Photographic Equipment in Germany: A Strategic Reference, 2007
ICON Group International, July 2007, Pages: 190
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 photographic equipment 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 photographic equipment in Germany. Latent demand is largely driven by economic fundamentals specific to photographic equipment. 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 photographic equipment in Germany. I use the term “micro” since the discussion is focused specifically on photographic equipment.
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 “photographic equipment and supplies”, as defined in Chapter 3. Again, while “photographic equipment and supplies” does not exactly equate to “photographic equipment”, 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 photographic equipment. 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 PHOTOGRAPHIC EQUIPMENT IN GERMANY 5
2.1 Latent Demand and Accessibility: Background 5
2.2 Market Overview 5
2.3 Accessibility: Distribution Strategies 6
2.4 Payment and Financing Practices 7
2.5 Market Issues and Obstacles 7
2.6 Key Contacts 8
2.6.1 Trade Events 8
2.6.2 Advertising 10
2.6.3 Regulatory Agencies and Industry Associations 11
3 FINANCIAL INDICATORS: PHOTOGRAPHIC EQUIPMENT AND SUPPLIES 12
3.1 Overview 12
3.1.1 Financial Returns and Gaps in Germany 13
3.1.2 Labor Productivity Gaps in Germany 16
3.1.3 Limitations and Extensions 16
3.2 Financial Returns in Germany: Asset Structure Ratios 17
3.2.1 Overview 17
3.2.2 Assets - Definitions of Terms 17
3.2.3 Asset Structure: Outlook 20
3.2.4 Large Variances: Assets 21
3.2.5 Key Percentiles and Rankings 24
3.3 Financial Returns in Germany: Liability Structure Ratios 39
3.3.1 Overview 39
3.3.2 Liabilities and Equity - Definitions of Terms 39
3.3.3 Liability Structure: Outlook 41
3.3.4 Large Variances: Liabilities 42
3.3.5 Key Percentiles and Rankings 45
3.4 Financial Returns in Germany: Income Structure Ratios 58
3.4.1 Overview 58
3.4.2 Income Statements - Definitions of Terms 58
3.4.3 Income Structure: Outlook 61
3.4.4 Large Variances: Income 62
3.4.5 Key Percentiles and Rankings 65
3.5 Financial Returns in Germany: Profitability Ratios 80
3.5.1 Overview 80
3.5.2 Ratios - Definitions of Terms 80
3.5.3 Ratio Structure: Outlook 82
3.5.4 Large Variances: Ratios 83
3.5.5 Key Percentiles and Rankings 86
3.6 Productivity in Germany: Asset-Labor Ratios 99
3.6.1 Overview 99
3.6.2 Asset to Labor: Outlook 100
3.6.3 Asset to Labor: International Gaps 101
3.6.4 Key Percentiles and Rankings 104
3.7 Productivity in Germany: Liability-Labor Ratios 119
3.7.1 Overview 119
3.7.2 Liability to Labor: Outlook 120
3.7.3 Liability and Equity to Labor: International Gaps 121
3.7.4 Key Percentiles and Rankings 124
3.8 Productivity in Germany: Income-Labor Ratios 137
3.8.1 Overview 137
3.8.2 Income to Labor: Outlook 138
3.8.3 Income to Labor: Gaps 139
3.8.4 Key Percentiles and Rankings 142
4 MACRO-ACCESSIBILITY IN GERMANY 157
4.1 Executive Summary 157
4.2 Economic Fundamentals and Dynamics 158
4.2.1 Social Security Reforms 158
4.2.2 Labor Market 158
4.3 Political Risks 159
4.3.1 Basic Government Structure 159
4.4 Marketing Strategies 160
4.4.1 Services 160
4.4.2 Trade Fairs 161
4.4.3 Advertising Options 161
4.4.4 Associations 162
4.4.5 Public Procurement 162
4.4.6 Marketing to the New Federal States 162
4.5 Import and Export Regulation Risks 163
4.5.1 Self-Certification 164
4.5.2 Value Added Tax/Turnover Tax 166
4.5.3 VAT Applicable to Online Sales 166
4.5.4 Custom Regulations/Tariffs 166
4.6 Investment Climate 166
4.6.1 Openness to Foreign Investment 166
4.6.2 Conversion and Transfer Policies 167
4.6.3 Expropriation and Compensation 167
4.6.4 Dispute Settlement 167
4.6.5 Performance Requirements and Incentives 167
4.6.6 Right to Private Ownership and Establishment 169
4.6.7 Intellectual Property Risks 170
4.6.8 Transparency of Regulatory System 170
4.6.9 Capital Market Risks 171
4.6.10 Political Violence 171
4.6.11 Corruption 171
4.6.12 Bilateral Investment Agreements 171
4.6.13 OPIC and Other Investment Insurance 172
4.6.14 Labor 172
4.6.15 Free Trade Zone Options 173
4.7 Trade and Project Financing 173
4.8 Travel Risks 174
4.8.1 Country Data 174
4.9 Key Contacts 175
4.9.1 Trade Associations and Chambers of Commerce 175
4.9.2 Market Research Firms 177
4.9.3 Commercial Banks 177
4.9.4 Other Contacts 179
4.9.5 Contacts in Washington D.C. 179
4.9.6 U.S.-Based Multipliers 180
4.9.7 Useful Web Sites 180
5 DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS 182
5.1 Disclaimers & Safe Harbor 182
5.2 Icon Group International, Inc. User Agreement Provisions 183
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