GERMANYAUTOINDUSTRY

Priyanka Sampat, Anshul Singh, Josh Schille, Manu Bhatia, Seiici Fujii, Yesinia Castillo

AUTOMOTIVE INDUSTRY IN GERMANY• Largest in the country

• Labor force of over 866,000

• Annual output of 6 million

• Absolute leader

• Europe since 1960s

• Third in world since 1970s

• Now fourth

CENTER OF EXCELLENCE• Volkswagen group is one of three biggest automotive groups in the world

• The Chevrolet Volt and its Voltec technology

• Invented and developed by former German engineer Frank Weber

RESOURCE-BASED VIEW

• Consumer’s demand for high quality products

• Provided the impetus for the establishment of many leading industries today

• Creates an atmosphere for high quality exports

• Highly skilled and motivated work force

• Provides human capital necessary for producing quality products demanded by domestic / global markets

• Germany's emphasis on skill training and technical education provides the foundation for its work force.

• High labor costs

• Complacency of businesses and their slow response to change

• New emission limits

• Strong antitrust legislation

• Low entry barriers

• Development of common standards which promote exports

• Unions and employers generally regard each other as social partners

• German law

• Regulation an standardization within European banking industry

INSTITUTION-BASED VIEW

Advantages Disadvantages

CENTER OF EXCELLENCE• Germany does not stand a chance to India / China in terms of labor cost

• Germany can compete aggressively in terms of R&D prowess (intangible asset)

FEDERAL FUNDING• 2020 vision: lead market for Electric Mobility

• German Government has set ambitious goal of one million electric cars by 2020

• National Electromobility plan includes EUR 500 Million in incentives for the development of vehicles, energy storage devices and infrastructure

ELECTRIC MOBILITY

ELECTRIC MOBILITY

• "National Electromobility Development Plan"

• The program set aside $705 million in an economic stimulus package.

• "It is our aim to make Germany into the market leader for electric mobility," Economy Minister Karl-Theodor zu Guttenberg said after the Cabinet approved the plan.

• There will be $240 million into research on the batteries that power electric cars, making productions in Germany a priority and ensuring that German experts are trained in the technology.

FEDERAL FUNDINGOther Government Incentives

• Germany's government provides a subsidy for people who scrap their old car for 2,500 Euros. With this subsidy people are able to purchase a new vehicle.

• It's a method of recycling and perhaps attracting more people to purchase new cars.

• It would lead our company to promote the German government and influence buyers to scrap their cars.

• In addition, the purchase of the new car has to meet all of the new emission standards.

LABOR LAW• Unions are powerful and large in Germany.

• Has relatively high corporate tax rates

• Germany is ranked 14, as the least corrupt country in the world. (according to 2011 corruption perceptions index)

TECHNOLOGY MINDSET“A love of technology in general pervades Germany. A governmental agency, the TÜV, or Technischer Überwachungs-Verein, which translates as Technical Inspection Association, is a large entity devoted to overseeing any technology produced in the country. In fact, every vehicle must pass a rigid TÜV inspection before it can be driven on German roads. Another clue to the German kinship with technology is the well-known term, "German engineering," which universally denotes high-quality craftsmanship. In fact, engineering is one of the most respected professions in Germany.”

TECHNOLOGICAL RESOURCES• A resource is the technology that is being implemented in Germany.

• There is an increasing demand for cars that are powered entirely by batteries or hybrid engines

• Therefore, our company will follow local norms and use the new technology in order to expand our industry.

SOCIAL MINDSET"As part of the social fabric of Germany, many clubs exist for enthusiasts, with subjects as diverse as music, firearms and sewing. The car clubs are especially popular, and, generally, each club is focused on one type of car, such as the Volkswagen Golf. There are even clubs for non-German cars."

RECOMMENDATION• Do Research and Development in Germany and bring the technology back to the U.S.

• e.g. R&D in electric cars.

• "According to VDA,German manufacturers are ranked first place in the efficiency comparison."

• "An international comparison shows Germany as a clear leader in matters related to environmental technologies--especially the reduction of carbon emissions."

PROSPECTS IN GERMANY• 2011

• Annual car production at 5.87 million cars

• Annual revenues reached

BUSINESS ETHICS IN GERMANY• Germany is a low-context culture, people tend to be very clear and only focus on facts.

• Germans are very frank and do not tolerate unacceptable behavior.

• Germans prefer to be formal and refer to each other by their last names.

• Punctuality plays a major role in a business setting.

• In addition, a person's identity tends to be an individualistic structure, however, in a business setting there is a collectivist structure.

MARKET STRATEGY• Offer high-quality automobiles

• Provide competitive prices

• Deduct effective tax rates

• Follow the appropriate local norms

• Provide the required two year warranties for our vehicles

LOCAL NORMS• "Law Against Unfair Competition"

o This law allows suits to be brought if advertising violates the accepted norms.

• Comparative Advertising

o Might be subject to certain conditions and might be restricted in some cases.

• When compared internationally wages in Germany are among the highest in the European Union and worldwide.

• Unions are powerful and large in Germany

• China is currently leading the EV R&D

• Increase in competition from emerging countries

• Government could have too much control of R&D as they try to compete with the emerging countries

• German labor is know to be productive and skilled

• German quality is famous throughout the world

• Merkel has indicated that the government will provide multi-billion euro investments over the next ten years to advance research and that

• Government has implemented plan focused on electric and hybrid technologies

• Positive relationships with mobility operators, energy providers, and charging point suppliers.

Positive Aspects Negative Aspects

SOURCES

• http://www.vda.de/en/meldungen/news/20130313-1.html

• http://search.proquest.com/docview/399062934?accountid=7120

• http://academic.depauw.edu/mkfinney_web/teaching/Com227/culturalPortfolios/germany/Values.htm

• http://export.gov/germany/marketresearchongermany/countrycommercialguide/doingbusinessingermany/index.asp

• http://www.celsias.com/article/germany-ups-e-car-targets-match-obama-and-4-millio/

• http://revel.unice.fr/eriep/?id=3329

• http://www.ehow.com/about_5414899_german-car-culture.html

• http://www.internationalexperts.com/index.php/research/item/pros-and-cons-of-forming-a-business-in-germany