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International Marketing In Germany

Chapter-1

History of Germany

Country Germany Capital Berlin Location Central Europe, bordering the Baltic

Sea and the North Sea, between the Netherlands and Poland, south of Denmark

Size357,021 sq km Terrain lowlands in north, uplands in centres, Bavarian Alps

in south Climate temperate and marine; cool, cloudy, wet winters and summers;

occasional warm wind Languages German Nationality noun: German(s)

adjective: German Religion Protestant 34%, Roman Catholic 34%, Muslim 3.7%,

unaffiliated or other 28.3% Currency euro

(EUR) Exports machinery, vehicles, chemicals, metals and manufactures,

foodstuffs, textiles After the collapse of the Second German Empire following the

defeat of German forces in the First World War, the Weimar Republic was

founded. Its first elected president was Field Marshal Paul von Hindenburg.

Germany’s economic depression resulted in discontent within the masses and

Adolf Hitler’s nationalistic views and calls for a Greater Germany fanned the

flames. Hitler was made chancellor in 1933 by Hindenburg. After Hinesburg’s

death in 1934 Hitler began rearming the military. His invasion of Poland was the

precursor to the Second World War. Germany was split by the Allies and Soviets

after their victory in 1945. The split resulted in the occupation of West Germany

by Allied Forces and East Germany effectively being controlled by the Soviet

Union. The re-unification of Germany was achieved through the collapse of the

East German communist government and negotiations between the West

German and Soviet Governments. The country was officially re-unified on 3October 1990.Today, Germany consists of over 82 million inhabitants; more than

7 million are foreign nationals. Its two main religions are protestant and catholic.

Religious freedom is enshrined in Germany’s basic law (Grund gesetz). The

official language is German and many dialects are spoken throughout the

country that can be difficult to understand for those who speak standard

German. Approximately 80% of the population speak at least one foreign

language, the most popular being English. German people generally take great

pride in their neighbourhood and the streets are generally clean and free from




litter. As a workforce, Germans have a reputation for being diligent, accurate,

reliable and loyal.The standard of living is generally high, with rental and retail

purchase being comparatively cheap. An OECD study for 2008 revealed that low

earners pay some of the highest taxes and social security contributions in

Europe – up to 52% of gross income.

Germanic tribes and Frankish Empire




Holy Roman Empire

On 25 December 800, the Frankish king Charlemagne was crowned emperor and

founded the Carolingian Empire, which was divided in 843.[17] The Holy Roman

Empire resulted from the eastern portion of this division. Its territory stretched

from the Eider River in the north to the Mediterranean coast in the south.[17]

Under the reign of the Ottoman emperors (919–1024), several major duchies

were consolidated, and the German king was crowned Holy Roman Emperor of

these regions in 962. The Holy Roman Empire absorbed northern Italy and

Burgundy under the reign of the Salian emperors (1024–1125), although the

emperors lost power through the Investiture Controversy.

Under the Hohenstaufen emperors (1138–1254), the German princes increased

their influence further south and east into territories inhabited by Slavs,

preceding German settlement in these areas and further east Northern German

towns grew prosperous as members of the Hanseatic League. Starting with the

Great Famine in 1315, then the Black Death of 1348–50, the population of

Germany plummeted.[19] The edict of the Golden Bull in 1356 provided the

basic constitution of the empire and codified the election of the emperor by

seven prince-electors who ruled some of the most powerful principalities and

archbishoprics.




Martin Luther publicized The Ninety-Five Theses in 1517, challenging the Roman

Catholic Church and initiating the Protestant Reformation. A separate Lutheran

church became the official religion in many German states after 1530. Religious

conflict led to the Thirty Years' War (1618–1648), which devastated German

lands.[21] The population of the German states was reduced by about 30%.[22]

The Peace of Westphalia (1648) ended religious warfare among the German

states, but the empire was de facto divided into numerous independent

principalities. In the 18th century, the Holy Roman Empire consisted of

approximately 1,800 such territories.[23] From 1740 onwards, dualism between

the Austrian Habsburg Monarchy and the Kingdom of Prussia dominated German

history. In 1806, the Emporium was overrun and dissolved as a result of the

Napoleonic Wars.




Germany History, Population, Language and Culture

Foundation of the German Empire in Versailles, 1871. Bismarck is at the centrein a white uniform.

Following the fall of Napoleon, the Congress of Vienna convened in 1814 and

founded the German Confederation (Deutscher Bund), a loose league of 39

sovereign states. Disagreement with restoration politics partly led to the rise of

liberal movements, followed by new measures of repression by Austrian

statesman Metternich. The Zollverein, a tariff union, furthered economic unity in

the German states. National and liberal ideals of the French Revolution gainedincreasing support among many, especially young, Germans. In the light of a

series of revolutionary movements in Europe, which established a republic in

France, intellectuals and commoners started the Revolutions of 1848 in the

German states. King Frederick William IV of Prussia was offered the title of

Emperor, but with a loss of power; he rejected the crown and the proposed

constitution, leading to a temporary setback for the movement. In 1935,

Germany reacquired control of the Saar and in 1936 military control of the

Rhineland, both of which had been lost in the Treaty of Versailles. In

1938,Austria was annexed, and in 1939, Czechoslovakia was brought under

German control. The invasion of Poland was prepared through the Molotov–

Ribbentrop pact and Operation Himmler. On 1 September 1939 the German

Wehrmacht launched a blitzkrieg on Poland, which was swiftly occupied by

Germany and by the Soviet Red Army. The UK and France declared war on

Germany, marking the beginning of World War II.[38] As the war progressed,

Germany and its allies quickly gained control of most of continental Europe and




North Africa, though plans to force the United Kingdom to an armistice or

surrender failed. On 22 June 1941, Germany broke the Molotov–Ribbentrop pact

and invaded the Soviet Union. Japan's attack on Pearl Harbor led Germany to

declare war on the United States. The Battle of Stalingrad forced the German

army to retreat on the Eastern front.[38] In September 1943, Germany's ally

Italy surrendered, and German troops were forced to defend an additional front

in Italy. D-Day opened a Western front, as Allied forces advanced towards

German territory. On 8 May 1945, the German armed forces surrendered after

the Red Army occupied Berlin.

Berlin in ruins after World War II

Occupation zones in Germany, 1947. The territories east of the Oder-Neisse line,

under Polish and Soviet de jureadministration and de facto annexation, are

shown as white as is the detached Saar protectorate.

After the surrender of Germany, the remaining German territory and Berlin were

partitioned by the Allies into four military occupation zones. Together, these

zones accepted more than 6.5 million of the ethnic Germans expelled from

eastern areas.[50] The western sectors, controlled by France, the United

Kingdom, and the United States, were merged on 23 May 1949 to form the

Federal Republic of Germany (Bundesrepublik Deutschland); on 7 October 1949,

the Soviet Zone became the German Democratic Republic (Deutsche

Demokratische Republic, or DDR). They were informally known as "West

Germany" and "East Germany". East Germany selected East Berlin as its capital,

while West Germany chose Bonn as a provisional capital, to emphasise its stance

that the two-state solution was an artificial and temporary status quo.

West Germany, established as a federal parliamentary republic with a "social

market economy", was allied with the United States, the UK and France. The

country enjoyed prolonged economic growth beginning in the early 1950s

(Wirtschaftswunder). West Germany joined NATO in 1955 and was a founding

member of the European Economic Community in 1957. East Germany was an

Eastern bloc state under political and military control by the USSR via the latter's

occupation forces and the Warsaw Pact. Though East Germany claimed to be a

democracy, political power was exercised solely by leading members (Politburo)of the communist-controlled Socialist Unity Party of Germany, supported by the




Stasi, an immense secret service, and a variety of sub-organisations controlling

every aspect of society. A Soviet-style command economy was set up; the GDR

later became a Comecon state. While East German propaganda was based on

the benefits of the GDR's social programmes and the alleged constant threat of a

West German invasion, many of her citizens looked to the West for freedom and

prosperity. The Berlin Wall, built in 1961 to stop East Germans from escaping to

West Germany, became a symbol of the Cold War. hence its fall in 1989,

following democratic reforms in Poland and Hungary, became a symbol of the

Fall of Communism, German Reunification and Die Wende.

The Berlin Wall in front of the Brandenburg Gate shortly before its fall in 1989

Tensions between East and West Germany were reduced in the early 1970s by

Chancellor Willy Brandt's Ostpolitic. In summer 1989, Hungary decided to

dismantle the Iron Curtain and open the borders, causing the emigration of

thousands of East Germans to West Germany via Hungary. This had devastating

effects on the GDR, where regular mass demonstrations received increasing

support. The East German authorities unexpectedly eased the border

restrictions, allowing East German citizens to travel to the West; originally

intended to help retain East Germany as a state, the opening of the border

actually led to an acceleration of the Wendi reform process. This culminated in

the Two Plus Four Treaty a year later on 12 September 1990, under which the

four occupying powers renounced their rights under the Instrument of

Surrender, and Germany regained full sovereignty. This permitted German

reunification on 3 October 1990, with the accession of the five re-establishedstates of the former GDR (new states or "neue Lander").




Geography

Topographic mapGermany is in Western and Central Europe, with Denmark bordering to the

north, Poland and the Czech Republic to the east, Austria and Switzerland to the

south, France and Luxembourg to the southwest, and Belgium and the

Netherlands to the northwest. It lies mostly between latitudes 47° and 55° N

(the tip of Silt is just north of 55°), and longitudes 5° and 16° E. The territory

covers 357,021 km2 (137,847 sq mi), consisting of 349,223 km2 (134,836 sq

mi) of land and 7,798 km2 (3,011 sq mi) of water. It is the seventh largest

country by area in Europe and the 62nd largest in the world.

Elevation ranges from the mountains of the Alps (highest point: the Zugspitze at

2,962 metres / 9,718 feet) in the south to the shores of the North Sea in the

northwest and the Baltic Sea (in the northeast. The forested uplands of central

Germany and the lowlands of northern Germany

Lowest point: at 3.54 metres / 11.6 feet below sea level) are traversed by such

major rivers as the Rhine, Danube and Elbe. Glaciers are found in the Alpine




region, but are experiencing deglaciation. Significant natural resources are iron

ore, coal, potash, timber, lignite, uranium, copper, natural gas, salt, nickel,

arable land and water.

ClimateMost of Germany has a temperate seasonal climate in which humid westerly

winds predominate. The climate is moderated by the North Atlantic Drift, the

northern extension of the Gulf Stream. This warmer water affects the areas

bordering the North Sea; consequently in the northwest and the north the

climate is oceanic. Rainfall occurs year-round, especially in the summer. Winters

are mild and summers tend to be cool, though temperatures can exceed 30

°C(86 °F).[59]

The east has a more continental climate; winters can be very cold and summers

very warm, and long dry periods are frequent. Central and southern Germany

are transition regions which vary from moderately oceanic to continental. In

addition to the maritime and continental climates that predominate over most of

the country, the Alpine regions in the extreme south and, to a lesser degree,

some areas of the Central German Uplands have a mountain climate,

characterized by lower temperatures and greater precipitation.

The eagle is a protected bird of prey and the national heraldic animal.




Chapter-2

Economic history of Germany

Peasants and rural life

Peasants continued to centre their lives in the village, where they were members

of a corporate body and help manage the community resources and monitor the

community life. Across Germany and especially in the east, they were serfs who

were bound prominently to parcels of land In most of Germany, farming was

handled by tenant farmers who paid rents and obligatory services to the

landlord, who was typically a nobleman. Peasant leaders supervised the fieldsand ditches and grazing rights, maintained public order and morals, and

supported a village court which handled minor offenses. Inside the family the

patriarch made all the decisions, and tried to arrange advantageous marriages

for his children. Much of the villages' communal life centered around church

services and holy days. In Prussia, the peasants drew lots to choose conscripts

required by the army. The noblemen handled external relationships and politics

for the villages under their control, and were not typically involved in daily

activities or decisions.

The emancipation of the serfs came in 1770-1830, beginning with Schleswig in

1780. Prussia abolished serfdom with the "October Edict" of 1807, which

upgraded the personal legal status of the peasantry and gave them the chance

to purchase for cash part of the lands they were working. They could also sell

the land they already owned. The edict applied to all peasants whose holdings

were above a certain size, and included both Crown lands and noble estates. The

peasants were freed from the obligation of personal services to the lord and

annual dues. A bank was set up so that landowner could borrow government

money to buy land from peasants (the peasants were not allowed to use it to

borrow money to buy land until 1850). The result was that the large landowners

obtained larger estates, and many peasant became landless tenants, or moved

to the cities or to America. The other German states imitated Prussia after 1815.

In sharp contrast to the violence that characterized land reform in the French




Revolution, Germany handled it peacefully. In Schleswig the peasants, who had

been influenced by the Enlightenment, played an active role; elsewhere they

were largely passive. Indeed, for most peasants, customs and traditions

continued largely unchanged, including the old habits of deference to the nobles

whose legal authority remains quite strong over the villagers? Although the

peasants were no longer tied to the same land like serfs had been, the old

paternalistic relationship in East Prussia lasted into the 20th century.

Industrial revolution

Before 1850 Germany lagged far behind the leaders in industrial development,

Britain, France and Belgium. By midcentury, however, the German states were

catching up, and by 1900 Germany was a world leader in industrialization, along

with Britain and the United States. In 1800, Germany's social structure was

poorly suited to entrepreneurship or economic development. Domination by

France during the era of the French Revolution (1790s to 1815), produced

important institutional reforms, including the abolition of feudal restrictions on

the sale of large landed estates, the reduction of the power of the guilds in the

cities, and the introduction of a new, more efficient commercial law.

Nevertheless, traditionalism remained strong in most of Germany. Untilmidcentury, the guilds, the landed aristocracy, the churches, and the

government bureaucracies had so many rules and restrictions that

entrepreneurship was held in low esteem, and given little opportunity to

develop. From the 1830s and 1840s, Prussia, Saxony, and other states

reorganized agriculture, introducing sugar beets, turnips, and potatoes, yielding

a higher level of food production that enabled a surplus rural population to move

to industrial areas. The beginnings of the industrial revolution in Germany came

in the textile industry, and was facilitated by eliminating tariff barriers through

the Zollverein, starting in 1834. The takeoff stage of economic development

came with the railroad revolution in the 1840s, which opened up new markets

for local products, created a pool of middle manager, increased the demand for

engineers, architects and skilled machinists and stimulated investments in coal

and iron. The political decisions about the economy of Prussia (and after 1871 all

Germany) were largely controlled by a coalition of "rye and iron", that is the

Junker landowners of the east and the heavy industry of the west.

http://en.wikipedia.org/wiki/Zollverein

http://en.wikipedia.org/wiki/Zollverein




Regions

The north German states were for the most part richer in natural resources than

the southern states. They had vast agricultural tracts from Schleswig-Holstein in

the west through Prussia in the east. They also had coal and iron in the Ruhr

Valley. Through the practice of primogeniture, widely followed in northern

Germany, large estates and fortunes grew. So did close relations between their

owners and local as well as national governments.

The south German states were relatively poor in natural resources and those

Germans therefore engaged more often in small economic enterprises. They also

had no primogeniture rule but subdivided the land among several offspring,

leading those offspring to remain in their native towns but not fully able tosupport themselves from their small parcels of land. The south German states,

therefore, fostered cottage industries, crafts, and a more independent and self-

reliant spirit less closely linked to the government.

Banks and Cartels

German banks played central roles in financing German industry. Different banks

formed cartels in different industries. Cartel contracts were accepted as legaland binding by German courts although they were held to be illegal in Britain

and the United States.

The process of cartelization began slowly, but the cartel movement took hold

after 1873 in the economic depression that followed the post unification

speculative bubble. It began in heavy industry and spread throughout other

industries. By 1900 there were 275 cartels in operation; by 1908, over 500. By

some estimates, different cartel arrangements may have numbered in the

thousands at different times, but many German companies stayed outside the

cartels because they did not welcome the restrictions that membership imposed.

The government played a powerful role in the industrialization of the German

Empire founded by Otto von Bismarck in 1871 during a period known as

the Second Industrial Revolution. It supported not only heavy industry but also

crafts and trades because it wanted to maintain prosperity in all parts of the

empire. Even where the national government did not act, the highly autonomous

http://en.wikipedia.org/wiki/Schleswig-Holstein

http://en.wikipedia.org/wiki/Ruhr_Valley


http://en.wikipedia.org/wiki/Primogeniture

http://en.wikipedia.org/wiki/Cottage_industries

http://en.wikipedia.org/wiki/German_Empire


http://en.wikipedia.org/wiki/Otto_von_Bismarck

http://en.wikipedia.org/wiki/Second_Industrial_Revolution

http://en.wikipedia.org/wiki/Second_Industrial_Revolution

http://en.wikipedia.org/wiki/Otto_von_Bismarck



http://en.wikipedia.org/wiki/Cottage_industries

http://en.wikipedia.org/wiki/Primogeniture



http://en.wikipedia.org/wiki/Schleswig-Holstein




regional and local governments supported their own industries. Each state tried

to be as self-sufficient as possible.

Despite the several ups and downs of prosperity and depression that marked the

first decades of the German Empire, the ultimate wealth of the empire provedimmense. German aristocrats, landowners, bankers, and producers created what

might be termed the first German economic miracle, the turn-of-the-century

surge in German industry and commerce during which bankers, industrialists,

mercantilists, the military, and the monarchy joined forces.

Class and the welfare state

Germany's middle-class, based in the cities, grew exponentially, although it

never gained the political power it had in France, Britain or the United States.

The Association of German Women's Organizations (BDF) was established in

1894 to encompass the proliferating women's organizations that had sprung up

since the 1860s. From the beginning the BDF was a bourgeois organization, its

members working toward equality with men in such areas as education, financial

opportunities, and political life. Working-class women were not welcome; they

were organized by the Socialists.

Bismarck built on a tradition of welfare programs in Prussia and Saxony that

began as early as in the 1840s. In the 1880s he introduced old age pensions,

accident insurance, medical care and unemployment insurance that formed the

basis of the modern European welfare state. His paternalistic programs won the

support of German industry because its goals were to win the support of the

working classes for the Empire and reduce the outflow of immigrants to America,

where wages were higher but welfare did not exist.[19] Bismarck further won the

support of both industry and skilled workers by his high tariff policies, which

protected profits and wages from American competition, although they alienated

the liberal intellectuals who wanted free trade

http://en.wikipedia.org/wiki/European_welfare_state

http://en.wikipedia.org/wiki/Economic_history_of_Germany




http://en.wikipedia.org/wiki/European_welfare_state




Railways

Political disunity of three dozen states and a pervasive conservatism made it

difficult to build railways in the 1830s. However, by the 1840s, trunk lines did

link the major cities; each German state was responsible for the lines within its

own borders. Economist Friedrich List summed up the advantages to be derived

from the development of the railway system in 1841:

1) as a means of national defence, it facilitates the concentration,

distribution and direction of the army.

2) It is a means to the improvement of the culture of the nation…. It

brings talent, knowledge and skill of every kind readily to market.

3) It secures the community against dearth and famine, and against

excessive fluctuation in the prices of the necessaries of life.

4) It promotes the spirit of the nation, as it has a tendency to destroy the

Philistine spirit arising from isolation and provincial prejudice and vanity.

It binds nations by ligaments, and promotes an interchange of food and of

commodities, thus making it feel to be a unit. The iron rails become a

nerve system, which, on the one hand, strengthens public opinion, and,

on the other hand, strengthens the power of the state for police and

governmental purposes.[21]

Lacking a technological base at first, the Germans imported their engineering

and hardware from Britain, but quickly learned the skills needed to operate

and expand the railways. In many cities, the new railway shops were the

centres of technological awareness and training, so that by 1850, Germany

was self-sufficient in meeting the demands of railroad construction, and the

railways were a major impetus for the growth of the new steel industry.

Observers found that even as late as 1890, their engineering was inferior to

Britain’s. However, German unification in 1870 stimulated consolidation,

nationalisation into state-owned companies, and further rapid growth. Unlike

the situation in France, the goal was support of industrialisation, and so

heavy lines crisscrossed the Ruhr and other industrial districts, and provided

good connections to the major ports of Hamburg and Bremen. By 1880,

Germany had 9,400 locomotives pulling 43,000 passengers and 30,000 tonsof freight, and pulled ahead of France.

http://en.wikipedia.org/wiki/Friedrich_List





http://en.wikipedia.org/wiki/Friedrich_List




Agriculture

Perkins (1981) argues that more important than Bismarck's new tariff on

imported grain was the introduction of the sugar beet as a main crop. Famers

quickly abandoned traditional, inefficient practices for modern new methods,

including use of new fertilizers and new tools. The knowledge and tools

gained from the intensive farming of sugar and other root crops made

Germany the most efficient agricultural producer in Europe by 1914. Even so

farms were small in size, and women did much of the field work. An

unintended consequence was the increased dependence on migratory,

especially foreign, and labour.




The social market economy

The Germans proudly label their economy a "soziale Marktwirtschaft," or

"social market economy," to show that the system as it has developed after

World War II has both a material and a social—or human—dimension. They

stress the importance of the term "market" because after the Nazi experience

they wanted an economy free of state intervention and domination. The only

state role in the new West German economy was to protect the competitive

environment from monopolistic or oligopolistic tendencies—including its own.

The term "social" is stressed because West Germans wanted an economy

that would not only help the wealthy but also care for the workers and others

who might not prove able to cope with the strenuous competitive demands of a market economy. The term "social" was chosen rather than "socialist" to

distinguish their system from those in which the state claimed the right to

direct the economy or to intervene in it.

Beyond these principles of the social market economy, but linked to it, comes

a more traditional German concept, that of Ordnung, which can be directly

translated to mean order but which really means an economy, society, and

policy that are structured but not dictatorial. The founders of the socialmarket economy insisted that Den ken in Ordnance—to think in terms of

systems of order—was essential. They also spoke of Ordo-Liberalismus

because the essence of the concept is that this must be a freely chosen

order, not a command order.

Over time, the term "social" in the social market economy began to take on a

life of its own. It moved the West German economy toward an extensive

social welfare system that has become one of the most expensive in theworld. Moreover, the West German federal government and the states

(Länder ; sing., Land ) began to compensate for irregularities in economic

cycles and for shifts in world production by beginning to shelter and support

some sectors and industries. In an even greater departure from the Erhard

tradition, the government became an instrument for the preservation of

existing industries rather than a force for renewal In the 1970s, the state

assumed an ever more important role in the economy. During the 1980s,

Chancellor Helmut Kohl tried to reduce that state role, and he succeeded in

http://en.wikipedia.org/wiki/Social_market_economy

http://en.wikipedia.org/wiki/Monopolistic

http://en.wikipedia.org/wiki/Oligopolistic

http://en.wikipedia.org/wiki/Ordnung

http://en.wikipedia.org/wiki/Helmut_Kohl

http://en.wikipedia.org/wiki/Helmut_Kohl

http://en.wikipedia.org/wiki/Ordnung

http://en.wikipedia.org/wiki/Oligopolistic

http://en.wikipedia.org/wiki/Monopolistic

http://en.wikipedia.org/wiki/Social_market_economy




part, but German unification again compelled the German government to

assume a stronger role in the economy. Thus, the contradiction between the

terms "social" and "market" has remained an element for debate in

Germany.

Given the internal contradiction in its philosophy, the German economy is

both conservative and dynamic. It is conservative in the sense that it draws

on the part of the German tradition that envisages some state role in the

economy and a cautious attitude toward investment and risk-taking. It is

dynamic in the sense that it is directed toward growth—even if that growth

may be slow and steady rather than spectacular. It tries to combine the

virtues of a market system with the virtues of a social welfare system.




Chapter-3

Business culture of Germany

The social, political, and economic climates in Germany have evolved in such away as to welcome change, deter intolerance, and promote equality. These

changes can be attributed to several significant historical events; however, it

does not mean that the country has lost sight of its culture. Most Germans have

a strong classical education because of the nation's rich heritage in music,

history and art and they expect others to appreciate that heritage. With a

reputation for being industrious, thrifty, and orderly, they have a strong sense of

regional pride, a fact that the federal system of government recognizes andaccommodates. Over the past decade, Germany has proven itself as a prominent

member of the European Union by managing adversity, honouring tradition, and

globally competing for international recognition and success.

Dimensions of Culture

Culture comprises the shared set of beliefs, expectations, values, norms, and

routines that influence how people within a country relate to one another andwork together to achieve certain societal expectations. Per Satterlee and

Robinson (2008), "[t]he savvy global manager seeks to understand each of

these dimensions as they impact decision making, negotiations, and ongoing

operations critical to long-term success" (p. 40). Outside of the managerial role,

one needs to understand and appreciate culture because day-to-day activities

are a product of and influenced by one's national culture. Communication,

Ethics, Values and Attitudes, Religion, Manners, Customs, Social Structures and

Organizations, and Education all precipitate culture.

Intercultural competence is what managers strive to achieve when entering the

global market. Rathje (2007) defines this somewhat radical idea with the

following analysis:

Given that culture is understood as existing within human groups, characterized

by cohesion that is due to familiarity with inherent differences between them,

then intercultural competence can be defined as a culture-generic skill which is

http://voices.yahoo.com/theme/506/germany.html

http://voices.yahoo.com/theme/506/germany.html




required in interactions between individuals from different human groups who

are experiencing foreignness as a consequence of their mutual ignorance of the

spectra of differences between them with a view to producing culture by creating

familiarity and thus cohesion amongst the individuals involved, allowing them to

pursue their interactional goals.

The key idea within Rathje's definition is the creation of familiarity and cohesion.

Managers in the global environment need to know the culture within the foreign

market and think of ways to get along. Profit may be the bottom line of the

business venture but it is the customers that generate profit and spell out

success or failure for the firm.

Communication

Communication is an important aspect of culture; not only gender

communication, but interpersonal communication as a whole between economic

classes, from elected government officials, policy makers, and across nations.

Communication is the tie that binds and if left unattended, it could choke both

personal and professional relationships.

A significant event in Germany's history was the fall of the Berlin Wall. When the

Berlin Wall was demolished, it signaled the end of two German states, East

Germany and West Germany, after many years of separation due to the Cold

War. German unification, brought about by a multitude of bilateral and

multilateral negotiations and arrangements, represents one of the greatest

triumphs of leadership and diplomatic professionalism in the postwar period

(Kaiser, 1991).

While separated into two distinct regions, Germany befell two equally distinct

cultures. It became a tug of war between the poorer eastern region versus the

astute western sector. Ignited by the freedom of choice movement, German

reunification resembled a merger between two international companies whose

language differences, economic differences, and social structures presented

more of a challenge than anticipated. It is clear that Kaiser's (1991) observation

can also be regarded as a triumph of communication.




Pre-unification East Germany, being severely behind its West German

counterpart, relied heavily on global support in order to improve its economic

conditions. Firms contemplating expansion into East Germany had the added

pressures of working with an under-developed region and had to carefully plan

each strategic business measure as to accommodate the needs of the

community. Although West Germany was already an apt member of the

European Community, opening the border to East Germany also presented an

opportunity for more multinational corporations to rethink their strategies for the

region. "[B]y extending their operations to less developed economies, MNCs

encounter unprecedented social, cultural and institutional gaps" (Sebastian,

2006, p.1573). One of those gaps lies within communication.

Communication, as a driver for culture, adds another dimension to the

discussion on multinational corporations' attention to human resource

management. Research into HRM within MNCs should, therefore take account of

the four influences: country of origin, dominance effects, pressures for

international integration, and host country effects. These influences do not

operate uniformly across the population of MNCs. Moreover, the nature and

strength of the influences alters over time, because of wider political, economic,

and institutional change (Almond, Edwards, Colling, etal, 2005). In the case of

Germany, business practices had to change when the country was unified. Any

international firm operating within the western or eastern region separately had

to make 180 degree changes to accommodate the new political system in order

to maintain its presence within a unified country. Just as post-unification MNCs

must account for all of the drivers of culture when prompted to open operations

within Germany.

To further distinguish German culture, it is important to devote some time to the

country's language. Language and dialect are often at the forefront of

communication barriers in international business. Minority languages in Germany

- as defined in the European Charter for Regional or Minority Languages - are:

Low German, Danish, Sorbian, Frisian, and the Romany language of the German

Sinti and Roma (Wawra, 2006). With Germany's current federal structure,

language policy is not the primary responsibility of its central government. The

central government does not have any legislative power as regards language. It




can only regulate language use in public administration. This meant that private-

sector business communication and personal communication is distorted by

several minority languages or dialects.

Verbal and written communication is dominated by German but the presence of

these other languages cannot and should not be dismissed. Just as within the

United States, where English dominates, the actual spoken word varies

depending on the specific location; Low German can change the meaning of a

message in Germany similar to how a southern drawl within the U.S. can change

the interpretation. The best summation on communication is that it should be

studied, practiced, and continuously evaluated for change and evolution.

Ethics, Values and Attitudes

Ethics is not a set of standard practices of morality across countries. Ethics is

perhaps the step-child of culture and although some generalizations can be

made, nothing can be considered absolute. An important cultural element is the

degree of consumer acceptance of current business practices. Such consumer

trust is vital for the efficient functioning of the marketplace. In order tosystematically evaluate consumers' sentiments towards business ethical

practices, the Business Ethics Index (BEI) was conceptualized, developed and

brought to fruition in the USA (Tsalikis & Seaton, 2007).

The Business Ethics Index was extended to some of the countries of the

European Union to include Germany. The study of the EU was primarily based on

its economic importance. It is important to make note of a few of Tsaliskis and

Seaton's findings from their 2007 study. At the other extreme German

respondents' BEIfuture scores were indicative of a distinctly pessimistic view of

future business ethicality. A low score on the BEI indicates that, in Germany, the

focus is on ''consensual'' or ''communicative'' ethics where ethical decisions lie

not with the individual but with the community as a whole. Apparently the

ethical behavior of individual German managers is lost in the shift of focus to the

corporation or the community as a whole (Tsalikis & Seaton, 2007). Compared

to the United States view of ethics where the role of the individual is emphasizedas the most critical source of ethical values, other capitalist nations, like




Germany, more emphasis is placed on the corporation as the locus of ethical

guidance.

Germans look to their local businesses to, in essence, guide their socially

acceptable behavior. A study involving ethics found some interesting similaritiesand differences with respect to the attitudes of consumers to social issues. The

most striking results were the similarities, not the differences. The results clearly

showed that four issues - human rights, the use of child labor, the availability of

safe working conditions, and the availability of good working conditions - were

rated higher than the average issue by individuals in all the countries studied

including Germany (Auger, Devinney, & Louviere, 2007). Another issue, paying

minimum wages, was also rated positively by all countries but only marginally soby most.

The similarities in preferences across countries imply that some universal norms

do exist with respect to important social issues. Similar beliefs with respect to

human and certain worker rights are cross-cultural and individuals are less

compromising on the subject. Therefore, some universal communication

strategies could show relevance to MNCs within Germany but they must be very

specific. For instance, the cost of labor may be lower in certain areas of Germanybut the people still expect the same safe working conditions that are afforded to

Americans thanks to the Occupational Safety and Health Administration (OSHA).

Another interesting finding was that German females perceived that, in the past,

businesses treated them personally more ethically than males did. This supports

the aforementioned fact that Germans perceive businesses as a guiding entity on

ethical values. When considering business ethics, it is important to briefly

discuss the subject of gender differences in ethics. Knowing that men andwomen consider a variety of criteria in their analysis of situations is useful to

creating more effective communication between male and female managers

about issues in business ethics. How a country perceives its gender differences is

derived from its culture and any incoming firm needs to spend time studying

gender roles. This is a function of multiple dimensions of culture.




Social Structures and Organizations

For Germany, the creation of the European Union reformed the social structure

of the country and acted as a springboard for its economy by lessening the

deficit between East Germany and West Germany and giving rise to internationalbusiness. The European Union is an association of twenty-seven member states

that are required to have a democratic and secular government, an independent

judiciary and corresponding personal freedoms (Satterlee & Robinson, 2008). In

a sense, the European Union resembles several of the policies and practices of

the 50 states that comprise the United States.

West Germany was one of the founding members of the union and when the

country was reunified, East Germany became part of the European Union. With a

focus on market-oriented rules paired with a social concept of globalization,

Germany is poised for global prosperity. This is evident in some of the more

recent economic research for the country.

Unfortunately, the united Germany inherited the burden of the run-down region

in the east. The eastern region absorbed a lot of the country's resources as it

began to rebuild. Political factions did not leave everything to the forces of the

market but assisted East Germany in catching up with the West by transferring

funds, investing enormous sums in the infrastructure and by offering generous

state incentives to investors willing to set up modern, efficient operations and

create jobs to run them.

"Less than one year after unification, a sense of disillusion, disadvantage and

insecurity was being felt by many in the East....They disliked what they saw as

arrogant Westerners, and referred to a new wall between East and West inheads and hearts" (Lumley, 1995, p. 30). These feelings were a product of a

submersion of two distinct cultures that had formed as a result of the

separation. The dominant social structure of the West was revered, welcomed,

and feared at the same time.

The German family unit is structured similar to that of the United States. Any

business with operations in Germany must respect its family structure. Although

women are steadily entering the workforce, it remains dominated by men whoare the breadwinners in the family.




The European Union affects the social structure of the country as a whole

however, today there is a wide range of community radio stations in Germany

that encourage and support the creation of social groups. Whereas talk radio has

lost some of its steam in the United States, Germans rely more heavily on "free

radio" or "citizens' radio" as they call it. Free radio is celebrated as a piece of

German culture and valuable medium for expression. Pinseler (2008) found that

free radio has important social roles in German economy. He noted that free

radio gives the microphone to the people and allows them to voice their

grievances and opinions on various matters directly affecting the people. By

doing so on a local level, it allows for the formation of representative groups who

fight social injustice and the like.

Free radio stations are under pressure to conform to mainstream media norms

due, in part, to financial pressure. Such regulations discourage open

communication. Therefore, they try to argue that free radio is part of the basic

service usually associated with public broadcasting or that they play a vital role

in providing training in media literacy. This way, these stations are able to stay

on the air and receive additional financial backing.




Education

All over the world, societies worry about the state of their school systems. Do

they work efficiently to advance the cognitive and non-cognitive skills of

students? In the endeavours to reform the school systems, three institutionalmeasures have recently taken centre stage: accountability, autonomy, and

choice. The rationale of such market-oriented reforms is that school systems

based on informed choice between autonomous schools improve student

achievement by creating incentives for students, parents, teachers, schools, and

administrators to provide the best learning environment for students.

The 2005 Human Development Index ranks Germany at 22 with an overall index

value at 0.935. Scores of 0.8 or greater indicate that the country is a developed

nation. Developed nations, as a whole, have economic stability. Various

researchers define economic stability to include long lives, well-educated

natives, higher GDP per capita, strong political presence, and the like. These

countries are technologically advanced and idolized by less-developed nations.

Although Germany ranks lower than the United States (#12), it is still a leader

among nations.

Its education index value is 0.953. German speech education has already

worked out adequate means of teaching. They comprise speech teaching as an

educational principle in schools, training students not only to gain better

knowledge and use of their native tongue, but to use speech as a means of

social interaction which could mean training for democratic principles and

activities from childhood. As these modern teaching principles have been

adopted in most schools, adult education facilities seek to fill in the gap.

The educational system in Germany follows the European model of free publiceducation and a variety of secondary schools for academic and vocational

education, rather than the American model of a single comprehensive high

school for all students (Flippo, 1996). The country has realized that within the

East German employment system, initial vocational training is of paramount

importance. Students, depending on their academic achievement capabilities

may be placed in a vocational program to learn a trade.




A prominent theme that has emerged about the dimensions of culture is the fact

that international business is more than strategic business practices abroad. A

well-informed and prepared manager knows that the people, the state of the

economy, and the environment are equal considerations in global operations.

Lack of attention in any one these areas could lead to failure in the global

market.




Chapter-3

Company analysis

About Real

Real has been the preferred choice of consumers when it comes to packaged

fruit juices, which is what makes India's No. 1 Fruit Juice brand. A validation of

this success is that Réal has been awarded ‘India’s Most Trusted Brand’ status

for four years in a row.

Today, Réal has a range of 14 exciting variants - from the exotic Indian Mango,Mausambi, and Guava & Litchi to international favourites like Pomegranate,

Tomato, Cranberry, Peach, Blackcurrant & Grape and the basic Orange,

Pineapple, Apple & Mixed Fruit. This large range helps cater different needs and

occasions and has helped Réal maintain its dominant market share.

A research conducted by Blackstone Market Facts even pointed out that Réal was

preferred by over 50% of the respondents. What’s more, Réal was liked for

being the better tasting juice - a category where likeability is primarily driven by

taste.

Made from best quality fruits, Réal does not have artificial flavours and

preservatives, and offer your kids not just great taste, but also FRUIT POWER -

the power of fruits… the power to stay ahead. Loaded with the power of Vitamin

C, Réal fruit juices have all the necessary nutrients that keep you active all day

long




Réal is endorsed by PFNDAI

The nutritional contents of Réal Fruit Juices & Nectars are endorsed by PFNDAI --

Protein Foods & Nutrition development Association of India.

Protein Foods Association has been in existence for about forty years. It has

gained credibility in health and food professionals such as physicians,

nutritionists, dieticians, food scientists and technologists, etc. as an unbiased

body, almost of the stature of an NGO. Even government officials have high

regards for the association. So when the association lends its logo to any

product, the product is accepted by them to deliver the nutritional contents as

claimed by the manufacturer.

Accolades for Réal

•India's No.1FruitJuice brand.

•Voted as a Super brand.

• Voted by consumers as the most trusted fruit juice brand for four years in a

row.

• Réal awarded the Reader’s Digest Trusted Brand Gold Award 2009 in the food

and beverages category.




Company’s Vision and Mission

There is an abundance of information for its investors and prospective

information including a daily update on the share price (something that very few

Indian brands do). There is a great sense of responsibility for investor’s funds on

view. This is a direct extension of Daburs philosophy of taking care of its

constituents and it adds to the sense of trust for the brand overall.

Vision:

"Dedicated to the health and well being of every household"

Mission:

Dabur believes in the mission of being a leader in the Natural Foods & Beverages

Industry. Dabur aims in offering quality products and distributing higher returns

to stakeholders. "Real" and "Real Activ" are the two fruit juice brands of Dabur,

which are packaged in different flavors like – Mixed Fruit Cucumber Spinach

Juice and Mixed Fruit Beetroot Carrot Juice.

Apart from food, Dabur Health Care offers wide range of ayurvedic and Health

care products. Dabur Consumer Health is the department that deals with the

marketing of Ayurvedic.




MANAGEMENT DISCUSSION & ANALYSIS

Chairman statement

It gives me immense pleasure to share with you, another year of impressive

performance by Dabur. The year has been a landmark year in more ways than

one. During the year, Dabur surpassed the Rs. 5,000 crores or the US$ 1 billion

mark in revenues and is now one of the few companies in India which have

achieved this distinction. Our Foods division achieved a new milestone

surpassing the Rs. 500 crore revenue mark. Odonil, one of our Home Care

brands has now become a Billion Rupee brand, taking our count of Billion Rupee

brands to twelve. These are trying times, with the industry and the world

witnessing fair bit of challenges, given the deepening debt crisis in Europe,

political upheavals in parts of Middle East and rising tensions between Iran and

the West. India too witnessed its share of challenges during the 2011-12 Ýscal,

led by a deceleration in Industrial production and GDP growth rates. Steep

inaction and the resultant high input costs coupled with adverse currency

movements and disruptive competition were some of the other challenges in the

Indian market. The external headwinds notwithstanding, the consumer goodsindustry has performed well. I am pleased to inform you that Dabur has ended

the year with strong growth in both revenues and ports. On a consolidated basis,

the revenues grew by 29.6% to end the year at Rs. 5,283.2 crores, and the Net

ProÝtrose 13.4% to Rs. 644.9 crores. The steady growth achieved by Dabur has

been enabled by sustained investments in marketing and brand building,

distribution, production, supply chain management, and by driving operational

efficiencies across functions. Our new launches such as Dabur Almond Hair Oil,

mixed fruit Favoured variant of our Warship health supplement brand Dabur

Chyawanprash, premium face masks and scrub under Dabur Uveda and a range

of professional facial products and body bleach under the brand Fem during the

year have been well accepted in the market. The pace of innovation in the

International Business has been fairly robust as evidenced by launch of products

such as skin serums, skin creams, skin lotions, wet wipes, new variants in hair

oils, shampoos etc. In addition, we Hobi Group’s expertise in hair gels and

launched the Vatika Hair Gel range in our international markets. Going aheadtoo, Dabur will accelerate its innovation initiatives and introduce a host of new




products and variants to consolidate our competitive positioning while remaining

focused on current market segments in which we operate today. The growth

strategies and your Company’s achievements through 2010-11 have been

elaborated in detail in the Management Discussion & Analysis section of this

report. During the year, we undertook two major distribution related initiatives

in our domestic business. The rationale behind our Ýrst initiative was to enhance

the quality of our distribution by leveraging scale of a united business, since the

earlier distribution structure for the Consumer Health Division comprising OTC

and Ethical’s was subscale. We integrated the entire portfolio of Dabur and

created specialized networks to meet different service needs of categories and

channels. The sales structure has now been aligned along three distinct

categories – Home & Personal Care, Health Care and Foods. The seconddistribution initiative, which is still work in progress, is focussed on signiÝcantly

increasing the reach of our brands in rural India since rural markets offer

signiÝcant potential, driven by increasing disposable incomes and rising

aspirational levels. We conducted a pilot in UP and Maharashtra which yielded

positive results. Consequently, we are rolling out the initiative in other states

like Punjab, Rajasthan, Bihar, West Bengal, Assam, Orissa, and Karnataka.

These ten states together represent around 70% of the rural FMCG potential.The year gone by witnessed some signiÝcant developments in our International

Business which I would like to highlight in this letter. Your Company is in the

process of establishing a greenÝeld manufacturing unit in Sri Lanka, which would

become operational by the second half of the current Ýscal. This unit will initially

produce our packaged fruit juices under the brand Réal and would later be

expanded to cover more products. In addition, we are contemplating local

manufacturing in Africa for Namaste’s range of hair care products which in turn

would help us enhance our product offering and presence in Africa. Our business

is committed not just towards portable growth, but also towards leaving a

deeper imprint on the society as a whole. We, at Dabur, believe that Ýnancialon

societal needs, while addressing environmental and climate change issues with

increased signiÝcance. Small yet signiÝcant steps are being taken to not only

reduce our carbon footprint but also continuously monitoring waste generation

and establish efÞuent waste treatment plants across all our manufacturing units.

As we expand our global footprint, we are also matching our business growthwhile addressing environmental and societal needs wherever we operate.I would




like to take this opportunity to thank all our consumers, business partners,

shareholders and employees for continued commitment and support. I gratefully

acknowledge the condense and faith reposed by the shareholders in the Board

and the Management team which has, in my view, spurred the Company to take

on more challenges. Finally, I must applaud the tireless efforts, dedication and

commitment of our employees who have helped us reach where we are now and

look forward to their continued support in the journey forward.

Yours sincerely,

Dr. Anand C. Burman

Chairman

Dabur India Ltd.




The Dabur Philosophy

At Dabur India Ltd., sustainability is not merely a buzz word. The concept of

sustainability is incorporated into the core of our business and has been

expanded to encompass our aspirations and responsibilities to the society and to

the environment. It is this concept that inspires us to optimize our business

performance to tackle the new and growing challenges of environment,

technology and sustainability.




Management of Dabur group




Performance in domestic market

Dabur today operates in key consumer products categories like Hair Care, Oral

Care, Health Care, Skin Care, Home Care and Foods.

Dabur India (Dabur) posted 21.4% yoy growth in its top-line to Rs.1,462cr,

driven by a mix of volume and value growth. The company’s net profit rose by

16.9% to Rs.149cr on account of robust top-line performance and steady

margins on a yoy basis.




Margins remain flat: During 1QFY2013, Dabur’s domestic business growth

stood at 16.0% yoy, driven by healthy 11.6% yoy volume growth. Food category

posted robust 34.5% yoy growth aided by good performance of real fruit juices.

International business (excluding acquisitions) grew by 24.0% yoy due to goodperformance in Nigeria, Egypt, GCC and Nepal. The company reported flat OPM

at 14.1% since cooling off in input costs was offset by higher advertising

expenses yoy.

Outlook and valuation: We expect Dabur’s top line to post a ~15.3% CAGR

over FY2012–14E, backed by its robust performance in domestic as well as

international markets. The bottom line is expected to post an 18.3% CAGR,

aided by top-line growth and margin expansion. At the CMP, the stock is trading

at 22.8x FY2014E EPS. We recommend Neutral on the stock.




SWOT analysis of Dabur CompanyDabur has established its name as the most trusted and the most recalling brand

because of its heritage being carried out for the last 125 years and the most

selling and accepted product of Chyawanprash. It also has robust distributionnetwork even penetrating the rural market as well and also famous for ayurvedic

medicine provider. However the company stands at the fourth no. after Unilever,

Nestle & ITC. Unilever wins hand down over Dabur because its much larger wide

range of products in comparison to its Dabur

Strengths:

1) Its own heritage, it is 125 years old2) Most recalling and trusted brand in India

3) 17 manufacturing plants all over the world.

4) Online presence of Dabur

5) Dabur is also financially very strong

Weakness:

1) Dabur more emphasis on Ayurvedic medicine, ayurveda being its corecompetence, which takes time to cure some illness where as the emerging trend

is starting inclining itself towards the allopathic medicine which are quick in

healing.

2) Dabur has less distribution channels to reach out its customers in comparison

to major players like HUL

3) A no. of products of Dabur are not well known among the consumers.

4) It also does not has direct outlets of the company

Opportunities:

1) The growing FMCG sector in India is the biggest opportunity for Dabur.

2) Expansion of the product or service line of its large selling products.

3) More penetration in the rural market.




Threats:

1) Gradual demographic change in India can harm Dabur.

2) Changing lifestyle of the people, moving more towards the international brand

3) No. of competitors like HUL, Nestle, ITC, Amul and price wars between them inthe market.

.




Products of real juices

310 × 257 - Real Juice 1 Littersx3.Price: $9.00

1500 × 1418 - Prices of juices without

added

sugar range from Rs 65/- to Rs 110.




Range from Rs 65/- to Rs 95

Range from Rs 65/- to Rs 95




Chapter-4

Industry Analysis

Industry Trend

The juice industry is being strongly affected by increasing costs, mainly as a

result of rising costs for raw materials and semi-finished products. Rising energy

costs and direct or indirect regional factors, like road toll, packaging regulation

or VAT increase ,are also having an impact, especially since the necessary

consumer price increases for juice and nectar have not yet fully been

implemented by retailers. This is putt in margins under pressure and causingfinancial problems for smaller producers.

Source: Rabobank, 2006, based on Lebensmittelzeitung 16, 21.04.2006, page

017, 2006/Dr. Kai Kelch, 2006

EU fruit juice and nectars consumption stood at 10.7 billion litresin 2011. If,

driven by the strong upwards momentum in juice and nectars consumption in

Germany. 100%juice sales represented approximately two-thirds or 7.0 billionlitres of total EU sales in 2011, with nectars (25-99% juice content) making up

the remainder.

On a global level, the overall fruit juice and nectars market recorded a marginal

decline in 2011, held back primarily by a sharp fall in demand in North America

due to consumer resistance to high price points, and a steep drop in East

Europe’s key consumption market germany as consumers retrenched.

The EU fruit juice and nectars market saw a third consecutive year of contraction

in 2011, with the rate of decline accelerating to 2.2%. Given the precariousness

of the economic situation in the euro zone, with inflation and rising

unemployment key areas of consumer concern, it is perhaps surprising that the

rate of decline was not higher; a fact that highlights the underlining robust

dynamics of the juice and nectars market. Fruit juice continued to fare better

than nectars, falling back by 1.9% compared with a fall of 2.9% for nectars.




Segmentation and flavour profile

The growing cost of from-concentrate raw materials is also serving to shrink the

price divide between from-concentrate and not-from-concentrate fruit juice. As aconsequence, trends reversed in 2011 with not-from-concentrate recording a

healthy increase at the expense of from-concentrate. Chilled fruit juice also

made gains over ambient as the narrowing price gap encouraged some

consumers to shift to more premium product. Orange continues to top the

flavour ranking of the combined fruit juice and nectars market, followed by

flavour mixes.

Innovation in flavour mixes has increased as producers seek both to manage

production costs and respond to consumer preference for the functional benefits

fruit combinations can offer. Apple ranks third in terms of importance – in

markets such as Germany and Austria the use of local/regional apple variants

has proved a popular concept with consumers. Peach and pine apple owe their

top five ranking primarily to their significance on the Germany market.

Country rankingGermany heads up the EU juice and nectars market ranking ,with a 26% share

of consumption. France, the UK, Spain and Italy follow, together accounting for

a further 46%. In terms of litres per capita, the top five positions are taken by

northern European markets, with Germany again at the forefront.




The structure of Germany juice industry

The Germany juice industry is rather fragmenting apart from a few top players

the Germany market is dominated by a huge number of smaller regionalproducers. the top ten juice companies have a market share in value in60% the

remaining 40%of Germany industry turnover is sub dived into more than 400

other companies so there is sttel room for consolidation is that half of the top

ten companies like Emig, Riha and Stute, are strong private label players (Figure

1). Riha, the number two, for instance, produces under the “Weser gold” brand

for top German discounter Aldi. The companies belonging to Refresco are also

settled among the rather low-price producers. In the branded segment Eckes-

Granini,Valensina, Punica,Tucano and Albi are top players. Eckes-Granini is the

largest juice company in Germany if the international sales are included.

Competitive pricing across both branded and private label

products

Whilst consumers have been forced to manage their budgets, it is notable that in

2011 both private label and brands declined in line with the overall juice and

nectars market average. Promotional offers of branded product at highly

competitive prices are now commonplace in the supermarkets, narrowing the

price differential with private label.




Demand trends in Germany• Consumer demand is polarised between fulfilling basic needs on one hand and

specific needs on the other.

• Basic needs are mainly covered by private labels, being predominant at the

budget end of the market.

• Brands are forced to create innovative recipes, finding their niche in a highly

competitive market, often setting trends.

• Consumer shows a dualistic behaviour: on the one hand a bargain hunter and

on the other a trend follower.

• Fruit juices have started to lose their identity; they seem to look the same and

taste the same “multivitamin effect” .

• Simple re-packing does not qualify as an innovation.

• Too many copycats and “me-too products” .

• The consumer expects from a real innovation that the product has an identity,

attributed to a unique taste and flavour convenient, easy to handle and quickly

available ideally is 100% natural, without any artificial ingredients offers an

additional [functional / nutritional] benefit.

Germans favour apple juice. More than one third of their total juice consumption

is apple juice, followed by orange juice (21%), multivitamin (9.4%) and grape juice (3.2%), see. Recently, a trend has emerged towards mild juices with less

acidity, particularly mild orange juice, whose sales volume more than doubled

during the first half of 2005

Compared to the same period in 2004.

Following a good year for the German juice industry in 2003, when the very hot

summer pushed consumption up to 42 litres per capita, figures fell to 40.3 litresper capita in 2004.Preliminary estimates for 2005 suggest it will have fallen to

40 litres or even lower, with consumption also falling in other classic segments

of the beverages industry.

Yet, the overall consumption of non-alcoholic beverages increased 1.5% up to

289 litres per capita in 2005, mainly due to a slight rise in soft drinks and

waters.




Germany fruit juice industry number of companies




Germany fruit juice industry turnover

German Fruit Juice Industry

Facts and Figures• Fruit juice producers approx. 650

• Employees approx. 21.600

• Turnover (billion EUR) 8,9

• Industrial production (billion litres) 11,7

(fruit juices / fruit nectars / fruit juice drinks without CO2)

• Fruit processing capacity (tons) approx. 1.400.000




Consumer price trendsRecent retail price increase for juice It is a tough market in which to compete in

terms of price .The current and anticipated cost is still not enough increases

cannot be covered by increases in sales prices, even though the discounter Aldirecently increased its prices for orange juice by EUR 0.06/litre, but that was still

not enough .Both market experts and juice producers alike have stated in recent

months that at least EUR 0.08 to 0.10/litre are necessary. The current dramatic

development is even forcing the juice industry to negotiate price increases of

EUR 0.16/litre, but price negotiations between suppliers and retailers are turning

out to be very difficult. Consumer prices for juice have been low for a long time.

Development of average prices orange and apple juices




Porter’s Five force Model

Threat of New Entrants – Low:

New product differentiation is very tough because already are available in

very wide range indifferent price points, flavours and brand image.

Access to distribution channel – Big and established players are alreadyhaving their huge and strong distribution channel.

Capital requirement is very high for setting up a manufacturing unit in

India as well as Germany.

Government Policies – Because of huge taxes and restriction in

advertisement in TV and other media, the chances of entering in this

industry is very less.




High barriers to entry:

Capital Intensive (especially in advertising)

Distribution networks

Regulations

Economies of scale in marketing, production and distribution

Rivalry (price competition has been decreasing):

o Increasing competition from imported beers (however, national

brewers own part of these breweries).

o 2,200 wholesalers and 560,000 retail establishments.

o Creative and enticing advertising by majors.

o Growing popularity of micro-breweries and other craft-beers.

o Alternative: expansion to super-premium beers and other segments

with lower demand elasticity.

Substitutes:o Growth in:

Premixed drinks

Alternative malt beverage

Alternative alcoholic drinks (from juices to beer and other)

o However, juice remains the largest drink sector.

Buyer’s Bargaining Power:

o It changes from segment to segment, but in general:

Low switching costs

Brand loyalty

Increasing health conscience

o However, for juices, which are perceived as having higher quality,

these characteristics may not always hold.

Suppliers’ Bargaining Power:

o Most supplies come from competitive industries which are more

fragmented than the juice industry.

Farmers

Labour (the case of unionized labour)

The more consolidated supplier is that one supplying

bottles/cans.




Chapter-5

Competitor analysis

Major Players in the juice industry in Germany & targeting

segment of the Market

Rani fruits industry

RANI is one of the leading juice brands in the Middle East and the flagship brandof Aujan Industries. Over the years Rani has established the unique brand

property, "Float," the fruit juice with real fruit pieces, which has highly

differentiated the brand within the fruit juice category.

30 years ago, Rani Float was launched in Saudi Arabia. Since then, Rani has

experienced tremendous sales growth across the Middle East, North Africa,

Europe and other export markets. The drink is sold in 56 countries and




generates sales revenue above US$600 million. Rani is produced at Aujan

Industries' own state-of-the-art facilities.

MarketConsumers have an enormous array of choice when it comes to buying a juice

drink – juice content, fresh versus long life, regular juice versus juice with fruit

pieces – meaning there is a juice drink on the market to match every consumer

preference. The juice category is classified into: Pure juice (100% fruit content),

Nectars (25%-99fruit content), and Drinks (less than 25% fruit content). Across

the globe, all three categories are experiencing slow but steady growth in

consumption per capita and there is enormous potential for the market in the

Middle East and North Africa. Instance, the average Egyptian drinks 4.1litres of packaged juice each year, while in Iraq the figure is around 12 litres. This

compares to37.9 litres in the Kingdom of Saudi Arabia, giving some indication of

the potential for the region’s juice manufacturers and distributors. Against this

backdrop sits Rani, one of the flagship brands of Aujan Industries and the

number one juice drink in the Gulf. Just two years after launching, Rani is

among the top three leading juice drinks in Egypt and among the top three juice

brands in Iran. Rani has experience tremendous sales growth across the Middle

East, North Africa, Europe and other export markets. The drink is sold in 56

countries and generates sales revenue aboveUS$600 million. Rani is produced at

Aujan Industries’ own state-of the-art facilities. The company’s flagship

manufacturing facility is the Aujan Soft Drink Industries ASDI) plant located

in Dammam Saudi Arabia ,which commenced production over 25years ago and

has been progressive lyexpanded and upgraded to meet the demands and

needs

of Aujan’s expanding products portfolio and capacity requirements, ever mindful

that quality is sacrosanct .ASDI has the capacity to produce more than 45 million

cases annually and plans are well an additional process stream and packaging

line installed in 2007. As with the ASDI plant, plans are also at an advanced

stage to expand this plant further in the near future. A third state-of-the-art

plant to produce Rani was built and commissioned in Iran during2008. In

addition, Aujan Industries completed the construction of a two-piece aluminium

can plant in Iran in support its operations. Aujan Industries continues to investin its markets to ensure there are sufficient in-house manufacturing capabilities




and competencies in place to ensure not only continuous supply but also fresh

products of the highest quality and within the market place pricing economies.

Product

Rani is the first “home-grown “brand for Aujan Industries. It comes in two

categories: Float and non-Float. Rani Float is a juice with real fruit pieces, while

then on-Float category is a regular juice without fruit pieces. Rani is available in

four different formats: cans, TetraPak, PET and glassbottles.In 1982, in Saudi

Arabia, RaniOrange Float became the first product in the range to reach. This

was swiftly followed by a series of other formats, property, “Float,” the fruit juice

with real fruit pieces, which has highly differentiated the brand within the fruit

juice category. In addition to the great taste of Rani Float, the juice drink (RaniNon-Float) also offers unique, convenient and fun packaging. Rani non-Float




comes in many flavours such as Apple, Cocktail, Orange, Red Grapes and Guava.

In 2010 Rani was re-launched in a new can, which fuelled even more the growth

and development of the brand. The new brand identity packaging of Rani Float

provides a more contemporary look with a distinct burst of colour, reflecting the

drink’s f amous fruit chunks and reminding consumers of the rich flavours that

Rani Float offers. The “Rani Float Ritual” is to “Shake, Open,

Drink and Chew.”




Product of RaniRani Float Cans - 240ml

Avaliable in orange,grapes,banana,pineapple ,guava,

apple etc. FOB Price: US $4-8 / Carton

Rani Float Cans - 180ml

Available in all flavour.

RANI JUICE PET PLASTIC BOTTLES

Rani Juice Pet Plastic Bottles - 1.5L


http://raniworld.com/





RANI JUICE DRINK GLASS BOTTLES


RANI JUICE DRINK CANS

Rani Juice Drink Cans - 330ml


RANI JUICE CARTON PACKS

Rani Juice Carton Paks - 200ml






PromotionFrom its inception through to today, Aujan Industries has used above the line

Communication and brand differentiation to educate consumers about the “float”

concept and explain its functional and emotional benefits.

Brand values

The words most often used to describe Rani are unique, young, innovative, with

real fruit pieces, fun, popular, cool.

Rani Float will celebrate its 30th anniversary in 2012.

Rani Float has natural fruit pieces, carefully picked from the best crops

across the world. In Egypt, Rani Float Peach is the favorite flavor, while in KSA, the UAE and

Jordan it is Rani Float Orange.

More than 4,000 consumers shake Rani every minute. Rani sold more

than 2.1 billion units in 2011, almost five times the number of people in

the Middle East.

Aujan Industries has more than 100 Stock Keeping Units .Aujan Industries

produced approximately 2.6 billion liters of juice and other beverages in

the past five years.




granini – only the best of fruit

With an extraordinarily fruitiness’ and premium quality – in the eye-catching

dimpled bottle – granini pleases consumers in over 50 countries day after day.

This success story began in 1965, when granini Think frucht – a product inspired

by fruit juices sold in Italy – was introduced to the German market. Today,

granini is one of the leading premium fruit juices and nectars in Europe – and

the strongest brand in the portfolio of the Eckes-Granini Group.

Whether for breakfast at home or as a refreshing treat for people on the go or at

hotels and restaurants – granini’s quality, popularity and unrivalled product

range make it the preferred brand. Granini covers the full taste spectrum with

over two dozen flavour varieties.

The Eckes-Granini Group at a glance

Headquarters- Nieder-Olm, Germany (Rhineland-Palatinate

Turnover (2011)

888 million EUR

Value-based market share

(2011)

11.8%

Export to over 70 countries world-wide

Employees (2011) 1,646

Strategic brands (2011)granini, hohes C, Joker, Marli, Brämhults, SIÓ, YO,

Mehukatti, Elmenhorste




The Eckes-Granini Group is active with its brands and products in the following

key market segments:

• Fruit juices and -nectars

• Chilled fruit juices

• Fruit-based refreshment drinks

• Fruit syrups

Our core comprises fruit juices and -nectars. It is also the largest segment in the

overall fruit beverage market.

The Eckes-Granini Group:

Volume and turnover growth,

earnings down significantly from 2010Along with the entire European fruit juice industry, we found ourselves

confronted with record-high raw material prices during the past year. At the

close of the business year, the net value of cost increases for all raw materials

was roughly equivalent to our profits for 2010. Consequently, Eckes-Granini

raised its selling prices consistently and substantially, a process that involvedagonizing negotiations with some of our partners in the trade. However, we

managed despite these influences to maintain our value-based market share at

a nearly constant level at 11.8 % (2010: 12.0 %).

Total net turnover for the Eckes-Granini Group rose by 4.2 % to 888 million EUR

in 2011 (2010: 852 million EUR). Revenue from the core fruit beverage business

rose to 869 million EUR (2010: 831 million EUR), a gain of 4.6 %. Volume sales

increased slightly by 1.1 % to 1.072 billion litres (2010: 1.061 billion litres). The

volume increase in core sales of fruit beverages from 939 million litres (2010) to




958 million litres amounted to 2.0 %. We suffered slight losses in volume sales

of our stra-tegic brands, due largely to a lack of promotional support in

connection with our negotiations with trade partners with respect to the

consistent implementation of price increases. We achieved further improvements

in our market position in Lithuania, Switzerland, Spain and Turkey.

Earnings before interest and taxes (EbIT) fell to 52.4 million EUR, well below the

previous year’s figure of 64.8 million EUR – a shortfall of 19.2 %. This is at-

tributable to the unusually steep rise in raw material costs. Although we raised

our selling prices to the trade and implemented systematic cost-cutting meas-

ures, it was not possible to compensate fully for the dramatic rise in raw

material prices.

Nevertheless, we continued to invest heavily in advertising support for ourbrands during the past year – with the expectation of sustainable positive effects

in the years to come.




Net sales share by brands in 2012




Chapter-6

Marketing plan

Real Juice has been a successful product brand in the India last many of the

years. The company's natural, 100% fruit juices has grown in sales by 15% each

year and is now available in over 100 store over all Indian states.

Real Juice is planning to expand its operation to include distribution to stores

within the entire Germany. Owner funding and internally generated cash flow

will enable most the expansion plan. The company will also secure a $100,000

short-term loan. Sales projections for the next three years are based on currentsales success with the target customer base in Germany. Initial contacts have

been completed with retail outlets throughout the state and the potential target

markets have been identified.

Situation analysis

Around 82 million consumers helped make Germany the largest food and

beverage retail market in Europe. Total food retailing revenue reached the EUR170 billion mark in 2011. Other important distribution channels include food

service sales (EUR 66.4 billion) and exports (EUR 48.4 billion). Germany’s food

and beverage industry is the fourth largest industry sector in Germany –

generating production value of EUR 163.3 billion (8 percent increase on 2010) in

2011. The industry is best characterized by its small and medium-sized

enterprise (SME) sector of around 6,000 companies employing 550,000. The

largest industry segments by production value are meat and sausage products(23 percent), dairy products (16 percent), baked goods (9 percent), and

confectionery (8 percent). Leading companies include well-known brand names

such as Nestlé, Dr. Oetker, Vio Food Group, Tchibo, Coca-Cola, and Kraft Foods.

R&D spending in the German food and beverage industry reached EUR 355

million in 2010.




Tagline

My Real Fruit Power

USP of real juice

Fruit flavoured health drink

STP of real juice

Segment

For all people seeking a healthy fruit based drink for regular occasions, parties

Target Group

All age groups Lower, middle and upper class people

Positioning

A fruit juice made from real fruits

Goal

To achieve at least 20% market share in Germany within a year as other juice

companies are holding about 55% of market share.

Objective

100% preservative free fruit juice brand offering consumers the great taste andwholesome nutrition of freshly squeezed juice in a hygienic and attractive pack.




Entry Strategy

1 Euro equals71.95 Indian Rupee

The market

Germany’s fruit and vegetable market is of particular interest for foreign

companies: just one-fifth of consumed fruits and a third of consumed vegetables

are locally sourced. More than half of Germany’s fruit and vegetable imports

come from Spain and Italy, the rest from France and the Netherlands.

Sales of processed fruits and vegetables (excluding fruit juices) reached €3.7

billion in 2009. Fruit preparations (38 per cent market share) and jellies and

jams (36 per cent) dominated the processed fruits market. Frozen vegetables

(71 per cent) and canned vegetables (21 per cent) are the most important sub-

segments of the vegetable industry.

Around 54 per cent of all fresh fruit and vegetables in Germany are sold through

discounters. They are the most important distribution channel for fresh fruit and

vegetables in Germany.

http://www.austrade.gov.au/Fruit-and-vegetables-to-Germany/default.aspx

http://www.austrade.gov.au/Fruit-and-vegetables-to-Germany/default.aspx




Initial Entry Market

After running through our screening criteria, we have selected the germany as

our target country. Not only was it an attractive market across all facets of our

decision-making process, but it fits our positioning of bringing exciting andexotic juices to a market that has had very little exposure to such a product.

The largest market within the Germany by a significant margin is the greater

Frankfurt Area, with a population of nearly 5.2 million. It will be our main entry

market for the product and the focus of the majority of our in-store and outdoor

promotional efforts. Secondary markets are Berlin and other state, the two next-

largest cities with populations of almost 3.5million respectively. While our

television and other broad-reach media advertisements will receive exposurethroughout the country, the sheer size and density advantage of Berlin makes it

the only viable target for the various innovative promotional activities we have

envisioned.

Distribution

As an ultra-premium product designed for at-home consumption, we will be

solely reliant on sales through grocery retailers opposed to sales for on-premiseconsumption at restaurants and bars or sales through convenience stores or

small vendors. Our offering was specifically designed to exclude single-serving

sizes as would be offered at many of the aforementioned venues.

Our product will be distributed through an already-established beverage

distributor with an aim of reaching most major supermarket chains and an

especial emphasis on the more up-market grocers such as Marks & Spencer and

Whole Foods. While we would not object to wider distribution of our product, ourin-store promotional efforts will be held at those stores that are most compatible

with our image. The advantage of this arrangement is that the already-

established distributor has pre-existing relationships with the supermarkets, and

we will be able to rely on their expertise and knowledge of market conditions to

obtain the best retail placement. Moreover, creating a distribution arm—

especially in a foreign country—is an incredibly difficult and time-consuming

process and not an aspect of business we are ready or willing to involve

ourselves in given the myriad other responsibilities that entail a product launch.




The concentrated fruit powder will be shipped to the Frankfurt plant, where it will

be reconstituted using locally-procured 100% pure white grape juice. Because all

of our ingredients are made from 100% fruit juices, and not reconstituted using

water, we are still able to label our juices as 100% natural fruit juice. After the

juice is reconstituted and packaged, we will ship it via sea to the Port of

Frankfurt Authority, where it will then be distributed.




MARKETING MIX

Product

Real Juice is an ultra premium 100% juice product made with only the finest of

exotic ingredients. Our product is available in six flavours that are both delicious

and healthy, playing to the health conscious nature of our target market. Our

juices are not only delicious and healthy but they are made with the finest exotic

fruits and because of that we are making no changes to our flavours for the

German market. None of the fruits our juices are based around are native to the

Germany and so the introduction of these flavours into the market.

PackagingAll Germany Juices are housed in sleek and trendy transparent plastic bottles

that are easy to hold and pour. The bottle graphics on each bottle are simple

and uniform making for an elegant yet approachable aesthetic. Additionally,

there will be no fruit imagery on the bottles allowing the rich and vibrant colours

of the juices, visible through the bottle, speak for themselves set off by the plain

lettering of the company and juice name. They come in two different sizes: 1

and 1.75 litters because they are designed to be taken home and enjoyedslowly, not as a grab-and-go indulgence. While not ergonomically designed, the

circumference of the bottle is designed to make it easy for one to pour out the

contents into a glass. We have chosen to use PET plastic specifically because of

its excellent performance as a liquid barrier, its varied and long list of recycled

uses, as well as its excellent candidacy for thermal disposal. These recyclable

qualities of PET are especially important because of the correlation between

health conscious and environmentally conscious consumers .

Distribution

The best placement approach for real Juices is to most heavily target higher end

grocery stores like Marks & Spencer and Whole Foods. We will participate in

direct distribution with these two stores and provide trade discounts. These

relationships will allow us to most efficiently solidify our products as high-end

premium quality products. Additionally, they will be placed in the juice section

adjacent other off-premise-consumption 100% juices, not with grab-and-go




style juices. It is important that we illustrate to the market that we provide a

higher quality product that is worth the higher price.

Price

per cartoon average 9.5 per cartoon

.

Promotion

As our first excursion outside of the Germany and as the initiation of our entry

into the broader European market, our promotional activities are very important.

First, we aim to build awareness for our product aimed at stimulating trial and

purchase. More importantly, however, we are also very serious about

establishing our brand personality in this new market. We face strong

competition in our product segment, and we understand that a differentiated

brand is essential to our growth and survival.

Country Factors Effecting Media Outlets

The Germany is a very developed national market which was key to our entry

decision, but also poses complications in it. Our target market is well-represented and avenues for mass communication are plentiful. However, we

must be conscious of the increasing ineffectiveness of such mass media outlets,

including television and newspaper. While our promotion strategy includes such

outlets, we are aware of other media options and plan to fully utilize alternative

forms of advertising.

Keeping this in mind, our promotion strategy will be highly reliant on non-

traditional advertising, as we see high potential in social networking, online, andguerrilla marketing. Our website will be full of information on our company and

products, as well as lifestyle information. We will also attempt to engage our

online audience through mediums, such as YouTube, Face book, Twitter, and

related blogs.

We will also lend vast resources towards in-store promotions to increase product

visibility. And lastly, we will feature some traditional advertising to increase




product awareness and knowledge levels, such as magazine, newspaper and

television promotions.

Message

Our promotional communication will highlight two main features of Real: Natural

and Cool. Our products are 100% juice and every blend includes a different

exotic fruit offering. We feel that by developing a direct association between

Real and “natural” we will get consumers to focus on the unique beverage blend

variety our product line offers. Furthermore, this direct association has the

added quality of automatically garnering Real juices the subconscious

associations of healthy and fresh that consumers normally make with “natural.”

Our message also focuses on transmitting the youthful, trendy, and fun brandpersonality of Real. In essence we aim to create a “Cool” factor. The individuals

in advertising must represent a young and hip consumer, and the presentation

of the product must be lively and appealing.

Additionally, we remained constantly aware about the immense importance of

breaking through the clutter of advertisement for our communication to have

any effect. Our advertisements will consist of edgy humour and racy imagery

to deliver our message interestingly and capture the viewer’s attention. By

creatively utilizing edgy and racy characteristics we also hope to create buzz

around our brand which we can use in viral promotional efforts to speed the

spread of awareness in the market.




Organization structure

Organization

Head

Marketing

head

Distribution

Manager

Sales

Department

Accountent

Money

Collector




Chapter 7

Budget

Budget (3 years – 2013 – ’ 14, 2014 –’ 15, 2016 – ’ 17)

budget for the real juice in germany2013-2014 in Germany

expencess income

particular amount particular amount

warehousing 10000 Sales 1900000

Transportation 25000 Capital

Shipping 40000

25% Equity, 75%

Loan

Office Rent 110000 Equity 25375

Staff salary Loan 76125organization

head 90000

marketing

manager 60000

distribution

manager5 250000

sales man

salary 10 100000

accountent2 72000 572000

advertising 60500

goods cost 800000taxes26% 494000




Total 2001500 Total 2001500

Net loss 101500

Budget for the year 2014 – ’ 15

Budget for the year 2014-2015for Real

juice

Expencess Income

Particular Amount Particular Amount

Warehousing 11500 Sales 2470000

Transportation 28750 capital

Shipping 44800 25%Equity75%loan

office rent 110000 Equity

staff salary Loan

organization head 90000

marketing manager 60000

distribution

manager5 250000

sales man salary 100000

accountent2 72000 572000

Advertising 60500

Goods cost 850000

Taxes 26% 568100

Total 2245650 total 2470000

Net profit 224350




Budget for the year 2015 – ’16 Budget for the year 2015-2016for real

juice

Expencess Income

Particular Amount Particular

Warehousing 12650 Sales 3087500

Transportation 33062 Capital

Shipping 51520 25%equity75%loan

office rent 110000 Equity

Staff salary Loan

organization head 99000

Marketing manager 66000

Distribution

manager5 275000

Sales man salary 110000 550000

Accountent2 79200

Advertising 75625

Goods cost 1020000

Taxes 802750

Total 2734807 Total 3087500

Net profit 352693




Income / Capital:

Capital

o 25% Equity

o 75% loan from Ahmadabad District Co – Operative Bank @ 15% per annum

Sales

o Number of cartoon distributed * Price (Average Price = Euros)

Expenses:

Office Rent includes :following things:

o Distribution +Head office, Furnished shared office

o Unlimited fibre optic internet usage, Cisco Telephony

o Fax by E-mail, Mail management

o Access to the network in Germany

Shipping cost:

20*2000 per containers

Distribution cost:

25000 assumptions in euro(0.7 cent per k.m)

Warehousing:

10000 per year (capacity 25000 cartoons for year

Staff salary:

Office head:90000

Marketing manager:60000

Distribution manager:5*50000=250000

sales man salary:10*10000=100000



Accountant:2*36000=72000

Advertising cost:

60500 in TV and news paper

goods cost manufacturing in india:

800000

800000/4 euro Average cost per cartoon=200000 cartoon

Taxes 26%on 1900000 sales=494000

Income

sales 1900000 9.5 euro per cartoon

international marketing final report.pdf 1

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