Market for Personal Computers in Germany Essay Example

at just5.2 deaths per thousand births.

Men in Germany have an average life expectancy of 76.99 years, while women have an average life expectancy of80.33 years.The majority ethnic group in Germany are Germans, making up91.5%of the population, followed by minority groups such as Turkish citizens (2 .4%), Italian residents (0 .7%), Greek locals (0 .4%), and Polish inhabitants (0 .4%). The remaining4 .6 % consistsof various other minorities such as those fleeing from former Yugoslavia due to its civil war.

Christianity is the predominant religion in Germany, with approximately45 % Protestants and37 % Catholics among the population.Division-wise,the religious preferences can vary among specific towns or regions.About15 %ofthe entirepopulationclaims no religious affiliation whatsoever.German is the commonly spoken language throughout the country, although there is a minority population that speaks Serbian.
The literacy rates in the country are comparable to those in the US, with 99% of individuals over the age of 15 being literate. The educational system is highly esteemed and has produced numerous accomplished engineers. Following reunification in 1989, the government established a bicameral parliament to establish federal authority. The Bundestag, which is the lower house of the legislature, holds primary importance. Its members are elected for four-year terms and select the Chancellor who leads the executive branch of government. Their main responsibility is enacting federal level legislation. The election process for a position in the Bundestag involves a two-vote system where voters have one vote for a specific candidate and another vote for a political party in general. This system helps ensure equitable distribution of party power within the government. The number of members in the Bundestag currently stands at 672 but may change with each election

cycle.The Bundesrat, known as Germany's Upper House, consists of representatives from its 16 states similar to US states. Its role includes approving laws related to states and proposing legislation; however, it primarily upholds decisions made by the Bundestag.The Bundesversammlung selects Germany's federal president and comprises members from both the Bundestag and state legislatures.This position holds significant prestige although it is primarily ceremonialThe government in Germany uses a "two-vote system" to maintain equal distribution of party power. The main political parties are the Christian Democratic Union (CDU) and Social-Democratic Party (SPD), with smaller parties also present. Neo-Nazis generate controversy in both public opinion and government affairs. Germany's constitution was established in 1949 and applied to the entire country before reunification, similar to the US constitution. It can be amended and grants personal freedoms such as freedom of speech, religion, and press.

Germany has an army consisting of approximately 347,000 personnel, including 124,000 conscripts. Military spending amounts to around $49 billion or 1.5% of GDP. As a member of NATO and the United Nations, Germany actively participates in their operations. It currently ranks as the world's third most powerful economy after the United States and Japan.

Despite its stable and prosperous economy, Germany faces challenges resulting from reunifying its east and west regions since 1990. To bridge this gap economically, the eastern region has received about $390 billion in subsidies from the west on which it still relies. The subsidies will continue at a rate of $100 billion per year well into the next century. Construction industries play a crucial role in driving one-third of the eastern region's industrial output for economic recovery purposes.
Germany's growth is driven by the

service sector and manufacturing industries, as the eastern region transitions from a manufacturing-based economy to a service-oriented one. In contrast, the western region has an advanced market economy known as a social-market economy, with three times the output of the east. The country experienced a robust recovery from a recession in 1992-93, which started in the export sector and later spread into investment and consumption sectors.

Germany boasts a highly urbanized and skilled workforce that enjoys high standards of living thanks to its comprehensive welfare system. However, unemployment remains a significant concern, with an approximate rate of 11.4%. The government believes that addressing unemployment will help address other economic, financial, and social problems.

When it comes to trade, Germany primarily engages with other European Union countries, with France being its largest trading partner. It imports road vehicles, electric machinery, petroleum products, and clothing while exporting road vehicles non-electrical machinery various electrical machinery metal and metal products. Due to its reputation for producing high-quality goods, Germany consistently maintains a trade surplus.

The German government strongly supports free world trade and opposes protectionism since one-third of its GDP relies on freely exporting goods.Germany's currency, the Deutsche Mark (DM), will transition to the Euro in 2001 when the newly formed European Union (EU) adopts it as their currency. Similar to the Environmental Protection Agency (EPA) in the United States, Germany has a governmental agency called the Ministry for the Environment, Nature Conservation, and Nuclear Safety that oversees environmental policy. This federal ministry works closely with each state in Germany to regulate various aspects of environmental protection. In recent years, there has been a focus on efficient energy use and preserving depleting

natural resources. Energy efficiency is a highly debated issue, with Germany strongly advocating for phasing out nuclear energy due to perceived harmful effects. Plans are underway to establish a new energy production strategy that eliminates nuclear energy within Germany by implementing stringent legislation aimed at enhancing safety at its 19 nuclear power plants and reevaluating byproduct storage; this strategy is expected to be completed by 2030.

Germany also aims to reduce nationwide carbon dioxide emissions by 25% by 2005, highlighting its high importance on conservation efforts. The country has established numerous nature reserves and landscape production areas covering approximately 25% of its land area - totaling around 5000 nature reserves and 6000 landscape production areas. Additionally, Germany follows the European Union (EU) directive on conserving natural habitats which seeks to protect existing natural areas while minimizing pollution.

In terms of waste management, significant changes were made in 1996 through the implementation of the Closed Substance Cycle and Waste Management Act.
This act emphasizes the significance of recycling to optimize the use of raw materials. According to the Packaging Ordinance, manufacturers have a responsibility to take back and reuse packaging materials, with the cost included in the price of goods. As Germany approaches the next millennium, its economy appears stable and reforms are expected across various sectors under the initiative known as "Future Program 2000." These reforms aim to maintain economic stability by consolidating the budget, promoting growth incentives and structural reform, creating more jobs, and managing government debt. One major concern addressed by this program is job creation for untrained individuals or those who lost their jobs due to technological advancements despite Germany's highly skilled workforce. To address

this issue, more training programs need to be established. In 1997, Germany experienced a record high unemployment rate of 11.4 percent which decreased to approximately 11.1 percent in 1998 due to proactive labor policies providing better training opportunities for the unemployed. It is expected that the unemployment rate will continue decreasing and possibly be below 11 percent next year.The government's reform plan aims to reduce government spending by DM 30 billion, resulting in a decrease of 1.5 percent in government expenditure for the year 2000 compared to 1999 levels. This reduction will impact all areas of the federal government, with the labor ministry experiencing the largest funding cut. Controversy has arisen due to adjustments to pension payments and unemployment benefits, which are prominent features of Germany's social security and welfare systems.

Taxation is also under review, with consideration being given to potentially lowering the corporate income tax rate to 25 percent. Following these tax cuts, businesses can expect to pay between 35-38 percent in federal and municipal taxes. In comparison, corporations in the US currently face a federal tax rate of 35 percent. This makes Germany an attractive destination for investors.

Income tax reforms will also be implemented, specifically targeting family taxes with special deductions for each child in a household. These tax cuts will be carried out in two phases and completed by 2001.

Both business and income tax cuts are expected to boost purchasing power, particularly benefiting products that are highly sought after, especially those aimed at families.

Germany's GDP growth rate serves as a reliable indicator of its overall economic condition.Germany's GDP growth is projected to decrease to around 1.5 percent in 1999 but is expected

to rise to approximately 2.5 percent in 2000. The German economy, driven by a new government and minor reforms, is well-positioned for recovery and satisfactory performance across all sectors by 2000. Germany's stable economy and similarities with the US make it an attractive investment location as a highly developed country. It offers abundant resources necessary for business success and has a long-standing history of leadership in various industries, particularly the automobile industry where it ranks third globally. The excellence of the German industry is evident in sectors like chemical and mechanical engineering. However, there has been a significant decline in the industrial sector's contribution to the nation's gross value added, dropping from 51.7% in 1970 to only 32.8% in 1997. On the other hand, service sectors have increased their contribution, reaching 37.3% in 1997.Germany's reputation as an industrial leader has prompted them to shift their focus with the "Germany 21" initiative towards catching up in communications and information technology (IT).The text discusses several aspects related to the development of the information society in Germany. These include coordinating the information society framework, improving internet accessibility, and implementing educational programs about the information age. Although communications and IT sectors in Germany are not yet at par with other countries, franchising has seen significant growth. In 1997, there were only 598 franchise systems, which increased to 625 by 1998. By the end of 1998, there were approximately 5,000 franchise outlets, with an expected increase of around six thousand projected for the year nineteen ninety-nine.

Germany's economy is known as a "social market" economy that combines elements of a free market system with government collaboration on decision-making. Despite allowing free

market principles to prevail, Germany remains heavily involved in business and industrial activities. The German government has been engaged in privatization efforts to alleviate the burden of re-unification while maintaining economic growth despite state ownership and subsidies.

The main focus is on creating a more competitive Germany and bridging the gap between eastern and western regions which has become a growing concern due to money pouring into the stagnant eastern economy. Achieving competition aims to lighten public budgets and provide citizens with more efficient services.To achieve these objectives, small and medium-sized enterprises (SMEs) need to actively participate in the economy, with a focus on promoting innovation since limited creativity arises when only a few individuals generate ideas. To support this, the government is enhancing access to venture capital for small businesses and simplifying the process of bringing research and development inventions to market. These challenges have affected all sectors of Germany's economy after reunification in 1990, when democratic West Germany faced economic difficulties due to totalitarian East Germany. Substantial restructuring efforts were necessary to equalize both regions. The Trust Agency, a government entity, has played a crucial role in successfully privatizing businesses and transforming Germany. They continue their work by selling off eastern businesses while improving infrastructure to match that of the west. Germany is renowned for its advanced network of roads, railroads, and communication systems, positioning it as a global business leader. Nevertheless, there are disparities in infrastructure between the east and west parts of the country. The famous autobahn enables efficient transportation throughout Germany while the extensive railway system spans 43,966 kilometers; however, its development is less pronounced in the eastern region.The government recognizes

the significance of a robust transport and communication network in improving the east's economic conditions. To achieve this, substantial funds from $100 billion subsidies have been allocated towards enhancing telephone lines and roads. Since reunification, remarkable progress has been made in rapidly modernizing eastern infrastructure, surpassing Europe's standards.

In terms of marketing personal computers, trade, and investment, foreign suppliers enjoy the freedom to select distributors that best suit their requirements in Germany. There are no regulations mandating the use of specific distributors for products. Both direct and indirect distribution methods are utilized; however, a direct approach may be most suitable for personal computers (as elaborated later in the report).

On the other hand, when it comes to industrial goods, companies often prefer indirect sales through existing suppliers due to high entry costs associated with this market. This approach proves more cost-effective for showcasing products. Independent traders like wholesalers, importers, retailers or independent dealers such as commercial representatives and exclusive representatives can distribute your product. Additionally, there are specialized companies focused on purchasing imported goods and selling them to distributors and dealers that do not limit themselves by specific economic or geographic regions.Similar to the United States, wholesalers and retailers play a significant role in Germany's import sector, especially when it comes to consumer goods. In fact, over half of imported consumer goods are distributed through supermarkets, mail orders, and department stores. Another indirect method is through independent dealers that foreign companies utilize if they don't want to establish a branch in Germany. These dealers offer cost-effective services and provide small and medium-sized businesses with access to the market.

When selling products in Germany, it is crucial for companies

to carefully choose a reputable dealer or trader in order to maintain their market position. Suppliers should ensure that the selected firm has a good reputation and possesses the capability to distribute products nationwide.

In the personal computer market specifically, direct distribution is considered the best option due to German perceptions of American companies. Germans believe that US firms follow a philosophy of "You bought it, now it's your problem" and may lack long-term stability in the market. This contradicts German expectations as they anticipate ongoing technical assistance and support from companies they purchase from.

Since computers are significant purchases often requiring support, it benefits companies to directly engage with customers through retail stores and websites. An example of this successful approach can be seen with Dell Computer Company which achieved a growth rate of 70% in 1998 by utilizing website and telephone sales methods effectively.Marketing products in Germany follows similar strategies as in other developed nations. To increase awareness, it is recommended to have a strong advertising campaign and participate in trade fairs. However, a significant difference in Germany is the lack of a centralized business center, with industries and populations evenly distributed throughout the country. Therefore, to successfully market a product in Germany, it is crucial to have an advertising and trade plan that appeals to the entire nation.

Advertising is generally seen as an effective way to promote products in Germany, although there are stricter regulations compared to the US. These regulations were established by major advertising firms and consist of both legal rules and voluntary guidelines. The legal rules were implemented in the early 20th century and are periodically modified. They allow competitors to

take legal action if another company violates proper etiquette. To avoid potential legal issues, companies need to consult with an advertising agency before implementing any plans.

Trade fairs provide businesses with an affordable and profitable platform for promoting their products. Originating from Germany during the Middle Ages, trade fairs hold great significance in German culture. They are considered ongoing business opportunities where companies must actively sell their products.German trade fairs serve as valuable platforms for keeping up with competition and discovering new technologies. These fairs are viewed by German citizens as a reliable gauge of product quality, influencing their purchasing decisions accordingly. Additionally, these fairs attract international visitors, resulting in sales outside of Germany. One notable example is the CeBIT fair, which is the world's largest computer and telecommunications fair that draws companies from around the globe. It is clear that participation in these fairs is crucial for success in Germany.

In 1998, a fully equipped personal computer with a 17" monitor cost less than DM 2,500 ($1,470), while a PC with a 15" monitor was approximately DM 1,600 ($940) or even less. In 1997, 36% of PCs sold in Germany fell between the price range of DM 2,700 ($1,588) and DM 3,600 ($2,118), and 33% were priced between DM 1,800 ($1,o59) and DM 2,700 ($1,588). Only two percent had prices below DM 1,800 ($1,o59).

Service and support are essential for businesses involved in the personal computer industry as customers often encounter various issues with computers especially if they are not regular users. Therefore businesses should be prepared to provide adequate service and support to meet customer expectations. German clients have high standards for excellent service such as

easy accessibility to their dealer and prompt resolution of problems and concerns.

In the German market; however consumer purchases are not solely determined by price.Customers often prioritize quality of service over lower prices, which is crucial to outperform competitors by focusing on "delighting the customer." Germany places great importance on intellectual property rights and enforces patents, trademarks, and copyrights legally. Intellectual property law enforcement in Germany is efficient and just, with fines typically exceeding the cost of obtaining a license. Additionally, as a member of the World Intellectual Property Organization (WIPO), Germany adheres to various international agreements that protect intellectual property. The German government actively works against software piracy, although it is not a significant issue in the country. Under the Uruguay Round's Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, Germany has made further commitments to combat software piracy levels. In 1993, Germany implemented an EU directive on software copyright and public education about piracy. These well-established intellectual property laws ensure that software manufacturers can safely sell their products to PC dealers in Germany. There are generally few formal trade barriers in Germany apart from some EU restrictions designed to strengthen economic union between countries. However, exporters face market entry challenges due to consumer behaviors and intense competition, making it difficult for companies to gain market share.The European Union imposes a 2.1% duty on CD ROMs and diskettes, while a 16% import turnover tax is applied to objects like tapes, diskettes, or laser discs containing software. This tax is passed on to end users as value-added tax. While there are no formal trade barriers, complex administrative policies can work against foreign businesses without discrimination and

may provide limited protection to domestic firms. Importing PCs does not pose significant challenges in Germany as the government welcomes foreign investment and has no regulations in place.

Bibliography:
1.Central Intelligence Agency.CIA World Factbook, (1998). Accessed 15 September 1999. Available from http://www.odci.gov/cia/publications/factbook/gm.html
2.Foreign Affairs Division of the Press and Information Office of the Federal Government (Germany)."Facts About Germany," (1998). Accessed 10 October 1999. The information can be found at the following websites:
1.Bundesregierung.de: http://www.bundesregierung.de/tatsachen_ueber_deutschland/englisch/index.html
2.Department of State: https://www.state.gov/www/about_state/business/com_guides/index.html
3.Tradeport.org: http://www.tradeport.org/ts/countries/germany/market.htmlThe Tradeport.org website provides information on Germany's trade practices and economic policies. In addition, various sources were accessed on specific dates to gather information. On November 30, 1999, the Department of State's 1998 Country Report On Economic Policy and Trade Practices was accessed. On November 29, 1999, John T. Lumborg's Industry Sector Analysis titled "Personal Computers" (1998) was accessed. The Economist Intelligence Unit's Investing, Licensing & Trading in Germany Main Report (1999) was accessed at an unspecified date. On November 15, 1999, the US Department of State's FY 2000 Country Commercial Guides for Germany were accessed. Finally, on November 11, 1999, the US Department of State's 1998 Country Report on Economic Policy and Trade Practices for Germany was accessed. Please note that all and their contents have been preserved in thisversion.