Global Business Individual Project- Hannah Meaney X00103230
Students are required to write a 3,000 word essay which examines macro environmental factors from the perspective of an individual country of the student’s choosing. Introduction:
The country that I have chosen to discuss for the purpose of this assignment is Germany. I have been to Germany before, their lifestyle and the way in which they operate their businesses on a day to day basis is highly intriguing to me. By choosing this country to research for this essay I will hopefully gain a deeper knowledge and insight into the differences between Germany and Ireland and the factors which make Germany so unique. In this essay I will look at and explain in detail the Macro Environmental factors and by using the P.E.S.T Analysis I will look at the Political, Economic, Socio Cultural and Technological factors of Germany. I will discuss what the change drivers are within the environment and what implications they have had on the country in terms of opportunities and threats that they may present to Businesses. Background:
Germany is located in central Europe. Its’ largest city which also is the capital is named Berlin. It is home to over 80 million people, which makes it the most inhabited country in the European Union today. Germany is a major leader and extremely influential in terms of economics and politics within Europe. It is one of the most powerful leaders in many different ways and has lots to offer. Germany has a powerful history which of course has had a huge effect on how things are operated there today and the way in which they work. Germany currently holds its place as the fourth largest economy by GDP (Gross Domestic Product) in the world and also for the fifth largest country in the world by purchasing power (infoplease.com, 2014). Germany is also the third largest exporter and importer of goods in the world, which implies that they must be doing something right. Country Profile:
So what exactly does the P.E.S.T analysis mean and what is its’ purpose? Well it is a tool that is commonly used in business to measure and access the market for a certain business. The word itself is an acronym which stands for Political, Economic, Socio-Cultural and Technological factors of a Macro-Environment. It is obviously an important part of setting up any business or organisation that you check and consider in advance the environment you wish to set up in. Does it tick all the boxes? This is where P.E.S.T comes into play. When speaking of the environment itself it is important to know the make-up of the environment. It is combined of three sections the Internal Environment, The Micro Environment and finally the Macro Environment. The internal environment includes staff members, Wages and Technology in the office, the micro environment include our customers, our competitors, the suppliers, the distributors and finally the macro environment is made up of the P.E.S.T. factors which I mentioned earlier and they are Political, Economic, Socio Cultural and Technological. Political: Germany is a democratic republic. The German political system follows a constitution called Grundgesetz meaning basic law, which was created in the year 1949. Germany is also known as a federal state; within it are 16 individual states today. Through the Treaty establishing the European Coal and Steel Community in 1951 and by its signing of the Treaties of Rome in the year 1957, the Federal Republic of Germany became one of the key founders of the European Union (eea.europa.eu, 2010). The German government is made up of three individual sections, the legislature, the executive and the judiciary and these are represented by the Federal Parliament, Government and the Constitutional Court. The president will be elected to serve for a period of five years; this president will then choose a Chancellor and their Cabinet which is the equivalent of say a Prime Minister. The President of Germany today is Joachim Gauck and its’ Chancellor is an infulential lady named Angela Merkel (infoplease.com, 2014). Angela Merkel would have a huge amount of responsibilities including implementing government policies.
Germany maintains a network of 229 diplomatic missions abroad and holds relations with over 190 countries. It is the largest contributor to the budget of the European Union and third largest contributor to the United Nations. Germany is a member of multiple important organisations including the NATO defence alliance, the Organisation of Economic Co-operation and Development (OECD), the G8, the G20, the World Bank and the International Monetary Fund (IMF). Germany has maintained a very strong alliance with France since the end of World War II and its’ presence in the world market is vital. The governments of both Germany and the United States are very close political allies. The 1948 Marshall Plan and strong cultural ties have generated a very strong bond between these two countries. These two countries are also both economically interdependent with roughly around 8.8% of German exports are U.S. bound and around 6.6% of German imports originate from the U.S. Since the 1970s, the environmental policy of Germany has taken on fundamental principles for the protection of the environment. Environmental protection was included in the Basic Law as a public responsibility in 1994 (economist.com, 2012). Germanys’ influence on politics has been absolutely essential and they have made a very important contribution to the politics in Europe by their role in creating the EU. In December 2013 the forming of a grand coalition ensured political stability until the next elections in 2017 as the governing coalition has a majority in both houses of parliament, which denies opposition any leeway to obstruct key legislations. The country plays an important role in peace-building missions in Afghanistan, the Middle East and Africa through its membership of international security organizations. Germany is also trying to mend its ties with France through cooperation in the areas of defence and energy. However, the country's reluctance to sign 2003 United Nations Convention against Corruption (UNCAC) could undermine its’ reputation as an efficient enforcer of anti-corruption laws. Rifts have developed between the European Central Bank (ECB) and Germany over the country's negative stance over issues such as formation of a banking union and debt mutualisation. On the domestic front, the country needs to seriously work on tackling right-wing extremism before it becomes a major problem. Politically speaking Germany has a lot going for them, but also a lot to be worked on. On analysis of their political position their current strengths are that they have a strong Federal Republic and that they have a growing international role in humanitarian efforts. On the other hand the challenges they currently face are complications with the ECB and regulatory deficiencies in resisting corruption. Their future prospects would be a stronger link with France and also political stability. The future risk that they may encounter is right-wing extremism.

Economic: Germany's flexible labour markets and its highly innovative small-and-medium-enterprises are the major factors behind its economic resilience during the times of the sovereign debt crisis that they faced. As a result, the unemployment rate in Germany continued on a down spiral after the global financial crisis even though in most other European economies, it went the opposite way. Since 2012 austerity policies (Government Involvement) has helped the government in keeping a balanced budget. However, populist reforms adopted by the Angela Merkel government in its third term could risk turning the economy backwards. Germany's ageing roads, bridges, train tracks and waterways could affect the country's economic growth and its long-term cost competitiveness. Other risks to the German economy come from its profitable but very highly leveraged banking sector, which has a high derivative of exposures, mainly concentrated in the top banks. German authorities are undertaking significant steps to strengthen the banking sector. Germany’s strengths include; their flexible labour market and their highly innovative and growing SME’s (Small medium enterprises). However, they are also faced with challenges like their ageing infrastructure, therefore this results in an ongoing process of fixing dilapidating buildings which incur high costs for the economy. Looking into what can happen in the future of Germany’s economy there will be a stricter financial sector regulation which will mean that there will be no waste of economic resources. Their falling public debt will mean that the residents of Germany will not have to pay for this through tax. Future risks of the German economy will result in a possible vulnerable banking sector and also the implementation of populist anti-growth reformation. As previously discussed the presence of highly innovative SME’s, also known in Germany as ‘German Mittelstand’, have been proven to be advantages in the market as they continue to be the driver of its labour market. SME’s are accountable for more than 99.6% of €3.7 million companies in the country. They provide employment for around 61.3% of the population.
Social Environment So as we know Germany is the most populous country within the European Union. The population of Germany is extremely well educated with modern and innovative views. They have an extremely diverse culture because of their location in mainland Europe which makes travel very easy within neighbouring countries. In recent years, Germany have been faced with some demographic challenges which include; an ageing population, immigration issues and depleting incomes due to economic crises. The business culture in Germany is unique; they possess an individual business strategy. Engineers and managers are given high appreciation over the likes of accountants and lawyers who in other countries are seen as the top earners of the working world. Engineers and managers have good academics and are technically proficient and hierarchy can be prominent in most organisations as the power is put in the hands of senior managers and staff roles. The process of the business and employees roles and responsibilities are strictly defined. This may result in individualistic attitudes among the professionals. German employees tend to be less social in the working environment compared to the likes of Ireland. A good quality of Germany is that they put facts ahead of emotions which results in a direct communication style which means they get work done quicker and more efficiently. Their current strengths lie in their liberal immigration laws for skilled professionals which mean that they only hire the very best of incoming workers from abroad. Their health care system proves to be one of the strongest in the EU; this encourages people to work as they receive the benefits of the healthcare system within their job. However, they are also facing challenges because of the low number of female workers due to women starting up families and their jobs not giving them the desired time off and flexibility. There is a huge gender wage gap which needs to be resolved to encourage females to continue working hard in their job knowing that they are being paid equal salaries to their male counterparts. Their future prospects are bright as they intend to abolish tuition fees in public sector higher education institutes. This means that they are giving everyone an opportunity to be educated and prosper into future careers. Ageing population and ethnic discrimination are the inherent risks that Germany faces.

Technological factors Germany’s R&D sector has seen a significant improvement in recent years. The government have played a vital role in this by taking effective steps in creating a link between industry and education through their different programs. In order to exploit the potential of ICT (Information and communications technology) it has made an ICT strategy called digital Germany 2015. However, the country still faces a deficit of skilled engineers which forces it to recruit them from overseas to maintain growth and innovation. Another challenge the German government is faced with is the poor show in higher education. They must do this through efficient reforms. Germany’s current strengths within their technological landscape include a world-class automotive industry for instance Volkswagen and Mercedes Benz and other market leading car distributers. Germany has strong STI (Science, Technology and Industry outlook) policies of the government which stands to them in this department. However their shortage of skilled workers proves to be a massive current challenge. The future of technological factors in Germany is looking good due to multiple opportunities in the ITC sector and the HTS 2020, which is their High Tech Strategy plan for the coming years. Although the future of technology in Germany certainly is a bright one, they must make a big effort to overcome some obstacles and the most important one being that there is a poor show in tertiary education in Germany they must transcend this problem.

Discussion of Data: Change Drivers, Opportunities and Threats