Computer Servers in Germany: A Strategic Reference, 2006
ICON Group International, July 2007, Pages: 193
How to Strategically Evaluate Germany
Perhaps the most efficient way of evaluating Germany is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance to computer servers are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries
Demand/Market Potential Driven Firm
Relative Accessibility
Accessibility/Supply Averse Firm
In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).
Latent Demand and Accessibility in Germany
This report provides a detailed overview of factors driving latent demand and accessibility for computer servers in Germany. Latent demand is largely driven by economic fundamentals specific to computer servers. This topic is discussed in Chapter 2 using work carried out in Germany on behalf of American firms and authored by the United States government (typically commercial attachés or similar persons in local offices of the U.S. Department of State). I have included a number of edits to clarify the information provided. Latent demand only represents half of the picture. Chapter 2 also deals with micro-accessibility for computer servers in Germany. I use the term “micro” since the discussion is focused specifically on computer servers.
Chapter 3 is also a stand-alone report that I have authored. It covers proxy pro-forma financial indicators of firms operating in Germany. I use the word “proxy” because the provided figures only cover a “what if” scenario, based on actual operating results for firms in Germany. The numbers are only indicative of an average firm whose primary activity is in Germany. It covers a vertical analysis of the maximum likelihood balance sheet, income statement, and financial ratios of firms operating in Germany. It does so for a particular Standard Industrial Classification (SIC) code. That code covers “computer programming, data processing and computer related services”, as defined in Chapter 3. Again, while “computer programming, data processing and computer related services” does not exactly equate to “computer servers”, it nevertheless gives an indicator of how Germany compares to other countries for a proxy adjacent category along various dimensions.
Chapter 4 deals with macro-accessibility and covers factors that go beyond computer servers. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Germany:
Openness to Trade in Germany
Openness to Direct Investment in Germany
Local Marketing and Entry Strategy Alternatives
Local Human Resources
Local Risks
Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are covered in the Chapter 4, which is a general overview of investment and business conditions in Germany. Chapter 4 is also presented from the perspective of an American firm, though is equally applicable to most firms entering Germany. This chapter is also authored by local offices of the U.S. government, as is Chapter 2. Likewise, I have included a number of edits to clarify the provided information as it relates to the general strategic framework mentioned earlier.
1 INTRODUCTION & METHODOLOGY 1
1.1 What Does This Report Cover? 1
1.2 How to Strategically Evaluate Germany 1
1.3 Latent Demand and Accessibility in Germany 3
2 COMPUTER SERVERS IN GERMANY 5
2.1 Latent Demand and Accessibility: Background 5
2.2 Latent Demand: Market Composition 5
2.3 Latent Demand: Dynamics 6
2.4 Latent Demand: Leading Segments 7
2.4.1 Blade Servers 8
2.4.2 Operating Systems and Software 9
2.4.3 Storage Area Network (SAN) and Network-Attached Storage (NAS) 10
2.5 Market Issues and Obstacles 10
2.5.1 Import Viability 10
2.5.2 WEEE and RoHS Legislation 10
2.6 Accessibility: Trade Events 11
2.7 Key Contacts 12
3 FINANCIAL INDICATORS: COMPUTER PROGRAMMING, DATA PROCESSING AND COMPUTER RELATED SERVICES 13
3.1 Overview 13
3.1.1 Financial Returns and Gaps in Germany 14
3.1.2 Labor Productivity Gaps in Germany 17
3.1.3 Limitations and Extensions 17
3.2 Financial Returns in Germany: Asset Structure Ratios 18
3.2.1 Overview 18
3.2.2 Assets - Definitions of Terms 18
3.2.3 Asset Structure: Outlook 21
3.2.4 Large Variances: Assets 22
3.2.5 Key Percentiles and Rankings 25
3.3 Financial Returns in Germany: Liability Structure Ratios 40
3.3.1 Overview 40
3.3.2 Liabilities and Equity - Definitions of Terms 40
3.3.3 Liability Structure: Outlook 42
3.3.4 Large Variances: Liabilities 43
3.3.5 Key Percentiles and Rankings 46
3.4 Financial Returns in Germany: Income Structure Ratios 59
3.4.1 Overview 59
3.4.2 Income Statements - Definitions of Terms 59
3.4.3 Income Structure: Outlook 62
3.4.4 Large Variances: Income 63
3.4.5 Key Percentiles and Rankings 66
3.5 Financial Returns in Germany: Profitability Ratios 81
3.5.1 Overview 81
3.5.2 Ratios - Definitions of Terms 81
3.5.3 Ratio Structure: Outlook 83
3.5.4 Large Variances: Ratios 84
3.5.5 Key Percentiles and Rankings 87
3.6 Productivity in Germany: Asset-Labor Ratios 102
3.6.1 Overview 102
3.6.2 Asset to Labor: Outlook 103
3.6.3 Asset to Labor: International Gaps 104
3.6.4 Key Percentiles and Rankings 107
3.7 Productivity in Germany: Liability-Labor Ratios 122
3.7.1 Overview 122
3.7.2 Liability to Labor: Outlook 123
3.7.3 Liability and Equity to Labor: International Gaps 124
3.7.4 Key Percentiles and Rankings 127
3.8 Productivity in Germany: Income-Labor Ratios 140
3.8.1 Overview 140
3.8.2 Income to Labor: Outlook 141
3.8.3 Income to Labor: Gaps 142
3.8.4 Key Percentiles and Rankings 145
4 MACRO-ACCESSIBILITY IN GERMANY 160
4.1 Executive Summary 160
4.2 Economic Fundamentals and Dynamics 161
4.2.1 Social Security Reforms 161
4.2.2 Labor Market 161
4.3 Political Risks 162
4.3.1 Basic Government Structure 162
4.4 Marketing Strategies 163
4.4.1 Services 163
4.4.2 Trade Fairs 164
4.4.3 Advertising Options 164
4.4.4 Associations 165
4.4.5 Public Procurement 165
4.4.6 Marketing to the New Federal States 165
4.5 Import and Export Regulation Risks 166
4.5.1 Self-Certification 167
4.5.2 Value Added Tax/Turnover Tax 169
4.5.3 VAT Applicable to Online Sales 169
4.5.4 Custom Regulations/Tariffs 169
4.6 Investment Climate 169
4.6.1 Openness to Foreign Investment 169
4.6.2 Conversion and Transfer Policies 170
4.6.3 Expropriation and Compensation 170
4.6.4 Dispute Settlement 170
4.6.5 Performance Requirements and Incentives 170
4.6.6 Right to Private Ownership and Establishment 172
4.6.7 Intellectual Property Risks 173
4.6.8 Transparency of Regulatory System 173
4.6.9 Capital Market Risks 174
4.6.10 Political Violence 174
4.6.11 Corruption 174
4.6.12 Bilateral Investment Agreements 174
4.6.13 OPIC and Other Investment Insurance 175
4.6.14 Labor 175
4.6.15 Free Trade Zone Options 176
4.7 Trade and Project Financing 176
4.8 Travel Risks 177
4.8.1 Country Data 177
4.9 Key Contacts 178
4.9.1 Trade Associations and Chambers of Commerce 178
4.9.2 Market Research Firms 180
4.9.3 Commercial Banks 180
4.9.4 Other Contacts 182
4.9.5 Contacts in Washington D.C. 182
4.9.6 U.S.-Based Multipliers 183
4.9.7 Useful Web Sites 183
5 DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS 185
5.1 Disclaimers & Safe Harbor 185
5.2 Icon Group International, Inc. User Agreement Provisions 186
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