This is the detailed PESTEL analysis of Germany which is important for understanding the external factors that affect the industry’s growth and profitability.
Germany, the land of poet and thinkers, by population is the largest country in Europe. It shares borders with nine other countries. Berlin is the capital of Germany and it has the world’s largest zoological garden. German people are the second most beer consuming nation in the world, the law forbids smoking in public places but drinking is allowed. Germany is the state that played a major role in the two World Wars, the famous Adolf Hitler belonged to Germany and therefore Germans are known to be very tough.
Political
Henry Kissinger once described Germany as “An economic giant but a political dwarf”. This is what Germany became after WWII. Germans were the most proud nation and they wanted to capture France and then Russia, thus establishing their power over the European region. Unfortunately for them they could not succeed in their mission and had to surrender by signing Treaty of Versailles, this was humiliation to them as they were made to accept complete responsibility of WWI and reparation was imposed upon them. This gave the window of opportunity to Hitler. He arose the feeling of nationalism and made Germans realize that this suppression can be put to an end through Nazism and thus set in motion WWII.
After these two wars Germany lost all its pride and dignity and adopted policy of no intervention but recently this policy has been changed. This change is the result of increasing pressure from the outside world and regained internal confidence. All eyes are on them to rescue European block from the EU crisis therefore they could no longer maintain the isolation policy. Recently they have been forced by the world to accept refugees
Economic
Germany’s economy was destroyed after WWII. They were made to pay huge amount of reparations. These situations made Germans enthusiastic to work hard to turn around the situation and Germany did excel in a lot of fields, but gradually this feeling started fading with time and now an average German worker 1450 hours per year whereas his American counterpart works 1850 hours. (Kiep, 2003).
Another pressing issue is the aging population of Germany and concerns about lower productivity. Germany crossed the European debt limit in 2006. Unemployment rate is very high. It is the leading exporter of vehicles, household equipment’s, machinery and chemicals. When Angela Merkel joined as chancellor she introduced tax cuts which increased the budget deficit, so next year she has to reduce the tax cut. In 2014 Germany’s economy started growing strong again and there is growth in GDP.
Social
After the reunification of East and West Germany it was believed that whole Germany would be contributing in the same way towards development and allocation of resources will also be the same, but unfortunately West Germany is better off. Geographically the world map shows both the regions as part of one country but in reality people from both the regions are not unified. This is because when Soviet Union took control of Eastern half they did not pay attention to its development and took all the money generated from here to be spend somewhere else. (Stroh)
Another issue with Germany is the high dropout rate from schools due to violence so much so that teaching staff had to write to the government to shut down the educational facility. Political extremism has also divided the country and there is rise in hatred and resentment for immigrants due to their jobless and homeless condition, which puts a strain on Germany’s economy to facilitate these people.
Technological
Germany has many technological inventions to boast about; in 2008 Germany was spending 2.6% of its GDP in research and development and aimed to raise it to 3% by 2015. Moreover there are many US funded projects of R&D undergoing in Germany. The major fields of contribution include nanotechnology, biotechnology, electrical engineering etc. manufacturing units have adopted advance technology to the extent that they have implemented robotics system to eliminate manual procedures, as a result of which they have gained greater efficiency and productivity.
Environmental
Like many industrialized nations Germany also faces the issue of air pollution but unlike other nations this situation is increasingly going out of control for Germany. After the unfortunate incident Fukushima nuclear disaster which happened in 2011, Chancellor Angela Merkel decided that Germany should phase out from nuclear projects and as a result 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 and 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. As it is the largest European economy, the burden of being the most responsible also lies on its shoulders, other European nations look up to it for high standards in everything.
Law/Legal
After Paris attacks authorities at Germany have been on high alert for any kind of terrorist movement, Muslim community is now facing discrimination more than ever. There has been an incident of harassment with a woman who had her head covered. Now law enforcing agencies have decided to impose restriction and punishment on individuals who travel to Middle Eastern countries in order to take part in “Jihad”. They would also detect and punish the organization that are financially funding and supporting these terrorists units. Greater security means greater budget allocation on defense activities, some politicians are not in favor of this plan, according to them the duties to the citizens in general should not be compromised as there is no way of securing ourselves completely from all kinds of threats.