Case Study made by Nora Kovacs, Pablo Gil and Sergio Stanga about what the German companies must take into consideration entering the US market with the aim of doing business there.
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German firms entering in the US market
1. GERMAN FIRMS ENTERING IN THE US
MARKET:
CHALLENGES AND OPPORTUNITIES
1
N O R A K O VA C S - G O D A
PA B L O G I L M A R T Í N E Z
S E R G I O S TA N G A
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
2. LAYOUT
2
INTRODUCTION
OPPORTUNITIES & THREATS
EXAMPLES
HIDDEN CHAMPIONS
CONCLUSION
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
3. German companies in the U.S:
3
Strong bilateral relationship
In 2007/2008 66% of the German companies registered high
sales
„The center of the world’s trade and investment economy”
German business contributes to:
U.S. economic growth and jobs
U.S. economic health
U.S. economic prosperity
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
4. German companies in the U.S:
4
German firms employed approx. 615,000 people in 2008
Wages are higher than the national average
Employment by Foreign-Owned Affiliates
1000
900
800
700
600
500
400
300
200
100
0
Sources: U.S. Bureau of Economic Analysis and Office of Trade and Economic Analysis
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
5. Foreign Direct Investment
5
More than 3,000 German enterprises have investment in
the U.S.
First ranking by Capital Stock Investment and R&D
expenditures
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
6. Future plans for the German companies:
6
Barack Obama: massive stimulus package
Create 2.5 million new jobs
Infrastructure projects
Focus on promoting green technologies
Germans are the beneficiaries
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
7. OPPORTUNITIES & THREATS
7
Internal market:
Geographic dimension:
Area of 9,372,614 km2
Distance of 4,500 km
The population: 307.212.123 (2009)
Threat: not product adaption
Economic dimension:
World's largest GDP (Gross Domestic Product)
$14.3 billons in 2009 (1/3 of world production.)
Corporate structure:
Small and medium enterprises domination
(99.7% of all companies in 2003)
Threat: High competiveness
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
8. OPPORTUNITIES & THREATS
8
Legal framework:
“Open and deregulated” in general.
Restrictions: agricultural
properties, telecommunications, nuclear energy, mining and restrictions
on the acquisition of property.
Foreign capital is subject to the same conditions as national.
Foreign investment incentives:
A foreign company have the same benefits and obligations as a U.S.
company
Foreign Direct Investment
EU investment flows to the US in 2008: €121.4 billion
US investment flows to the EU in 2008: €50.5 billion
Threats: necessary high knowledge in U.S. Law & Tax.
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
9. OPPORTUNITIES & THREATS
9
Currency:
€1=$1.4508
Propensity to import:
European Union
NAFTA (Canada and Mexico)
(2003, China has overtaken Mexico )
Trade in goods
EU good exports to the US in 2009: €204.4 billion
EU goods imports from the US in 2009: €159.8 billion
Trade in services
EU services exports to the US 2009: €119.4 billion
EU services imports from the US in 2009: €127.0 billion
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
10. Big German companies in U.S:
BMW North America
10
1975 effort to be released in the U.S., focusing on the IMSA Series. Result: the
number of people who knew BMW Bayerische Motoren Werke meant were much
higher.
70´s: new serie 5 because of clients demand
1980: they sell 895 units.
(During the next years BMW won reputation because of the competitions cars and M1
serie.)
1986: new M3 and Deutshe Tourenwagen Mastes champion, growing their
reputation .
In following years, the reputation of the brad will grow improving,innovating and
creating new models… reinforcing their reputation alway with Car tournaments.
Case of the BMW Serie 5 GT :
8,000 units expected.
2,848 real units sell.
Error: Not choose BMW Serie 5 family.
“The director himself has said that potential buyers wanted the Serie 5 family opted for the Serie 5
GT, but the result is that buyers have absorbed the Serie 7 ($ 14,000 more expensive)”
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
11. German Biomass Companies in the U.S. Market
11
2nd German American Energy Conference.
German Energy Agency GmbH
The German American Chambers of Commerce
US and the European Union: strong policy incentives to
support bioenergy development.
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
12. HIDDEN CHAMPIONS
12
Herbert Simon
“Mittelstand” or SMEs
(=small and mid-sized enterprises)
- UNKNOWN
- LEVERAGE OF OBSCURITY
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
13. HIDDEN CHAMPIONS
13
CHARACTERISTICS:
OWNERSHIP AND
GOVERNANCE STRUCTURE
BASED ON FAMILY BUSINESS
LONG-TERM RELATION WITH
KEY STAKEHOLDERS
LONG-TERM ORIENTATION (NICHE FOCUSED)
FOCUS ON OPERATIONAL EFFECTIVENESS
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
14. HIDDEN CHAMPIONS
14
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
15. HIDDEN CHAMPIONS (EXAMPLES)
15
SAP has sales and development locations
in more than 75 countries worldwide.
Fresenius is a global health care group
with products and services for dialysis,
the hospital and the medical care
of patients at home.
The core business of the Würth group is the
global trade with connecting and assembly
technology that is implemented through an
international network of group companies.
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
16. CONCLUSION
16
Large single market:
Challenges
Opportunities
340,000 export companies 600,000 jobs
100,000 FDI for Americans
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011
17. SOURCES
17
German American Chambers of Commerce (Deutsch-Amerikanische Handelskammern)
German American Trade Magazine
H. Simon, Hidden Champions, Lessons from 500 of the World’s Best Unknown Companies
http://www.manufacturingnz.org.nz/news-and-info/latest/?a=19364 (How Germany’s hidden champions stay
ahead in the global economy)
http://www.arpem.com/racing/bmwsport/r_bmwsport_p.html
http://www.google.com/#q=bmw+company+history+eeuu&hl=en&prmd=ivns&tbs=tl:1&tbo=u&ei=m97wTfnGO
8vfsgbY04SIBw&sa=X&oi=timeline_result&ct=title&resnum=11&ved=0CHIQ5wIwCg&bav=on.2,or.r_gc.r_pw.&
fp=3c571b42131dab45&biw=1280&bih=642
http://www.amchamchile.cl/sites/default/files/Guia%20Doing%20Business-rev.pdf
http://ecologic.eu/3564
http://www.olafbohlke.com/public/Top50GermanCompaniesUSA.pdf
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011