Discuss about the International Business Opportunities In Germany.
Introduction to Qantas
Qantas (Queensland and Northern Territory Aerial Services Limited) is the third oldest airline in the world, which was founded in the Queensland outback in 1920. Qantas is generally perceived as the world's driving long separation carrier and one of the most grounded marks in Australia. The company has built an excellent reputation in maintenance, software, and engineering. It is the collaboration of two contemporary airlines- Qantas and Jetstar with the main business of transportation of customers worldwide (Qantas 2018). The airlines provide regional, domestic, and international services. With its main hub at Sydney airport, the airline is based in Sydney suburb. It has 65% contribution to the Australian domestic market, as per the reports of March 2014. Many local airlines work under the banner of QANTAS banner, Jetstar being one of them. Jet-star airways are a low-cost airline provides services between Australia and New Zealand. If we put a glance at the history of Qantas, its foundation is the result of the endeavors of hard-working individuals, not just machines. The journey started with feeble biplanes carrying two passengers, then airbuses flying with some 450 passengers across the world in around a day. We are well aware of its present status. Behind this productive and excellent history, there is the hard work of innovative individuals and sincere staff alongside the excellent business partners and the key suppliers. At present, it is one of the best companies of its type, which holds a promising future in the market (Qantas 2018). It connects the entire world with its excellent facilities and is at the forefront of the international civil aviation industry with its promising facilities, the company would continue to evolve and grow.
Germany- The sovereign state present in central Western Europe is Germany. 357, 386 square kilometers of an area is covered by Germany, including 16 constituent states. In Germany there are approximately 83 million inhabitants are present (Globaltenders 2016). According to 2017 estimates, the PPP of Germany was $4.171 trillion. Talking about Germany’s economy, it has a “social market economy.” Labor forces in Germany are highly skilled with a huge amount of innovation (allianceexperts 2018). Germany has secured the fourth position in the world according to GDP nominal and 3rd position in being the largest importers in the world. IT sector contributes more to GDP.
China- China is located in East Asia and also known as “ unitary one- party sovereign state”. China has the largest population in the world that is, 1.404 billion (export.gov 2017). An area covered by China is 9,600,000 square kilometers. Beijing is the capital of the china. According to 2018 estimates, the PPP of China is $25.238 trillion and GDP nominal is $14.092 trillion. According to the consulted sources, China has had the largest economy in the past many decades. According to the survey conducted in 2014, China secured the second position in terms of world's economy and GDP (nominal) which was USD $10.380 trillion.
Identification of countries for market entry
Political and legal - China is counted as one of the strongest countries in the world. But that does not give it any power over government, no matter what the rules are, whether informal or formal all the organizations must abide by them. Political factors can influence the economy like high rate tariffs etcetera (Pestleanalysis 2018). The political environment in China is stable which gives them privileges like, great GDP, cheap labor, and well-defined infrastructure. It also makes China a dominant investor overseas because of being a better destination for foreign direct investments.
Economical- China has the second largest economy because of nominal GDP in the world. The purchasing power of China is very strong that makes it the second-largest economy. China has grown remarkably since 1970. China's economy is market-based which was used be centrally- planned earlier which also resulted in high GDP growth. Despite all these efforts, economic development has caused many complexities for China like increasing urbanization, environmental destruction and a high level of inequality. China has the cheapest labor that makes most of the countries to get their products manufactured in China and therefore gives the competitive advantage to China.
Social- Total population of China is 1.4 billion which makes it the most populous country in the world. Social and cultural factors also affect the economy of the country. The changing trends of social and cultural values because of population growth, sex, age, and other factors often affect the decision making. Social factors like living standards, literacy rates, traditions, religion, and immigration and emigration rate also affect the economy of the country. Majority of the population in China is literate which makes the country a better place to enhance the economy.
Technological- China has the largest internet users with around 772 million users currently. According to a technological point of view, many big tech giants are present in the country, which makes the IT sector, the biggest contributor to the GDP. Technology has been the biggest forte of China, which helps China to be a leader in technology and the science all across the world. Technology has also helped the country to focus on the innovation and creative economy instead of being a labor-intensive one. There are so many opportunities available in China for many different organizations in this sector due to the enhanced level of technology.
Environmental- China is increasing rapidly according to the economic point of view. However, the rapid growth of China has resulted in environmental damages in the country. Several kinds of pollution have risen in the country like water pollution, air pollution, and air pollution etcetera. This has resulted in deforestation, global warming, sudden climate change, and loss of biodiversity etcetera (Rahman 2017). Although the Chinese government has taken many initiatives towards the increasing environmental concerns, such as government has launched some legal policies and laws. These laws have allowed more people to get involved and take an initiative towards the betterment of the environment.
PESTEL analysis of China
Political and Legal- Germany has been a democratic republic. A framework was laid out in 1949 called as Grundesetz in the constitutional document. The Christian democratic union and the social democratic party dominate the political system of Germany (Pestleanalysis 2018). All the fundamental structure of the German government has been laid out by the constitution of the federal republic in Germany. All the rules and standards are set by it that has to be followed by every person in the nation. That is what makes it the higher authority. This old system has affected Germany in so many different possible ways.
Economical- The economy of Germany is comparatively slow. Germany has fewer amounts of raw materials, which is only igniting, and potash that too in a very significant amount. In Germany, the main source of electricity is the power plant in which ignites is burned. Solar power technology is rapidly growing in Germany along with the wind turbines, which makes the Germany one of the leading producers of them. Most of the products like, natural gas, oil are imported into Germany from other countries that makes it the 3rd largest importer in the world. 70% of GDP is obtained by the service sector.
Social- 82 million inhabitants are present in Germany currently. According to the amount of population, it is the biggest EU country. Germany is a modern country with lots of different cultures. Different kind of social background means different lifestyles, which affect the economy of the country in several ways. In Germany, a family is always given the first preference. Social and cultural aspects of Germany are mostly reflected by its, music, art, literature, sports, and the local architecture etcetera. Germany is popular for its best art pieces and many international events based on sports. BMW and Mercedes are manufactured in Germany.
Technological- Science and technology are backed by Germany in several different ways. Many independent libraries are present in Germany, which also offers a place for private research. Germany also supports the technology sector by giving a preference to the different type of research and developments, which can be very beneficial for the growth of the country in different possible ways. Many programs related to technology and science is facilitated in the country. In the European Union, Germany secures a noteworthy position in the IT and science sector and gives so many opportunities to this sector.
Environmental- Due to increasing industrialization, Germany is also suffering from environmental damages. Due to ignites and coal burning, pollution has increased in the air that eventually results in the acid rain which contains sulfur dioxide. As an end result of the acid rain, the amount of deforestation has increased and has led to forest destruction. Industrial waste has affected the sea life and the seawater because of the harmful industrial effluents and raw sewage directly going into the sea. The government has launched several acts to prevent the environment from harmful damages, act like, “effluence levies act” etcetera.
PESTEL analysis of Germany
China has shown a rapid growth in the past few decades. China is a better destination of FDI and has the largest trading power (Prebisch, 2016). China is mainly focused on achieving the accelerated foreign trades and develops more opening to other countries. Many trade policies and development strategy have contributed to the development of China, which are as follows: Foreign trade policies- according to this policy, China are mainly concerned about enhancing its business to many other countries that are increasing foreign trades. According to this policy, China wants to develop the economy of the country in a better way (Rugman and Verbeke, 2017). Manufacturing value enhancement and the increased exports are the two strategies of the Chinese government.
Increased bilateral arrangements- the Chinese government intends to increase bilateral arrangements by involving FTA's which will help promote the multilateral trading in China and provide a new platform.
Germany is comparatively slow when it comes to economic growth therefore to enhance the business trades and the policies, the Germany government has been using some strategies such as:
Skilled workforce- In Germany there is the very high shortage of skilled labors and workforce, therefore, the manufacturing industry is not so advanced over there (Leigh and Blakely, 2016). To overcome the situation, the Germany government is trying to train the workforce with high technical skills.
Science and technology sector- Germany government is focusing more on this sector which might lead to the better growth of the country (Neelankavil, 2015). In order to create knowledge, the German government is trying to manage a scientific capacity, substantially.
High-quality infrastructure- the government is trying to create such an education system which is scientifically oriented. And providing the proper place for the research and development team in order to create more opportunities for the country.
Risks- China is rapidly growing but due to the increased growth, urbanization is also growing. The high population also cause low job vacancies and more unemployment in the country. It is also increasing environmental damages due to the industrial establishment and growth (Charles Schmidheiny and Watts, 2017).
Opportunities- Economy of China is growing and that has made China, the second largest GDP (nominal) country (Cavusgil, Knight, Riesenberger, Rammal and Rose, 2014). It has given so many opportunities to the country for the betterment and the growth. Due to this, many persons are literate and the literacy rate has increased which helped the country in the increased economic growth mainly.
Risks- Risks associated with Germany due to changing policies of the country can be a threat for the country. These risks can be such as, low opportunities for people, increasing urbanization, environmental damages and many more (Lu, 2018). The environmental damage is also the main concern in Germany as well.
Opportunities- With the change in policies, many opportunities have raised for the technology and science sector (Shenkar, Luo and Chi, 2014). This has allowed the country to achieve advancements in the IT sector and scientific because of providing the platform for research and developments. New policies have opened so many gates of opportunities.
After summing up the above-presented report it has been inferred that there is a huge difference between the economic condition of Germany and China. China is growing rapidly in the terms of economy and if compared, Germany is very slowly growing. The labor force is declining in Germany whereas it is the strongest forte of the china. Apart from that Germany have a better trade surplus because it sends capital to different countries. In the terms of business, China is a better country because of many factors such as low-cost labor, low manufacturing rate, and better destination for FDI. The main business factor of China is the largest economy and better FDI and FTA segment, which has made China, a better place to invest in the business or trades.
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