S.W.O.

T-Germany 1

Executive Summary

Team Germany pulled together information from multiple sources to understand

Germany’s capability as a base for business operations. The analysis of Germany as a business

atmosphere revealed a number of strengths, weaknesses, opportunities, and threats. The report

focuses on those considered the most significant to the country as a location for business

operations.

Strengths

Three of Germany’s greatest strengths are its infrastructure, its large and strong economy,

and its non-corrupt business environment. The highly advanced system of railways, high-speed

roadways, airports, and seaports add great value to this centrally located European country.

These factors prove to be of great benefit to the economy, as they are among the world leaders in

both imports and exports. These all come together to form a very safe, non-corrupt business

environment.

Weaknesses

Even though Germany is a complete world power, in the top 5 in nearly every category,

they still have weaknesses that affect their country. A few of Germany’s more prominent

weaknesses are their taxes and tariffs, brain drain, and their high priced necessities. Their high

tax system gives many people healthcare and other positive aspects, but the taxes are at times

unbearable for some German citizens. This high tax is reason for another weakness, the brain

drain, which is a problem that most all high taxed countries in Europe are facing. Lastly, the high

prices that the citizens have to pay for their needs and necessities affect them drastically.
S.W.O.T-Germany 2

Opportunities

Germany is a land full of ideas and opportunities. Germany sees itself as a pioneer in

environmental and climate protection. Germany’s education system is one of the worlds most

preferred by foreign students, creating a cutting-edge of international research with a constant

source of new patents, and driving a strong business environment. Another area of opportunity

for Germany is their new political agenda that is driven by the people. Also, healthcare is an

opportunity that will make for a strong, productive workforce.

Threats

Where there are opportunities, there are also threats. Japan’s recent nuclear plant

explosion affected Germany in several aspects. Since the nuclear plants in Germany have similar

architecture and structure like the plants in Japan that were shut down, Germany has had to

temporarily shut down seven of their seventeen nuclear plants. This is almost half of their

nuclear energy source that has been shut down and nuclear energy is a fourth of the energy that

Germany consumes. Not only has the explosion of the nuclear plant affected one of Germany’s

sources of energy, it has also altered the people’s views of the issue and has changed the tradition

and status quo of the politics for the county.

Conclusion and Recommendations

With careful analysis of the strengths, weaknesses, opportunities, and threats of

Germany, Team Germany concluded that any business specializing in “green” energy or product

globalization would definitely benefit from doing business in Germany. With the facts given,

Team Germany predicted that the cost of energy will continue to increase, thus giving way to a

new “green” philosophy that Germany has already started to implement. Team Germany also
S.W.O.T-Germany 3

believes that the strong infrastructure throughout the country and the non-corrupt business

environment will provide the stability needed for Germany to remain a world power.

Introduction

Germany offers several benefits that are very helpful for incoming business operations.

Yes, they have weaknesses and threats, but they do not overshadow their strengths and

opportunities as a country. Team Germany researched the benefits of Germany’s diverse

infrastructure, strong economy, non-corrupt business environment, and their drawbacks of high

taxation and costs, and immigration. We also researched their opportunities in “green”

technology, education, politics, and health care, along with the threats of the recent nuclear crisis

in Japan.

Report’s Scope

Germany has been an established world power for many years now. Like many other

countries, Germany has been threatened by the recent natural disaster in Japan. Japan’s natural

disaster caused many of their nuclear power plants to melt down. As a result, Germany now

wants to become a world leader in “green” technology. Even before Japan’s crisis, Germany saw

this as an opportunity and was working to accomplish this goal. Team Germany focused on the

foundations of their large economy and infrastructure as positive aspects for business operations.

Germany’s weaknesses of high taxation and costs of necessities are things that affect many

different countries as well, but they do not affect their overall stability as a business

environment.
S.W.O.T-Germany 4

Research Methods

Resources used for the SWOT analysis of Germany include library references and on-line

sources:

 CIA The World Factbook

 Date files

 Database articles

 Statistical figures

 Online news articles

 Government publications

Team Germany collected and analyzed publications and documents from library resources and

online resources to determine aspects of Germany’s business environment.

Germany’s Strengths

Germany is well-known for their diverse infrastructure and is the model for other

country’s transportation systems. Their many railways, roads, airports, and seaports provide a

great base for their strong economy and business environment. Germany’s strengths are:

 Germany has a very diverse and up to date infrastructure

 Germany has a large and strong economy

 They have a non-corrupt business environment

S.W.O.T-Germany 5

Diverse Infrastructure

Infrastructure is a major advantage for any business to maintain or create new operations

in Germany, which has occupied the top spot in infrastructure in the World Economic Forum’s

Global Competitiveness Report since the year 2007. The country’s optimal location, with over

half of the European Union’s population living within 500 kilometers of its borders, is

indisputable. More goods pass through Germany than any other European country, and nearly

all of Europe is within three hours flight time or 24 hours by road (Germany’s Seaports, 2011).

The very highly advanced system of railways, high-speed roadways, airports and seaports

coupled with effortless accessibility to telephones and internet makes communication and

shipping an easy task within or outside of the country.

German rail systems are no comparison to that in the United States. Along with normal

rail lines, the Deutsche Bahn AG offers a network of high speed trains that make rail travel a real

alternative to flying (Business Infrastructure, 2010). All railways in Germany add up to a total of

48,215 kilometers of track, which ranks among the top 5 countries worldwide (Germany

Infrastructure Report, 2011). Germany’s central location in Europe also allows for good rail

connections with its neighboring countries, as you can see in Figure 1.

S.W.O.T-Germany 6

Figure 1 Map of Germany’s Diverse Infrastructure

High Speed Rail Lines |    Fast Inter-City Rail Lines |    Normal Rail Lines

Source: Germany Rail Travel Map - European Rail Guide, 2011

As you can see in Figure 1, Germany’s rail system is loaded with stations and provides

access to connections and travel to all of the surrounding countries.

Even though the railways are already superior to most, the German transport company

Deutsche Bahn announced two different railway improvements in July, 2010. The first
S.W.O.T-Germany 7

improvement being modernization of rail stations and the purchase of new electric trains as well

as replacing some high speed trains with newer models. The second improvement would be the

development of a new railway link connecting Switzerland and Germany. This link is expected

to become operational by the end of 2014 and reduce travel time between Munich, Germany and

Zurich, Switzerland by 40 minutes (Germany Infrastructure Report, 2011).

Like the railways, it is tough to find a comparison to German roadways. Roads cover

644,480 kilometers of Germany, with 12,645 of those kilometers being expressways. This ranks

11th in the world (important to note that all roadways in Germany are paved, whereas unpaved

roads also count toward other countries totals) (CIA The World Factbook, 2011). The Autobahn,

Germany’s famous highway, is kept in excellent condition and is very well developed (Business

Infrastructure, 2010). While it has a reputation for simply having no speed limit, this is only true

on about 40 percent of the roadways. That does not account for shipping trucks, or semi-trucks,

which are always under speed restrictions (About.com,2008). Like the railways, construction

projects continue to improve the Autobahn, with the latest being the A4 “A-Modell” motorway

section in central Germany opening a year ahead of schedule (Germany Freight Transport

Report, 2011).

Germany’s airports provide a reliable source of transportation when railways or roadways

are not an option, such as trans-continental travel or shipping. Germany is home to 549 airports

which rank them in the top 15 world-wide (CIA The World Factbook, 2011). Direct flights to

and from the United States are available at six different German airports, as shown in Figure 2.
S.W.O.T-Germany 8

Figure 2

German Direct Flights to 10 United States Cities

Airport
Atlant Chicago Los Angeles Dallas Denve Las New York City Miami Houston Newark
a r Vegas
Berlin  

Düsseldorf      

Frankfurt          

Hamburg  

München      

Stuttgart 

Source: Business Infrastructure -- U.S. Commercial Service Germany, 2008

Figure 2 shows that over 25 direct flights to and from Germany are available from 10

different United States airports. Obviously, international travel by air is made relatively easy by

the large number of technologically advanced airports that Germany possesses.

Seaports and inland waterways are also very advantageous to Germany. Sixteen major

seaports and the world’s number one inland port at Duisburg, Germany serve as important hubs

in international transport chains. These ports handled a record 318 million tons in 2008 and help

safeguard jobs and boost value creation. Within the industry, the largest sector is the merchant

shipping sector, which accounts for around 21 percent of the maritime economy. Over the past

15 years, the German North Sea ports have grown at a rate of almost double that of any other

significant players in the region. Many ports around the world have been affected by the

dramatic economic slowdown, but Germany’s ports have been among the first to emerge with
S.W.O.T-Germany 9

strong results across all sectors and maritime regions. The German seaport infrastructure will

continue to improve with the opening of a deep-water port in Wilhelmshaven, Germany that will

begin operation in the year 2012 (Germany’s Seaports, 2011).

Communications via telephone and internet are virtually effortless in Germany. The

country boasts 48.7 million telephone users, which ranks 3rd behind only China and the United

States. Internet hosts rank 4th in the world with 21.729 million, and users rank 5th in the world

with 65.125 million (CIA The World Factbook, 2011).

Large and Strong Economy

Germany is centrally located in Europe and has the largest economy in Europe (Germany

Autos Report, 2011). They have the fourth largest economy in the world, in terms of purchasing

power parity (PPP) (CIA World Factboook, 2011). This is excluding the European Union (EU),

because Germany is actually a part of the European Union. Germany has an almost unrivaled

reputation for world class quality in manufacturing goods (Germany Auto Report, 2011). Their

high quality goods are what make Germany’s economy so large and strong. German consumers

are prepared to pay for high-quality goods (Germany Food and Drink Report, 2011). In addition,

Germany is the number two exporter in the world. Their US dollar amount of merchandise

exports on a free on board basis is $1.337 trillion. Germany’s main export goods are machinery,

vehicles, chemicals, metals, and textiles. Their main export partners are France and the United

States. In contrast, the United States is ranked number four with $1.27 trillion worth of exports

(CIA The World Factbook, 2011). Figure 3 shows how Germany ranks out of the top three

exporting countries.
S.W.O.T-Germany 10

Figure 3
Germany Ranks Second in World Exports
Rank Country Exports

1 China $1.51 trillion

2 Germany $1.33 trillion

3 United States $1.27 trillion

Source: CIA The World Factbook, 2010

According to the Central Intelligence Agency, Germany is ranked number three in

imports with $1,120,000,000,000 of goods imported. Machinery, vehicles, chemicals, foodstuffs,

textiles, and metals are their main imported goods. Germany’s main import partners are the

Netherlands, China, and France (CIA World Factbook, 2011). Germany’s export and import

rankings do not include the European Union (EU). As you can see, in Figure 4, Germany is

ranked below the United States.

Figure 4
Germany Ranks Third in World Imports
Rank Country Imports

1 United States $1.90 trillion

2 China $1.30 trillion

3 Germany $1.12 trillion

Source: CIA The World Factbook, 2010

S.W.O.T-Germany 11

All things considered, Germany’s large and strong economy has been built by their mass

numbers of exports and imports, and by their reputation for world class quality in manufacturing

goods. Their large and strong economy provides stability for business operations, because they

already have a well established and dependable country.

Non-Corrupt Business Environment

Consequently, Germany’s powerful economy provides for an inviting business

environment. Transparency International ranked Germany 14th in their 2010 ‘Corruptions

Perceptions Index’. The ‘Corruption’s Perceptions Index’ measures the perceived levels of

public sector corruption in 178 countries (Corruption Perceptions Index, 2010). Their ranking

proves that their private and public sector institutions are strong, and free from corruption

(Germany Auto Report, 2011). Furthermore, in June of 2010, Germany came in 22nd in the

World Bank’s ‘Doing Business’ ranking (Economy Rankings, 2010). They have moved up 5

places since 2009 (Germany Auto Report, 2011). Their high rankings show that starting and

operating local firms in Germany is very encouraged (Economy Rankings, 2010). In addition,

German labor is known to be very productive and skilled (U.S. Department of Commerce, 2011).

Like the United States, Germany has had a very high unemployment rate, but they have

significantly lowered their unemployment rate in 2011. Germany’s unemployment rate has

dropped to 7.4% in 2011(CIA The World Factbook, 2011). Even though their unemployment

rate has dropped, there are still many people that are available to work. This drop in

unemployment points out that Germany’s economy has improved over the years. As you can see,

in Figure 5, Germany’s unemployment rate fell over a 9 year period.

S.W.O.T-Germany 12

Figure 5
Germany’s Average Unemployment Rate Falls Over 9 Years

Year Average Unemployment Rate

2002 9.8%

2003 10.5%

2004 10.6%

2005 11.7%

2006 10.8%

2007 9.2%

2008 9.0%

2009 7.80%

2010 8.20%

2011 7.4%

Source: U.S. Department of Commerce- Germany Economy and Business Practices, 2011
All in all, Germany’s non-corrupt business environment is extremely important for

incoming business operations. Germany encourages new businesses and has an available

workforce that is ready to labor.

Germany’s Weaknesses
S.W.O.T-Germany 13

Germany has weaknesses that are common with most other countries in the European

Union. Citizens face the burden of taxation and costs, while the country faces a loss of skilled

workers through emigration. Germany’s strengths are easily able to make up for these

disadvantages. These predicaments will probably always be around. The weaknesses of Germany

are:

 Germany’s high taxes put on its citizens

 The brain drain causing citizens to emigrate

 The high costs for needs and necessities

High Taxation and Tariffs

Germany has a higher tax rate than most countries in the world. That being said, it has it

upsides and downsides. On the upside, it helps the country as a whole progress and keeps it

moving up in the world’s observation. But even though people are being offered these great

things such as the healthcare system, it doesn’t mean that they are all using the average amount

of care given or getting as much back as they give, making it hard to afford things that they need

at any given time. Around 75 percent of the population is capable of getting this public health

insurance, because they make under the 48,000 EUROS per year, which is the cut-off (Reinhard,

2009).

The corporate tax rate is between 30-33% which is higher than every country besides

France, who has a tax rate at strictly 33%. The United States has a corporate tax rate between 15-

35%. If a business was brought to Germany from the United States, the business would definitely

suffer from the jump to a 30% tax rate. The business would either have to sky rocket their prices

of goods or learn to deal with the profit cut (World Tax Inc., 2011).
S.W.O.T-Germany 14

Not only does Germany have a high tax rate, but they also have a Value Added Tax

(VAT). According to businessdictionary.com, they describe the VAT as “Indirect tax on the

domestic consumption of goods and services, except those that are zero-rated (such as food and

essential drugs) or are otherwise exempt (such as exports). It is levied at each stage in the chain

of production and distribution from raw materials to the final sale based on the value (price)

added at each stage. It is not a cost to the producer or the distribution chain members, and

whereas its full brunt is borne by the end consumer, it avoids the double taxation (tax on tax) of a

direct sales tax” (Business Dictionary, 2011). The VAT was introduced by the European

Economic Community (now the European Union) in the 1970s.” The Value Added Tax is 19%

in Germany but it stays at an average basis or even lower than most other European countries.

Figure 6 compares Germany and a couple of its competitors, including France which is one of

the only countries with a higher tax, and the United States which is significantly below them.

This is why the taxation is considered one of the largest weaknesses to bringing in a business to

Germany (World Tax Inc., 2011).

Figure 6

Tax Rates Exceed Competitive Countries

Country Tax VAT
(Value Added Tax)
Germany 30-33% 19%
France 33% 19.6%
Ireland 12.5% 21%
United Kingdom 28% 20%
United States 15-35% NA
Source: WORLDWIDE-TAX INC., 2011
S.W.O.T-Germany 15

Brain Drain Weakens Workforce

Most all European countries are similar with one particular weakness, that weakness is

the brain drain. According to the online dictionary Merriam Webster, they describe the brain

drain as “the departure of educated or professional people from one country, economic sector, or

field for another usually for better pay or living conditions”(Merriam Webster, 2011). For a

nation that invented the term “guest worker” for its immigrant laborers, Germany is facing the

sobering fact that record numbers of its own often highly-qualified citizens are fleeing the

country to work abroad in the biggest mass exodus for 60 years. Figures released by Germany’s

Federal Statistics Office showed that the number of Germans emigrating rose to 155,290 last

year — the highest number since the country’s reunification in 1990 — which equaled levels last

experienced in the 1940s during the chaotic aftermath of the Second World War” (Mitchell,

2007).

Everyone has their own reasons and own beliefs of why people are leaving to go to

countries such as Switzerland, Austria, and the United States, but not all reasons are justified;

here are a few examples from past German citizens that have moved away. Daniel J. Mitchell

interviewed a man by the name of Claus Boche. Claus Boch is a 32 year old executive, who left

the West German city of Paderborn more than two-and a half years prior to the interview. He

now lives in Zurich, moving there to take up a job with a Swiss management consulting firm.

Claus Boche says “Nearly everything is less bureaucratic and more go ahead than in Germany,”

he added, “I also pay about 40 percent less tax. I have no plans to go back” (Mitchell, 2007).

Another example, interviewed again by Daniel J. Mitchell goes by the name of Thomas Bauer,
S.W.O.T-Germany 16

he is a labor economist from Essen, which gripes about Germany’s employment conditions.

Thomas say’s “Germany is certainly not attractive when compared to other countries in Europe,”

he said. “The taxes are too high, the wages are too low and feelings of jealousy towards high-

income earners are widespread. This is a special deterrent to the highly qualified” (Mitchell,

2007).

Figure 7 describes just a small statistic of how many German citizens left Germany in

the year of 2007. The top three countries moved to is Switzerland, which is on the border of

Germany, along with Austria, which is another border country, and also with the United States.

Where are Germans Immigrating to?

Rank Destination # of People
1 Switzerland 18,000
2 United States 13,425
3 Austria 9,309

Figure 7

Source: Mitchell, 2007

High Costs of Necessities

Germany’s government is important in the Euro-zone, being the biggest economy in

Europe. According to the Federal Statistical Office in Germany “inflation in Germany will

contribute significantly to inflation in the Euro-zone and the behavior of the European Central

Bank. High or rising inflation acts as a signal to the ECB to raise interest rates, an action which

will result in the strengthening of the Euro”(Forex Trading, 2007). With Germany having the

highest economy in the European Union (EU), and there location being directly in the center, it
S.W.O.T-Germany 17

proves that whatever affects Germany, will obviously affect the other countries around it. If

things are looking discouraging and inflation is rising in Germany, then it’s probably true

everywhere around Germany as well. In the past year, Germany’s CPI, which is the Consumer

Price Index, has almost doubled. Figure 8, shows a graph from April 2010, to April 2011

explaining it in more detail (Trading Economies, 2010).

Figure 8

Source: Trading Economies, 2010-11

Another high cost weakness to the economy in Germany is the Gasoline prices. Germany

is a huge importing and exporting country and it is in one of the best positions for transportation

with its great infrastructure which Germany is hugely proud of and known for. But the country’s

many ways of transporting goods is not a problem; it’s the cost to do these things that will and is

being affected the most. According to the CIA The World Factbook, Germany is ranked 8th in

having the most expensive gas prices at $5.57 a gallon for gasoline in USD, this is around

Frankfurt, Germany. Another downfall is that they are only producing 156,800 barrels of oil a

day, which is ranked 45th in production. While they are ranked 8th in consumption, at 2.437
S.W.O.T-Germany 18

million barrels a day, it’s crazy how much more they use then they produce, resulting in a lot of

money put back for strictly importing oil. This is a major weakness because of the wide gap in

between the production and consumption levels that Germany will have to think of ways in the

future to fix or change the way they go about transporting and moving goods (CIA The World

Factbook, 2011).

Germany’s Opportunities

Germany is a country that is well known for its superior quality in manufacturing.

Combining its desire to be a leader in “green” technology with training and local resources

makes it an ideal location for future endeavors. The strong trade ties Germany has with many

other major consumer driven countries also makes Germany a great business venture. Germany’s

many opportunities are driven by:

 Germany’s negative views on nuclear power

 Their citizen driven political agenda

 Germany’s educational system that drives business

 Their health care system allows workers to become more productive

Green Energy Emerging

The citizens of Germany have had a long standing dislike for nuclear power. In the

1980’s, protestors banded together to have nuclear weapons removed from their shores. From

this deep rooted desire from the people the government had proposed a time frame to be nuclear

power free with an original time frame of 2020 for this to have been a reality. Because of

pressure from business owners of nuclear plants this time frame was pushed back to 2050 (Facts
S.W.O.T-Germany 19

About Germany, 2011). Now with events happening around the world such as the nuclear power

plant failure in Japan, the desire to be nuclear power free is now renewed. This is shown with

the upset in a recent vote of a couple of major states. The Green Party gained enough ground to

control the state of Baden-Wurttemberg while gaining significantly in Rhineland-Pfalz. With

this change of power, it appears that the public is in an ever increasing drive to become more

natural and safer with a move from a relatively inexpensive power source (coal) to a renewable

alternative.

Germany is considered a pioneer in developing renewable energies. Since 1990,

Germany has reduced its greenhouse gas emissions by more than 23 percent. This is in advance

of the planned time-line imposed to cut greenhouse gas emitted into the atmosphere by leading

industrial nations. Germany currently gets its electric power from multiple sources. These

sources include approximately 40% coal with its carbon footprint, 23% nuclear with its obvious

current threats, 17.4% in the form of renewable energy, with the remainder being made up of

other sources such as natural gas. Greenhouse gas emissions from road traffic have been

decreasing since 1999, despite a significant increase in traffic, and are now below the 1990 level.

The use of catalytic converters is partly responsible for roughly 50 percent reduction in nitrous

oxide emissions. Renewable energies now make up 10.6 percent of all German energy

consumption and as much as 17 percent of electricity consumption. By 2020 it is intended to

systematically increase it to at least 30 percent. Germany has implemented an Integrated Energy

and Climate Protection Program to further this long term ambition. The measures in the

Integrated Energy and Climate Protection Program serve to protect the environment. They also

work to promote the development of innovative future industries, which in turn will be a real job
S.W.O.T-Germany 20

creator. Almost one solar cell in five and almost every third wind turbine comes from Germany

(Facts about Germany, 2011).

When looking at other countries and where they get their electric power, you can see how

Germany is better poised for the future of renewable energy than many other top countries.

Germany compares well with other nations around the world who heavily rely on nuclear power,

such as France with about 70% of its electricity coming from nuclear. Japan and the United

States both rely heavily on non renewable sources at 80% and 86% respectively (CIA The World

Fact Book and National Geographic, 2011). Given that one of the greatest problems with

renewable energy is that its production cannot be predicted Germany is attempting to tackle this

problem head on. Germany in its ever growing desire to improve its use of renewable energy is

working on what the BMWi has termed E-Energy (a smart grid similar to the internet) where

energy production is monitored and key users are informed when energy cost are down, thereby

reducing consumption during lulls in renewable power production (Federal Ministry of

Economics and Technology, 2011). With this system power can be rerouted to where it is

needed making renewable energy more practical. This system is in the test stages in a few of the

states in Germany.

Citizens Drive Politics

This drive to improve on renewable energy could not happen without the support and

assistance of the government. The German federal state is a complex entity. It consists of a

central Federal Government and 16 federal states. As mentioned before the Green Party has

gained control of one of the more influential states. The German party system is quite

transparent. The Greens belong to the European group of green and ecological parties (Facts
S.W.O.T-Germany 21

About Germany, 2011). In the SPD and CDU, the two main parties, almost every third and

fourth member respectively is female. With this latest election the voice of the people seems to

be clear. A long term change in power production is needed to protect the environment for

future generations. The Christian Democratic Union of Germany is a major force in the German

party system. The Social Democratic Party of Germany is the other major force in the German

party system. The Left Party is the most recent important political party in Germany. It is

particularly strongly represented in the five federal states that acceded to the Federal Republic on

unification. The German electoral system makes it very difficult for any one party to form a

government on its own. By voting for a particular party citizens thus express on the one hand a

preference for a specific party alliance, and on the other determine the balance of power between

the desired future partners in government (Facts about Germany, 2011). The Bundestag is the

German parliament. The Bundestag resemble to some extent Congress in the USA, the prototype

of a working parliament. There are three pan-state functions the individual federal states

exercise on their own: schooling and tertiary education, internal security, including policing, as

well as the organization of local self-government. With this emphasis within each state on

education it is no wonder competition is high.

Education Drives Business

Most people are well-educated and enjoy a high standard of living, as well as sufficient

freedom to be able to plan their lives as they themselves see fit (Facts about Germany, 2011).

Education, science and research play a central role in Germany. In Europe, free of borders and a

world of globalized markets, education lays the basis, enabling Germany to exploit the

opportunities open borders and world-wide knowledge networks offer. Although Germany like

so many other countries, thought they had a very good educational system, they had that put to
S.W.O.T-Germany 22

the test in 1985 when standard testing was conducted among many countries. This was a wakeup

call to many nations and Germany revamped its own system to improve its overall rating. In

2000 PISA (Program for International Student Assessment) was formed. This program test 15

year olds from each country in areas of Science, Math, and Reading. The test is only given every

three years with special emphasis on one of the areas. On the latest test given in 2009 Germany

exceeded the average PISA score in each area as seen in Figure 9.

Figure 9

PISA Scores Exceed Average in 2009

Country Science Math Reading

Germany 520 513 497

France 498 497 496

United States 502 487 500

OECD Average 501 496 493

Source: OECD, 2010

In the area of science Germany scored 520, 19 points above the OECD average. In math

Germany scored 513, 17 points above average. And in reading Germany scored 497, 4 points

above average. These scores have been continuously improving in recent years, with a strong

chance of continuing this trend. The German education and university system is undergoing a

profound process of renewal that is already bearing fruit.

These results are attributed to the educational system in Germany that is classified as a

Duel System because it combines apprentice training along with preparatory classes for higher
S.W.O.T-Germany 23

learning. According to Rheinhold Weiss, Director of Research at the BIBB, “Germany is on the

right track because there are increasing numbers of full-day schools, more support for early

childhood education, and more data on the performance of the students and the system.”

(OECD, 2010). This increased support and data collection working within the Duel System of

Education can do nothing but improve the overall quality of the workforce in Germany. The

Duel System in Germany prepares students in a wide variety of ways to become better workers

by giving students specialized skills, work ethics, and team and individual training to solve a

variety of actual problems. Part of this is accomplished because of the rigorous standards used to

select teachers. Only the top third of graduates are even considered for teaching positions, and

they still have greater training requirements in many other fields. The policymakers and

universities have taken the initiative, with a series of reforms to adapt the university system to

the new international standards. It is safe to say that the education system is the section of society

undergoing the most major changes. Anyone wanting to study in Germany is able to choose

between 370 higher education institutions that are spread across the entire country (Facts about

Germany, 2011). This is just one example of the educational opportunities available there. The

state of North Rhine-Westphalia alone has over 18 universities and institutes entitled to award

doctorates, 33 universities of the applied sciences and universities not entitled to award

doctorates, and 9 academies of art and music (Facts about Germany, 2011).

With regard to doctoral students as well Germany is in a top position: 2.3 percent of an

academic acquire this level of qualification. The technical universities have a sterling reputation

as the forges of German engineering know-how and are especially popular among foreign

students. These universities collaborate closely with corporations. This makes for a well

balanced workforce. Approximately 200 universities of the applied sciences also conduct
S.W.O.T-Germany 24

research, albeit with a strong focus on potential applications and industry’s needs (Facts about

Germany, 2011). Since 2010 courses at German universities have for the most part been adapted

to the internationally recognized Bachelor’s and Master’s degrees. Between 2010 and 2013

federal government spending on education and research is set to rise by a total of EUR 12 billion.

The aim is to invest ten percent of GDP in this field by 2015 (Facts about Germany, 2011). For

companies that are looking globally for expansion Germany is a great place to begin. With

regard to trade patents, Germany is in third place after the USA and Japan (Facts about Germany,

2011). Almost 50 percent of 24-year old men and no less than 27 percent of women of the same

age live at home. One reason for staying at home so long is that more and more young people

are staying in the education system for longer (Facts about Germany, 2011). Germany appeals to

young people from all over the world as a place to study. About 240,000 foreign students are

enrolled at German universities, 70 percent more than in 1995(Facts about Germany, 2011).

These numbers are only expected to rise in the future. Germany has taken a path that has made it

a modern immigrant society with increasingly ethnic cultural diversity, and has increased its

efforts to integrate the migrants in the nucleus of society. This drive in education is matched by

the drive in healthcare.

Healthy Workers Improve Productivity

Germany has a social healthcare system where every citizen is covered who meets the

basic standards. First, all German nationals are covered no matter what age. Second, foreign

workers working for companies in Germany who ascribe to the healthcare plan are covered.
S.W.O.T-Germany 25

This system is paid for by a combination of company contribution, and the workers contributions

themselves. It is subsidized by the government giving guaranteed coverage. The Basic Law

defines Germany as a welfare state. The welfare state requires the political system to take

precautions such that people are guaranteed a decent standard of material well-being in case of

unemployment, disability, illness and in old age (Facts about Germany, 2011). About 10.4

percent of the country’s gross domestic product is spent on health care – 1.5 percent more than

the average in the OECD member countries. With over four million jobs, health care is the

largest employment sector in Germany (Facts about Germany, 2011).

Germans in general have shown in recent years to be more health conscious with a

reduction in the per capita consumption of beer in the last 10 years. While the consumption of

wine (thought to be heart healthy) has increased. Smoking by adults is down but only by a small

percent. Germany also has Volk Fest Marches (walks of varied lengths through the countryside)

during many months throughout the year. These are social events that add to an exercise plan

that helps to keep the population healthier. Germany cuisine also has become far more varied and

health conscious, light and imaginative. In 2008, sales of organic food totaled some 5.8 billion

Euros. Organic supermarkets offer a blend of what is becoming increasingly important to

Germans: Enjoyment and responsibility, lifestyle and a clear conscience (Facts about Germany,

2011). The healthier workers are the less sick days they take, and the more productive they

become.

Germany’s Threats
S.W.O.T-Germany 26

Along with great opportunities come threats that hinder Germany. Germany faces several

threats that are detrimental the health and stability of its country. With Japan’s recent natural

disaster affecting many countries, Germany now has threats arising with:

 The cost of energy going up due to nuclear shut down

 Political change that could start a political revolution

Nuclear Energy Shut Down Threatens Economy

To begin with, since Japan’s earthquake and nuclear plant explosion; Germany has now

shut down seven of their seventeen nuclear plants due to Japan’s recent events according to

Juergen Baetz of the Associated Press for MSNBC (Baetz, 2011). The seven plants are shut

down for inspection since the plant’s structure and architecture have great similarities to Japan’s

nuclear plant that exploded (Baetz, 2011). For Germany that becomes a big threat, because two

thirds of Germany’s imports comes from energy. Germany only produces a third of their energy

according to CIA The World Factbook (2011). Nuclear energy is about twenty five percent of

their energy consumption. Most of their energy consumption comes from fossil fuels, according

to earthtrends.org (Earthtrends, 2003). As a result, of fewer energy sources, the price will be

affected. If the demand for a product goes up, then the price will go up and vice versa. (See

Figure 10)

Figure 10
Sources of Energy Consumption
S.W.O.T-Germany 27

Source: Earthtrends, 2003

Not only does it affect Germany’s main energy source, they also consume most of their

energy in the industry sector (Earthtrends, 2003). If their main energy source is going to cost

them more it will hurt Germany in a big way, because they are the second largest exporting

country in the world. According to the earthtrends statistic compilation, Germany cannot change

how they use most of their energy consumption in the industry sector, because that is their main

source of income for their country. Germany imports two thirds of their energy, according to the

statistics from the CIA World Factbook. If Germany has to pay more for their energy to be

productive, then they will. (See Figure 11)

Figure 11
Mass Energy Production and Consumption
S.W.O.T-Germany 28

Source: Earthtrends, 2003

In addition, the nuclear crisis will hinder Germany’s transportation; which Germany

excels in because of their up to date and top notch infrastructure. The problem will also affect

their residential lives as well, because the third highest energy consumption by sector would be

the residential sector (Earthtrends, 2003). This is the energy they use to live in their homes. (See

Figure 12)

Figure 12
Sectors of Energy Consumption

Source: Earthtrends, 2003

If the cost of energy does go up for Germany, because of supply and demand, then not

only will Germany’s top three sectors (the industry sector, transportation sector, and residential
S.W.O.T-Germany 29

sector) would be affected but because they are so close in numbers, if you look at Figure 12, it

would affect the way they eat, work, and live. If Germany cannot produce what they are good at

for their country’s income, then they cannot pay for their own energy consumption in their

homes, if the cost of traveling becomes more expensive than goods and services would cost

more. It would also be difficult for the people of Germany to live. Furthermore, the people of

Germany will be concerned about the unforeseen future if the Green Party becomes a major

political party of their country.

Nuclear Energy Shut Down Threatens Politics

After fifty eight years of being in control of Baden-Wurttemberg, the Christian

Democratic Union lost popular votes to The Green Party (Ewing, 2011). Before this past

election, Germany had always been ruled by three major parties; the Christian Democratic Union

(CDU), the Christian Social Union (CSU), and the Social Democratic Party (SDP). Along with

the three major parties there are three minor parties; The Greens, Free Democratic Party (FDP),

and The Left Party (BBC News, 2005). Now that the Green Party has the popular party in the

main capital of Germany and has also won Rhineland-Pfalz with thirteen percent of the popular

votes (Ewing, 2011). This is a problem, because after fifty eight years of tradition the country

has a new political party in charge of the capital and a sisterly state as well (Ewing, 2011). The

status quo has now changed after almost six decades of tradition. So the threat that Germany

faces is that they don’t know what to expect from the Green Party. They have never been in

charge and the people of Germany do not know what to expect based off of past statistics,

because none really exist. Plus the fact that The Green party is lead by a former communist

according to Jack Ewing of The New York Time of Europe (Ewing, 2011). Overall, the threat
S.W.O.T-Germany 30

that the people face is that they cannot foresee their future and must trust in a party to make them

strive through the future.

Summary

Team Germany has come to a conclusion that Germany’s strengths and opportunities

completely outweigh its weaknesses and threats. Germany’s different types of advanced

infrastructure, their non-corrupt and friendly business environment, and their revolution towards

the change in renewable resources, outweigh the threats that hinder Germany’s growth as a

country. Even though threats have occurred that alter Germany’s energy source of consumption,

the political affairs and people have now been driving more towards renewable energy versus

nuclear energy. Their opportunities in education and health care show promise that this already

strong country will continue to improve. The weaknesses that affect Germany are felt globally,

but they are, as a whole, not slowing the country’s growth and production at a significant level.

Strengths

After viewing the various aspects of Germany from many different perspectives, Team

Germany concluded that the country’s infrastructure, strong economy, and non-corrupt business

environment are its most prevalent strengths.

Germany’s infrastructure is very advanced and diverse, which allows for easy

transportation and shipping within the country as well as across its borders. The number of

readily accessible railways, airports, roads, and seaports are second to none and provide

Germany with the resources it needs to be a center for globalization.

S.W.O.T-Germany 31

The strong German economy, centralized around its infrastructure, continues to be among

the top exporters and importers of the world. Given its advanced infrastructure and high quality

of manufactured goods, the German economy has proved itself to be the strongest in Europe.

Helping to boost the strong economy is the very non-corrupt business environment.

Germany boasts an unemployment that is steadily falling after the world-wide recession and

continues to produce a labor force that is productive and skilled. According to the Corruptions

Perceptions Index, Germany’s business environment as a whole ranked in the top 15 world-wide.

Weaknesses

Germany is a much respected country among the European Union and among the entire

world. But yet the country still has its certain weaknesses, and the way that Germany decides to

handle these weaknesses will be the key to how long they can keep the success of their country

going. Team Germany has analyzed the country and was able to find a few setbacks that cause

problems with the economy and government of Germany.

The high taxes of Germany, and most of Europe for that matter, are a huge weakness for

what Americans are used to, when considering bringing or starting up a business overseas. The

VAT is at 19 percent which is already added on to the everyday goods that a consumer buys and

the corporate tax is at 30-33% which is almost double what some Americans have to pay.

Their high taxes bring up their next weakness, the brain drain. Brain drains happen in

many countries, it’s just not as big of a deal as it is in Germany. Their educated and highly

trained people that could greatly help the future of Germany are put in a bind, because the high

taxes and tariffs put on Germany just aren’t worth the money when they could do the same job in

another country and get paid sometimes up to 30 percent more. Germany is a great nation but
S.W.O.T-Germany 32

with these high taxes it’s hard for a person to see the greatness in it when they are getting under

paid.

As was said earlier, the high costs in Europe for gasoline is much greater than in the

United States; Europe has been paying quite a bit more for gasoline for years. With Germany’s

low production of only around 156,800 barrels a day, compared to its 2.437 million barrels of

consumption a day is extremely scary when you calculate how much they import.

These weaknesses will either make or break a country and Team Germany believes that it

will not hinder the Germany as a business environment.

Opportunities

With Germany’s drive in the advancement of Green Energy and the current affairs

happening worldwide, the opportunities for companies working with green technology has

greatly improved. The political atmosphere is being driven by the people to produce safe and

healthy alternatives to possible hazards that could come from continued use of nuclear power.

The educational system in Germany is one of the best in the world. It is providing a

strong workforce for the future. The educational system works with businesses to ensure

graduates are of the highest quality. Even with its high standard already in place it is still

working and continuing to improve.

Given the health care system in Germany a business can be assured of a workforce that

are both productive and happy. Germany is spending above average for health with over 10.4

percent. With over 4 million jobs related to healthcare, this is the largest employment sector in

Germany.
S.W.O.T-Germany 33

Threats

Along with most other countries dealing with the nuclear explosion disaster, Germany is

facing many threats to their country because of it. Germany has to deal with the disaster affecting

their economy and politics.

Germany has to deal with their main energy source being shaken due to the fact that at

least half of their nuclear plants have been shut down, and if they remain shut down then

Germany will have to face the fact that their energy consumption will be at least eighty five

percent dependent on fossil fuels as their source of energy. Don’t forget, Germany imports two

thirds of their energy. If the nuclear energy becomes nonexistent as a source of energy then

Germany will only have one main source of energy, because hydroelectric and renewable

resources lag behind as a consumption source in energy for Germany.

Not only does the nuclear plant shut down effect Germany’s economy, but it also stirs up

the traditions in Germany’s political parties. Now that the Green Party has popular votes in

Germany’s Baden-Wurttemburg with twenty six percent of the popular votes, the Green Party

also has popular votes in their sisterly state Rhineland-Pfalz. Not only has the status quo changed

from having three majority parties in control of the German politics versus now The Green Party

is on the rise to become another major political party of Germany. The threat the people face is

the fact that the Green party has no history for them to judge the party’s policies. What can the

people of Germany expect from The Green Party? This is the question that is on the back of

many German’s minds.

S.W.O.T-Germany 34

Conclusions

Germany’s infrastructure, strong economy, and non-corrupt business environment, along

with the countries opportunities in “green” energy, health care, and education, provide all the

necessary conditions for an advantageous business environment.

Even with the high taxes and the “brain drain” coupled with the threats of nuclear plant

shut-down and political change, Team Germany believes that Germany will continue to be a

world power. While the country may have recently been divided politically, they are as a whole,

pushing for a more eco-friendly source of energy.

With all things considered, Team Germany definitely believes that the country will

continue to be among the top countries in the world, while continuing to be a leader in “green”

technology.

Recommendations

When comparing Germany’s strengths and opportunities against its weaknesses and

threats, Team Germany decided that Germany would provide a very good place for business

operations. Team Germany believes that any business specializing in “green” technology or

product globalization would benefit the most from starting operations within the country. It is

the impression of Team Germany that the country as a whole will continue to push for advances

in “green” technology, and that all types of products could be distributed throughout the world

with ease.

While Team Germany believes that Germany would be a good place for business

operations, it is understood that there are some negative aspects that show room for
S.W.O.T-Germany 35

improvement. Team Germany would recommend that the country find some way to compensate

highly skilled workers, in order to keep them in the country and prevent a “brain drain”.

All in all, Team Germany would recommend Germany as a place to do business. It is

Team Germany’s belief that the country’s strengths and opportunities outweigh the weaknesses

and threats, especially in the aforementioned areas of “green” technology and product

globalization.
S.W.O.T-Germany 36

Appendix A- German Business Culture: A Driving Force in Europe

The German business culture is nationalized and defined by the key values that govern it.

In Germany, living and working rules abide by a strict structure with little flexibility. Facts,

tasks, and following the schedule are the main focus in the workplace, while achieving

milestones and personal relationships take a back seat (German Business Culture, 2011).

The culture is largely individualistic, but Germans still recognize the need for adhering to

communal interests. Appointments and punctuality are extremely important, whereas coming to

work ten minutes late is considered disrespectful and usually requires prior notice. Within the

German corporate hierarchy, clearly outlined responsibilities are placed on employees and the

various departments that comprise a business.

Personal relationships are far different than in the United States. These relationships are

harder to forge and there is a very definite line between work and personal matters. While at the

workplace, discussing personal matters is frowned upon. In this “all business” atmosphere,

Germans are known by their last names only, even with co-workers who have known each other

for years. Like in many other countries, firm handshakes are common before and after business

meetings (German Business Culture, 2011).

S.W.O.T-Germany 37

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