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LALA LAJPATRAI COLLEGE
MAHALAXMI
MUMBAI-400 034

TOPIC- Pestle Analysis of Germany

SEMESTER-VI
ACADEMIC YEAR- 2012/13

Submitted By:-
Karan Marwah-10111150
Rajendra Singh-10111318
Date:- / /2013
Sign:-

PESTLE Analysis of Germany

Overall, Germany is a stable innovation driven economy with a strong democratic system and a highly competitive economy. The aging population as well as the European sovereign debt crisis pose current and future risks to the development of the country. The very sophisticated business sector and the well-developed technical infrastructure sustain Germany’s innovativeness and competitiveness.

Regarding Cold Stone, we still value the benefits of operating in Germany higher than possible problematic factors. With the unique concept of Cold Stone, we believe it will be able to succeed even in light of the high local competition in Germany.

In addition, EU regulation will be majorly affecting Cold Stone when operating in Germany ensuring equal treatment in the food industry across Europe for Cold Stone and its competitors.

Political Factors

* Strong federal republic (Germany is divided into states and municipalities, but final authority lies with federal government)
* Robust democratic setup

* Elections considered fair and transparent (high rank in indicator “Voice and Accountability” in Worldbank Worldwide Governance Indicator)

* Benefits from being member of the EU (free trade agreements etc.)

* Many of the decision relevant for Cold Stone (or the food industry as a whole) are made on the European level

* Goal to minimize ecological footprint (garbage, water, energy, light etc.)

* Increasing international role within the EU, with US and NATO (major contributor to EU and UN)

* Tax regulations and tax rates perceived as one of the most problematic factors for doing business (WEF, 2012)

* Rigid labor market laws (ranking 119th in labor market flexibility according to WEF) leading to a labor market efficiency below comparable countries

* Recently some political and corporate corruption issues (e.g. Siemens and Christian Wulff) and Germany did not ratify the UN Convention against Corruption yet (Rank 14 in Corruption Perception Index 2011 of Transparency International)

* Increasing right-wing extremism

Economic Factors

* 5th largest economy in the world in PPP terms and Europe's largest economy

* Leading exporter of machinery, vehicles, chemicals, and household equipment making Germany a highly competitive country

* Innovation driven economy (WEF, 2012)

* Macroeconomy still remains remarkably stable in the view of continued economic difficulties in the Euro area

* Reduction in the fiscal deficit (fulfills Maastricht criteria)

* Germany benefited from low interest rates during sovereign debt crisis (deposit facility at 0.00% since July 2012)

* Financing for companies very cheap due to low interest rates

* Decreasing inflation rate to currently 2.0% (October 2012) (2.0% is the maximum level set by ECB to ensure price stability)

* GDP growth of 0.3% in Q2 2012 keeping the overall Euro area out of recession

* Depreciation of Euro against major currencies facilitates exports

* GDP per capita of 31.415,97 € (2011) indicating high purchasing power of consumers

* Prudent economic policies especially regarding lowering of corporate tax rates

* Spillover effects of European Sovereign Debt crisis weighing down on Germany’s economy

* Rating agencies threaten to downgrade Germany (negative outlook according to Moody’s)

* Low GDP growth compared to other developed countries outside Euro area

Social Factors

* High Human Development Index ranking 9th in the world 2011

* Strong healthcare and education expenditure

* Increasing labor productivity (1.6% growth in 2011)...
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