Market for Personal Computers in Germany

Executive Summary

The goal of this report is to inform US investors about the German market for personal computers. This document outlines many different areas of the German political, economic, and social structures and how they concern the personal computer industry. It provides a clear insight to the German approach to personal computers and the age of information we are now in.
This report was compiled from a variety of resources consisting primarily of government documents, but also of on the research of various market analysts through their publications on the subject. These sources are extremely reliable and provided information vital to the success of a foreign firm in the German market.
The document contains complex analysis that is written in an easy to understand format. The first section provides an overview of the German economy, government, environment, and begins with a glimpse of the German culture. The second half of the report consists of in depth analysis of many business concerns for US investors in Germany, such as: marketing, advertising, taxation, distribution, and product pricing.
The report end with a concise recommendation founded on the aforementioned research.

Part I: A Glimpse of German Political, Economic and Social structure

A. People

The Federal Republic of Germany was solidified in 1990. As a result, it achieved unification of East and West Germany, which had been separated in the aftermath of the Second World War. East and West had previously been divided by their political ideals: democracy in West Germany, and communism in East Germany.
Located in the heart of Western Europe and stretching over 356,910 square miles, Germany has a total population of 82,079,454 making it the largest country in Europe with the exception of Russia. Currently the population is split 40,124,756 males and 41,954,698 females. Between the ages of 15-64 the number of males is 28,688,052 and females stand at 27,532,099 giving the country a sizable work force. The country\'s population is expected to grow at a rate of .02% as of a 1998 estimate (this includes migrant peoples.) Germany\'s population density is at around 300 people per square kilometer, with roughly 85% living in urban areas. The birth rate in Germany stands at 8.84 births to every 1000 people and the death rate at 10.22 per 1000 persons. Infant mortality rates in the country are low at 5.2 deaths for every 1000 births. Life expectancy in Germany is an average of 76.99 years for men and 80.33 for women.1
People who live in Germany are referred to as German(s). 91.5% of Germans are ethnic Germans while the remainder of the population is divided into these groups: 2.4% Turkish, .7% Italian, .4% Greek, .4% Polish and various other minorities comprise the final 4.6% of the population. (The latter is mainly people fleeing former Yugoslavia as a result of the country\'s recent civil war.) 1
Germany is primarily a Christian country. Its population is divided at about 45% Protestants and 37% Catholic. It is typical for one religious preference to prevail in a particular town. 15% of the population is of no religious affiliation.
The language commonly spoken is German, but a small minority of Serbian speaking peoples must be noted. Literacy rates are comparable to US rates at 99% of population (over the age of 15) literate. Germans take pride in their educational system and produce many of the world\'s leading engineers.

B. Government and Political Conditions

Following reunification in 1989 the Germans set up a bicameral parliament with two main branches to establish federal authority. The first branch of the legislature is the Lower House or the Bundestag and is the most important house. Members of the Bundestag are elected for four-year terms and select the Chancellor, who is the head of the executive branch of government. The house main responsibility is enacting legislation at the federal level. A two-vote process elects candidates for a position in the Bundestag. Each constituent has two votes. The first vote is for a specific candidate, much like the popular vote in the US. The second vote is cast for a political party in general. The voters tend to vote for a party opposite that of the candidate they chose in the first vote. All the political parties are then