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PESTEL analysis, example of a country - Germany

The PESTEL analysis is a strategic analysis that aims to describe a maximum of the Political, Economic, Social, Technological, Ecological and Legal elements which exert, or could exert, influence on a company, a sector, a country. In this paper, we will study the PESTEL analysis of Germany.

PESTEL analysis, example of a country - Germany

Credit Photo : Unsplash Martin Fahlander

Germany is one of the central European countries in terms of geographic, economic and demographic positioning. It has nearly 83 million inhabitants and is a good student with only a 6% unemployment rate in the midst of the COVID pandemic.

1) Political elements
Several political elements are likely to have an impact on Germany. We can cite in the first place the very recent change of chancellor, after more than fifteen years with Angela Merkel in power. The arrival of a new chancellor after such a long period of political stability is necessarily synonymous with changes, reforms, new oppositions, political redistributions of cards, posts, etc. We can also cite the political decisions relating to the management of the COVID-related crisis. Germany announced in early December 2021 that significant restrictions on unvaccinated Germans would be imposed, which may prove particularly unpopular.

2) The economic elements
The unemployment rate, the occupation rate of the active population, the household savings rate, the business investment rate, the ease, or not, of borrowing for businesses and individuals and inflation, are so many factors likely to have a significant impact on a country such as Germany. The COVID crisis has degraded certain indicators, such as the unemployment rate, which has started to rise again in most European countries. In Germany, it climbed to 6% of the working population, against less than 5% before the pandemic. Inflation also appears to be trending upward after several years of stabilizing at a very low level. The economic data is partially encouraging, with good signs of a solid economic recovery. But the situation remains fragile, in particular, given the immense uncertainties still linked to the COVID crisis.

3) Social elements
Several social elements can have major influences on Germany. These include the generalization of teleworking and its sustainability during and after the COVID crisis. This brings about many changes, including desertion of large cities in favor of smaller ones, a decrease in transport and car use, etc.

Another social factor at work in Germany today, which can have significant impacts on the country, as a whole, is the increase in the proportion of working women. The economic crisis, in particular, has pushed some women to take up or resume a professional activity, and the consequences of this movement are numerous.

4) Technological elements
Germany, like many European countries, is faced with the arrival and deployment of 5G technology, a very high penetration rate of the mobile phone market, and the exponential development of video conferencing and video telephony techniques. The development of these advanced technologies allows, for example, the rise of medicine through videos, which is a partial solution to the problems of medical disruption observed in certain regions of Germany. It also makes it possible to medically open up certain areas in Germany and to relieve as much as possible the emergency services, which are already overcrowded in this period of COVID19. These technological developments can therefore be seen as major disruptions and important development factors for the country.

5) Ecological factors
Germany is a country already firmly oriented towards ecological transition. Environmental concerns have been strong and widely shared for several decades. Raising this awareness can impact the country in significant ways. One can think, in particular, of reducing the use of polluting private transport in favor of non-polluting transport (especially bicycles) or public transport. This impacts the country as a whole and reinforces the need for large-scale common infrastructure.

6) Legal factors

Germany is facing many legislative changes, which should be even more numerous in the coming months due to the departure of Angela Merkel and the arrival of the new chancellor, coming from a party opposed to that of her predecessor. In addition, Germany is impacted by many supra-national legal developments, such as the recent entry into force of the European GDPR. These European regulations apply to Germany as to other countries and can upset well-established balances. We can also cite, for example, the European standards IFRS, which are applied and imposed on all European companies and groups.

Germany is one of the greatest European powers and appears to be on the cusp of a real revival at the end of 2021, led by Olaf Scholz, succeeding Angela Merkel after 16 years in power. The country nevertheless seems to be impacted by many factors, political, economic, social, technological, ecological and legal, which constantly redistribute the cards, shake up the data, challenge the inhabitants as well as the leaders. Among these factors is the COVID crisis, as a whole, with its consequences and multi-sectoral repercussions. Its full consequences are not yet known, although it nevertheless seems that the end of 2021 is more optimistic than the end of 2020.

Sources: Into the minds, Coface