $ 310
billion, making it the biggest capital exporter globally. Germany is the third largest exporter in the
world with 1.21 Trillion euros ($1.27 trillion) in goods and services exported in 2016. The service
sector contributes around 70% of the total GDP, industry 29.1% and agriculture 0.9%. The top 10
exports of Germany are vehicles, machinery, chemical goods, electronic products, electrical
equipment, pharmaceuticals, transport equipment, basic metals, food products, and rubber and plastics.
As a global leader in several industrial and technological sectors, it is both the world’s largest exporter
and importer of goods. As a developed country with a very high standard of living, it upholds a social
security and universal health care system, environmental protection, and a tuition free university
education.
The Federal Republic of Germany was a founding member of the European Economic Community in
1957 and the European Union in 1993.Known for its rich cultural history, Germany has been
continuously the home of influential and successful artists, philosophers, musicians, film people,
sportspeople, entrepreneurs, scientists, engineers, and inventors. Germany has a large number of
World Heritage sites and is among the top tourism destinations in the world.

KEY STATISTICS
o Official name: Federal Republic of Germany
o Capital: Berlin
o Chancellor: Angela Merkel
o President: Frank Walter Stein Meier
o Government: Federal Parliamentary Republic
o Population: 83,000,000 (2018)
o Religion: 57% Christian, 36% no religion, 7% others
o Languages: German is the official and national language
o Area: 357,386 km2
o GDP (PPP): $ 4.555 Trillion (2019 estimate)
o Most populated cities are Berlin, Hamburg, Cologne, and Frankfurt etc.

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o Per Capita Income: $ 54983

o Currency: Euro
o Exports: Cars, vehicle parts, pharmaceuticals, aircrafts, helicopters, refined petroleum, petroleum
gas, engine parts, medical instruments, computers, gold etc.
o Imports: motor vehicles, electronic and optical products, crude petroleum and natural gas,
o Unemployment rate: 3.2%
o Human Development Index 0.936 very high
o Population growth: 0.4% annual
o Birth rate: 9.5 births/1,000 population (2017)
o Death rate: 11.3 deaths/1,000 population (2017)
o Literacy rate: 99%

THE BOARD OF MANAGEMENT OF DIAMLER AG

Chairperson of the board of

management/ Mercedes-Benz
Cars
Dr. Dieter Zetsche

Group research &

Diamler Trucks Integrity and Human Resources
Mercedes-Benz cars
and buses legal affairs and Director of
development
manager manager Labor Relations &
Manager
Martin Daum Renata Jungo Mercedes-Benz
Ola Kallenius
Brungger Vans
Wilfried Porth

Mercedes-Benz
Cars Marketing Greater China Finance &
& Sales manager Hubertus Troska Controlling/Daimler
Britta Seeger Financial Services
manager
Bodo Uebber

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TOP FIVE COMPANIES OF GERMANY THAT ARE GLOBAL

Volkswagen Group (Automotive Manufacturing Company)
Volkswagen Group, also called Volkswagen AG, major German automobile manufacturer, founded by
the German government in 1937 to mass-produce a low priced “people’s car”. Headquarters are in
Wolfsburg, Germany.

The company was originally operated by German labor front (Deutsche Arbeitsfront), a Nazi
organization. The German Labor Front hired the Austrian automotive engineer Ferdinand Porsche,
who was responsible for the original design of a car, in 1934, and ground was broken for a new factory
in the state of lower Saxony in 1938.

Volkswagen production expended rapidly in the 1950. The company introduced the transporter van in
1950 and the Karmann Ghia coupe in 1955. Sales abroad were generally strong in most countries of
export, but, because of car’s small size, unusual rounded appearance, and historical connection to Nazi
company, sale in the United States were initially sluggish. The car began to gain acceptance there as
the 1950s progressed, however, and Volkswagen of America was established in 1955.

This is the largest German company in the term of revenue generation. It is the world’s largest
automakers in the term of sales and features in the sixth position in Fortune Global 500 company list.
Volkswagen has multiple world famous brands like Audi, Bentley, Lamborghini, Porsche, Bugatti,
Skoda, Volkswagen, and even motorcycle brand Ducati.

Daimler AG (Automotive Manufacturing Company)

Daimler-Benz was formed in 1926 by the merger of two pioneering German Automobile Companies,
one founded by Karl Benz, the other by Gottlieb Daimler. Both Benz and Daimler claimed to have
invented the Gasoline-Powered auto engine. Benz built his first Automobile which was powered by a
one-cylinder Gasoline Engine, in 1885 and started selling cars in 1887. Daimler designed a series of
Gasoline-Powered engines in 1883 and received a German patent on a Three-Wheeled Gasoline-
Powered vehicle in 1885.

In 1890 Daimler formed the firm of Daimler-Motoren-Gesellschaft to manufactured his rapidly

growing line of Daimler autos. The first Daimler Produced luxury car was sold to the Sultan of
Morocco in 1889. In 1901 Daimler sold he first Mercedes, which was equipped with a four-cylinder
engine. Emil Jellinek, a diplomat and major Daimler Investor, had suggested that the line be named
after his daughter Mercedes because he feared the German-Sounding Daimler name would not sell in
France.

The Benz company produced trucks as well as autos. Benz began producing trucks with fuel-saving
diesel engines, which sprayed Fuel Oil into the combustion chamber under high pressure, before
World War 1.

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After the merger of two rival companies in 1926, their engineering staffs worked together to design the
classic “S” series Mercedes. Daimler-Benz was the first company to use diesel engines in passenger
cars; the diesel-equipped Mercedes-Benz became available in 1936.

Daimler AG has automotive ranging from cars, buses, trucks and even motorcycle. It has some world
renowned brands like Mercedes-Benz, Detroit Diesel, and Western Star just to name a few. It is the
largest truck manufacturer in the world by sales figures and the company also has a financial service
arm.

Allianz (Financial Service Company)

Once known primarily as a German insurance company, Allianz AG has grown to become one of the world's
leading financial services providers. Structured as a holding company of approximately 700 companies in over
70 countries, Allianz AG operates in three core business areas: property and casualty insurance, life and health
insurance, and asset management and banking. In its property and casualty insurance sector, which is overseen
by Munich-based Allianz Versicherungs-AG, Allianz is the leading insurance provider in Germany and one of
the largest providers of corporate insurance in the world. The company is also the top life insurance provider in
Germany, and recent acquisitions outside Germany have made Allianz an international leader in this, its second
business segment. Under the auspices of Allianz Dresdner Asset Management, Allianz AG has over EUR 1.1
trillion under management in its newest sector--asset management and banking.

Carl Thieme, director of the Munich Reinsurance Company, and the private banker Wilhelm Finck, founded the
company as Allianz Versicherungs-Aktien-Gesellschaft in 1890 at the time when the German economy had
gotten back into its stride after a long depression and was entering the second phase of its industrial revolution.
Taking advantage of the rapid spread of mechanization in the workplace and the steeply rising number of
industrial and traffic accidents, Thieme and Finck began by concentrating on accident and liability insurance.
From the 1890s until World War I, however, Allianz grew and prospered mainly through freight insurance,
which with reinsurance has been fundamental to the Allianz story from its beginning. In the view of leading
experts of the time, the freight insurance market was very overcrowded, but Paul von der Nahmer, Allianz's
second company chairman who led the firm from 1894 with Carl Thieme and from 1904 alone, spotted the great
possibilities offered by the rapid expansion in the volume of German trade. In 1913, when Allianz had already
become by far the largest German freight insurer, this division produced almost 45 percent of the firm's
premium income.

Before World War I, Allianz had already begun to extend its scope, although it was still far from offering a full
composite range. In 1900 it received the first German license to sell plant insurance, and in 1911 it was also
licensed to insure against mechanical breakdowns, a service available exclusively from Allianz until 1924. For
three decades the role played in the firm's business by these two classes of insurance did not increase, but
Allianz's expertise in this area due to its early involvement is one reason for the firm's present undisputed
position as market leader in the field of engineering--that is, mechanical, plant, and equipment--insurance. In
1905 Allianz included direct fire insurance in its list of benefits.

BMW Group (Automotive Manufacturing Company)

BMW was established as a business entity following a restructuring of the Rapp Motorenwerke
aircraft-manufacturing firm in 1917. After the end of World War 1 in 1918, BMW was forced to cease

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aircraft-engine production by the terms of the Versailles Armistice Treaty. The company consequently
shifted to motorcycle production in 1923, once the restrictions of the treaty started to be lifted,
followed by automobiles in 1928–29.

The first car which BMW successfully produced and the car which launched BMW on the road to
automobile production was the Dixi, it was based on the Austin 7 and licensed from the Austin Motor
Company in Birmingham, England.

BMW’s first significant aircraft engine (and commercial product of any sort) was the BMW IIIa
inline-six liquid-cooled engine of 1918, much preferred for its high-altitude performance. With
German rearmament in the 1930s, the company again began producing aircraft engines for the
Luftwaffe. Among its successful World War II engine designs were the BMW 132 and BMW 801 air-
cooled radial engines, and the pioneering BMW 003 axial-flow turbojet, which powered the tiny,
1944–1945–era jet-powered “emergency fighter”, the Heinkel He 162 Spatz.

BMW Group manufactures different types of automobiles including motorcycles. The company’s
name is its biggest brand and it has sub-brands like BMW M and BMW I for electric cars. Other
renowned brands from the company are Rolls-Royce, Mini, and BMW Motorrad for Motorcycles.
BMW sports car and touring cars are extremely famous for their performance and comfort.

In June 2012, BMW was listed as the #1 most reputable company in the world by Forbes.com.
Rankings are based upon aspects such as “people’s willingness to buy, recommend, work for, and
invest in a company is driven 60% by their perceptions of the company and only 40% by their
perceptions of their products.”

Siemens (Industrial Manufacturing Company)

Siemens is incorporated in Germany and has its corporate headquarters in Munich. It has operations in
around 190 countries and approximately 285 production and manufacturing facilities. Siemens had
around 360,000 employees as of 30 September 2011.

Founded: 12 October 1847; 171 years ago; Berlin, Kingdom of Prussia

Founder: Werner von Siemens

Products: Power generation technology, industrial and buildings automation, medical ...

Headquarters: Berlin and Munich, Germany

Siemens AG, in full Siemens Aktiengesellschaft, German energy technology and manufacturing
company formed in 1966 through the merger of Siemens & Halske AG (founded 1847), Siemens-
Schuckertwerke (founded 1903), and Siemens-Reiniger-Werke AG (founded 1932). Operating in more
than 200 countries and regions, it engages in a wide range of manufacturing and services in areas such
as power generation and transmission, energy management, transportation, telecommunications

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systems, and medical engineering. The company invests heavily in research and development and
ranks among the largest patent holders in the world. Headquarters are in Munich.

The first Siemens company, Telegraphen-Bau-Anstalt von Siemens & Halske (“Telegraph
Construction Firm of Siemens & Halske”), was founded in Berlin in 1847 by Werner von Siemens
(1816–92), his cousin Johann Georg Siemens (1805–79), and Johann Georg Halske (1814–90); its
purpose was to build telegraph installations and other electrical equipment. It soon began spreading
telegraph lines across Germany, establishing in 1855 a branch in St. Petersburg for Russian lines and
in 1858 a branch in London for English lines, the latter headed by Werner’s brother William Siemens
(1823–83). As the firm grew and introduced mass production, Halske, who was less inclined toward
expansion, withdrew (1867), leaving control of the company to the four Siemens brothers and their
descendants.

Meanwhile, the company’s activities were enlarging to include dynamos, cables, telephones, electric
power, electric lighting, and other advances of the later Industrial Revolution. In 1890 it became a
limited partnership, with Carl Siemens (Werner’s brother) and Arnold and Wilhelm Siemens
(Werner’s sons) as the senior partners; in 1897 it became a limited-liability company, Siemens &
Halske AG.

COMPONENTS OF INTERNATIONAL BUSNIESS

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
Cristian Democratic Union leads the political system since 1949. The legislature, the judiciary, and the
executive are the 3 wings which make up Government of Germany.

The Constitution of the Federal Republic of Germany lays down the fundamental structure of the
government. It dictates what value of system the nation should follow. It is the main source of
authority. Following a system that was made so many years ago has some effects on Germany

Economic Factors
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. It is the
leading producer of solar power technology and wind turbines. Most of the other resources including
natural gas and oil are from other countries. German imports about two-third of its energy. In fact, it is
the world’s 3rd largest energy importer.

The service sector contributes 70% of the GDP. Industry contributes 29.1% while agriculture backs
0.9%. Most products are in engineering. Automobiles, metals, machinery and chemical goods are
sometimes they are proud of. German cities like Berlin, Frankfurt and Hanover hold the largest annual
international trade fairs.

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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.

Socio-Cultural Factors
Germany has around 82 Million residents. This means it is the largest EU country in term population.
It is a modern, multicultural country. The society in modeled 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 the most important social reference unit. Young people have 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 country are the result of the fragmentation during
countries. 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 Herman 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 Mathias 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.

Technological Factors
Germany backs national science and technology in many ways. It houses independent laboratories.
there are national laboratories and also private research. The Ministry of Science and Technology is an
organization which coordinates and decided priorities for the national science and technology
programs in Germany.

The Natural History Museum in Berlin has mineralogical, geological, zoological, and botanical
components. There are many specialized scholarly societies concerned with agriculture and veterinary
science, the natural science, medicine, and technology.

Germany’s position in the European Union has a noteworthy science and technology components. The
country provides funding for broad European research and development. It also offers scientists and

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laboratories. There are many universities and colleges in the country which offer basic and applied
sciences.

Germany’s Automobile Industry is its greatest strength. Optical communication links, nanotech
materials, and many other innovations will perhaps be used in cars. German carmakers are hoping that
computer-based assistance systems will make driving more comfortable and safer.

The analysis above helps us understand that Germany is a very advanced country. It is spending a
lot of money on research and development. Their culture gives emphasize in music, literature, art and
sports. But, they still value family the most. Germany is beautiful. It is very peaceful nation, especially
to conduct business. The people are educated and the living standard is high. You must realize that it a
great country, but it still has potential to grow.

Environmental Factor
Like many industrialized nations, Germany also faces the issue of air pollution but unlike other
nations, this situation is increasingly going out of the control for Germany. After the incident of
Fukushima nuclear disaster in 2011, Chancellor Angela Merkel decided that Germany should phase
out from nuclear projects because of which the air pollution in 2012 and 2013 were the highest in
history. Due to global warming effects, Germany has decided to efficiently use the raw materials,
make use of renewable energy sources, and implement cleaner technologies, which would cut down
the waste and be less environmentally hazardous. Agricultural development of pesticides and
insecticides contribute towards water pollution.

BUSINESS ENTITIES RUNNING IN THE COUNTRIES

The Limited Liability Company
This is the most widespread company form. Its shareholders are not personally responsible for the
company’s debts.

One person is sufficient to set up a LLC and to be its shareholder. The share capital must be at least €
25,000. A notarial agreement must be drawn up between the shareholders and the company being set
up. The company comes legally in existence only when it is entered into the Register of Companies
(Handel register).

Shares in a LLC are not embodied in a certificate and cannot be quoted on stock exchanges. However,
they may be transferred through properly notarial documents. A GmbH must appoint at least one
managing director, who may also be shareholder of the company; he is the only person entitled to
represent the company.

Joint Stock Company

In order to set up this kind of company there must be at least one person who may be the only
shareholder of the company, too. A share capital of € 50,000 is required; the shares may be (but need

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not be) listed on the stock exchange. Articles of association, authenticated by a notary, are needed to
set up a joint stock. The company becomes legally existent as a joint stock when it has been entered
into the Register of Companies.

A joint stock must have a board of directors empowered to decide all matters relating to the operation
and the management of the business. The board of directors is appointed by and responsible to the
directorate. The shareholders of a joint stock exercise their power in regard of the company at regularly
scheduled general meetings.

General Partnership
In contrast to limited liability company and joint stock company, the partners in a general partnership
have unlimited liability. Every partner is legally obliged to participate actively in operating the
business unless the articles of partnership otherwise provides. The general partnership can sue or can
be sued in a court of law. For internal matters decisions should be made unanimously, but articles of
partnership usually allow decisions by a majority of votes.

Limited Partnership
This is basically a partnership but provides a limitation of liability on behalf of some of the partners. A
limited liability bears two kinds of partners: 1) the general partner, who has an unlimited liability
extending to his or her personal assets, and 2) the limited partner whose liability extends only to his or
her nominal holdings in the company.

Limited Partnership with Limited Liability Company as General Partner

This combines a limited liability company with a limited partnership by making the former the sole
general partner of the latter. The limited partners are, as in the case of every limited liability, only
liable to the extent of their registered holdings.

Subsidiary
This is a non-independent company physically separated from the parent company, and has a certain
degree of independence. It usually has its own management, accounting system, balance sheet
procedure and business assets.

Branch
This is rather a non-independent business branch, dependent in every aspect on the head office, which
also is in charge of the central administration.

The distinction between a subsidiary and a branch office is important as it determines whether an entry
must be made in the Register of Companies. The distinction is also relevant in determining the place of
the actual business in terms of German tax law.

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PARTNERSHIP WITH COUNTRIES

Below is a list showcasing 15 of Germany’s top trading partners. That is, countries that imported the
most German shipments by dollar value during 2018. Also shown is each import country’s percentage
of total German exports.
1. United States: US$134 billion (8.6% of total German exports)
2. France: $124.4 billion (8%)
3. China: $109.9 billion (7.1%)
4. Netherlands: $99.8 billion (6.4%)
5. United Kingdom: $96.8 billion (6.2%)
6. Italy: $82.6 billion (5.3%)
7. Austria: $75.2 billion (4.8%)
8. Poland: $74.7 billion (4.8%)
9. Switzerland: $64.3 billion (4.1%)
10. Spain: $52.4 billion (3.4%)
11. Belgium: $52.3 billion (3.4%)
12. Czech Republic: $51.8 billion (3.3%)
13. Sweden: $31.1 billion (2%)
14. Hungary: $31 billion (2%)
15. Russia: $30.6 billion (2%)
Over seven-tenths (71.3%) of German exports in 2018 were delivered to the above 15 trade partners.

Via its 12.4% gain from 2017 to 2018, China posted the fastest growth among the top importers from
Germany.
In second place was Italy (up 11.8%) trailed by Poland (up 11.3%), Czech Republic (up 10.9%) then
Hungary (up 10%)
Russia posted the smallest growth in demand among Germany’s top importers via a 1.9% gain year
over year.

CURRENCY USED IN FOREIGN BUSINESS

Germany is a part of Euro zone and operates using the Euro (€). The Mark was one primary currency
of the country in 2002, when it was replaced by Euro (€).

TRADE POLICIES
Trade Barriers
Germany's regulations and bureaucratic procedures can be a difficult hurdle for companies wishing to
enter the market and require close attention by U.S. exporters. Complex safety standards, not normally
discriminatory but sometimes zealously applied, complicate access to the market for many U.S.
products. U.S. suppliers are well advised to do their homework thoroughly and make sure they know
precisely which standards apply to their product and that they obtain timely testing and certification.

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Import Tariff
The TARIC (Tarif Intégré de la Communauté), is available to help determine if a license is required
for a particular product. Moreover, the European Commission maintains an export helpdesk with
information on import restrictions of various products.

Many EU member states maintain their own list of goods subject to import licensing.

For example, Germany's "Import List includes goods for which licenses are required, their code
numbers, any applicable restrictions, and the agency that will issue the relevant license. The Import
List also indicates whether the license is required under German or EU law.

TARIFF RATES OF GERMANY

A 19% (7% on agricultural products and other exceptions) Import Turnover tax is imposed, aiming at
treating equally German products which are subject to a 19% VAT. List of tariffs and local taxes that
apply to your product on our service Customs Duties and Local Taxes.

PRICING STRATEGY OF GERMANY

Germany has become more price-conscious, especially in consumer goods areas. Consequently, price
is increasing in importance as a competitive factor, but quality, timely delivery and service remain
equally important, especially in B2B relations. Do not underestimate the importance of quality for
German businesses and consumers! In buying decisions, it often trumps all other factors including
price. Just take a look at some consumer research conducted by Google – of the 5 countries analyzed,
Germany has the lowest average number of apps installed per smartphone, yet it has the highest
average number of paid apps. Germans tend not to be afraid to pay for things, as long as they are worth
paying for. As quality ranks so high in their books, when launching a new brand or product in
Germany you’d do well to put simple and fast communication channels in place which allow for
conversation, questions and complaints. You’ll find that German people will rarely hesitate to state
their opinions, both positive and negative, in public places like app stores or online forums.

PRODUCT STRATEGY OF GERMANY

The Germans are not particularly well known for their tendency to take risks. They like to be well
informed before making decisions. Whatever industry you are working in, think hard about trust
elements when designing for a German audience. Despite the widespread assumption that all Germans
understand English, this is not the case, especially if your target market is in the upper age groups. It is
claimed that over 60% of the German population speak English, but this definitely does not mean that
you should not invest effort into localizing your product. Just like most non-English natives, the
Germans are still more comfortable getting information in their native tongue, so a German-language
website, blog and social media accounts will add value to your strategy. Products and services which
have clear benefits, offer value for money and are of high quality are likely to succeed in Europe’s
largest consumer market.

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BUSINESS ETHICS (DOING BUSINESS WITH GERMANS)

One of the highest praised traits in German business ethics is the ability to have personal integrity and
to be loyal to your associates. Backstabbing someone, lying or corruption are not well received from
the average German. Germans love their work and that being employed and working hard are core
principles in the self-confidence of a German person.

1. Keep feelings to yourself. Reliability and integrity are more important than emotions in business.
2. Keep small talk to a minimum. Germans like to get down to business quickly.
3. Germans tend to work long hours, although strong unions mean working hours are technically
strictly regulated.
4. Be punctual, above all else. Even being a few minutes late is considered very rude, while letting a
meeting run over schedule is considered inefficient.
5. Take a long-term view. Germans prefer to be methodical than to rush a project.
6. Stick to an agenda. Meetings will go through a schedule, point by point.
7. Introduce yourself. Explain why you are there, mention your professional credentials and
experience.
8. Keep presentations concise, run to time and build in time for questions at the end. Expect these to
be detailed and try to anticipate in advance, so you can have answers ready.
9. Prepare to be interrupted. Germans do not consider it rude to ask a question during a presentation
if a technical point needs elaborating on.
10. Be direct. Germans appreciate clarity, honesty and respect. They are direct communicators and
value a person who sticks to their word.
11. Appreciate process. Germans have a strong desire to do things the correct way, whether this means
a technical task or a social function. Deviating from the norm is not appreciated.
12. Keep standards high. The features and performance of a product is more important than its look or
image, although Germans do have a strong eye for aesthetic appeal as well.
13. Understand the social fabric. Society is highly structured and life is conducted according to a set
of rules, right down to something as simple as the ritual of greeting a shopkeeper when you enter a
shop.
14. German businesses are hierarchical, usually run by a hands-on board of directors.
15. Job positions are compartmentalized and roles are clearly defined.
16. Expect many layers of management and a complex system of decision makers, some of whom will
be specialists from outside the company.
17. Do not expect to come across a nation of entrepreneurs; most Germans are in employment, rather
than self-employed.

SUMMARY
As Europe's largest economy and second most populous nation (after Russia), Germany is a key
member of the continent's economic, political, and defense organizations. The most important sectors
of Germany's economy in 2015 were industry (25.9 %), public administration, defense, education,

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human health and social work activities (18.2 %) and wholesale and retail trade, transport,
accommodation and food service activities (15.8 %). Germany's main export partners are France, the
US and the UK while its main import partners are the Netherlands, France and China.

The German economy - the fifth largest economy in the world in PPP terms and Europe's largest - is a
leading exporter of machinery, vehicles, chemicals, and household equipment and benefits from a
highly skilled labor force. Like its Western European neighbors, Germany faces significant
demographic challenges to sustained long-term growth. Low fertility rates and a large increase in net
immigration are increasing pressure on the country's social welfare system and necessitate structural
reforms.

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