PESTLE Analysis of Germany

Pestle analysis of Germany. Germany (Federal Republic of Germany) is situated at the central and western intersection point of Europe. Austria, Switzerland, France, Czech Republic, Luxembourg, Poland, Belgium, Denmark, and Netherland are the neighboring countries of Germany. Berlin is her capital.

Approximately 137,847 square miles is the total area of Germany. The total population of the country is more than 83,166,711 people. It makes her 18th world’s most populated country and 2nd most populated country in Europe after Russia. She has 16th states.

Different Germanic tribes inhabited Germany in the known history of 100 AD. The Holy Roman Empire came to power in the tenth century and it collapsed in 1806. Prussian empire took hold in 1871. The German revolution overthrew the monarchy in 1918-1919.

The Nazi party took control over the country in 1933 and started the 2nd world war from 1939 to 1945. The victorious allied forces divided the country into East and West Germany. The separated countries finally got back together on October 03, 1990.

Today, we’ll discuss the pestle analysis of Germany. Here we’re going to focus on the macro-environmental factors of the country. For internal factors, check out the swot analysis of Germany. Here’s the pestle analysis of Germany as follows;

Political factors affecting Germany

Government & Political System

Germany follows the federal parliamentary and representative democratic political system. The head of the government is Chancellor who can exercise its power through the cabinet. The head of the state is President. The role of a prime minister and Chancellor are almost the same as the parliamentary democratic system. Angela Markel is the chancellor and Frank Walter Steinmeier is the president of the country.

 Alliances

Germany has been a member of the world’s leading organizations like OECD, G20, G7, NATO, UN, IMF, and the World Bank. She plays a major role in the budge of the EU and the UN (3rd largest). She has the 4th highest number of the world’s heritage sites of UNESCO.

Most importantly, Germany has developed a very good diplomatic relationship with France and other European countries. Those relationships and trade alliances have helped uplifting her economy and making it the best in the world.

Relationship with EU & USA

The USA and the EU are the two major dominating factors in the world’s market. Germany has built good ties with both of the economic giants. Some of the news circulating over media shows the relations with the US government hasn’t been going well.

According to a survey conducted by Pew Research Centre, 70% of America perceives the relationship is good. 73% of the Germans don’t consider the relationship between both countries is good.

Economical factors affecting Germany

High GDP

According to a financial study, Germany’s annual PPP GDP was 4.454 trillion dollars in 2020, and it’s the 5th highest in the world. Her per capita-earning was 53,571 dollars and it’s 15th highest in the world. Her annual GDP has decreased in 2020 is mostly due to the worldwide locked down and shutdown of businesses.

Unemployment Rate

The unemployment rate of Germany in 2020 was 3.03% and it has decreased since 2019. She has stabilized the economic environment to create a healthy job market. She offers the highest salaries, job protection, and the longest holidays compared to the other European countries. It’s because her workforce is comprised of highly skilled professionals and they’re best at what they do.

Taxes

The corporate tax of Germany in 2020 was 15%. Businesses and companies have to pay surcharge tax and trade tax by municipalities of 5.5% and 14% to 17% along with it and that makes the total rate of 30 to 33%.

The income tax rate of Germany is 14% and there’s no tax on the first income of 9169 Euros. If the income is above 55,961 and 265,327 Euros, then income would be around 42% and 45% respectively.

Imports & Exports

Some of the major imports of Germany are human & animal blood, pharmaceuticals, gas, oil, chemicals, agricultural items, spare parts of vehicles, and cars. The top importing countries are the Netherlands, Italy, China, France, and the USA.

Some of the prominent exports of Germany are spacecraft, helicopters, planes, spare parts, vehicles, and cars. She exports her products/services to many countries worldwide and some of the top exporting countries are Poland, Italy, UK, the Netherlands, China, France, and the USA.

Social factors impacting Germany 

Best Country to Live

Germany falls under the category of one of the world’s best countries to live in. It’s because she offers a high quality of life, healthcare, a stable economy, and the best education system. It’s the 2nd densely populated country in Europe with over 83 million people living there.

The average life expectancy of males and females is 78 and 83 years old in Germany. The country has the world’s lowest birth rate and that’s why its population is reducing. The number of retirees is increasing.

Demographic & Beliefs

Germany has a diverse population comprising of people from across the world. Her social setup follows the plural lifestyle. Roundabout over 19 million people have a migratory background. Majorities of her people approximately 60% to 70% are Christians and 4.4% people are Muslims. 35% of the people say that they don’t have any affiliation with any religion.

Standard of Living

Germany is a social welfare state and it provides a high standard of living. People have the freedom of choice to live their life. The country is also facing some social challenges. Costly lifestyle, decreasing wages, falling buying power, lower birth rate, and increasing aging population are some of the tops.

Social Interests

German people are perfectionists, diligent, detail-oriented, hard-working, punctual, and respectful of privacy. It’s because of these collective social traits the country has been the world’s leading economy. She’s also best in sports like skiing, tennis, golf, ice hockey, hockey, football, and others.

Technological Factors Impacting Germany

Tech Industry

Germany ranks at the 5th position of the world’s most technologically advanced countries. She has had a strong research and development historical background and it resulted in the form of many discoveries and innovations. She’s the global leader in many fields like design, engineering, technology, military, infrastructure, scientific research, and medicine.

Over 1 million German people are working in the IT field and it’s higher than the people working in the pharmaceutical, chemical, and mechanical engineering industries. She has a global market share of over 14% in the production of green products.

Research & Development

According to an estimate, Germany has allocated 3 billion Euros for research and development and artificial intelligence. She plans to spend it in the next five years up to 2025. The purpose of this heavy tech investment is to bridge the gap between Asian and American in software innovations.

Legal Factors Affecting Germany

Laws

German laws promote equality and they don’t discriminate against anyone. The country also promotes the development of businesses and companies. She also welcomes foreign investors and the growth of local businesses.

The employment contract must include the important points of the job and the role. The minimum monthly and hourly wage in Germany is 1584 Euros and 9.19 Euros. Businesses and companies provide 30 days of holidays annually to their employees.

Environmental factors impacting Germany

Tourism Industry

The tourism industry adds 4.5% of the annual revenue to the country’s total GDP. She is one of the world’s most attractive tourist places worldwide. Some of the prominent tourist destinations of Germany are fairs, festivals, mountains, forests, cathedrals, grand palaces, villages, towns, cities, scenic beauty, and German history and culture.

Environmental Challenges

Germany has achieved tech industrial success at the cost of environmental issues. Damaging forests, coal burning, acid rain, air pollution, water pollution, and global warming are some of the major challenges.

Her government has taken appreciating steps toward sustainable energy initiatives. One of them is the reduction of carbon emission rate through the increased utilization of renewable energy of 60% in 2050.

Conclusion: Germany PESTLE Analysis Example Country

After a careful study of the pestle analysis of Germany, we’ve realized that Germany is one of the tech leaders in the international market. The declining birth rate, environmental issues, and post-pandemic economic crisis are serious macro-environmental threats. The country should address these issues; while paying heed to the external political, economical, social, technological, legal, and environmental factors.