Free Essay Sample «Advantages of Investing in Germany»

«Advantages of Investing in Germany»

Germany is the largest economy in Europe. The country has a diversified economy that provides excellent investment opportunities for companies in various industries. Germany’s thriving economy offers a suitable location for Greenfield to make direct investment into various business organisations. However, the companies should be ready to tackle stiff competition from well-established companies that already have operations in Germany.

Availability of infrastructure is critical to the smooth running of a business organisation. Infrastructure includes transportation, communication, and marketing institutions. These ensure that there are efficient distribution channels in the country (Doole & Lowe 2008, p. 112) Germany has a highly developed infrastructure network that connects it to European markets in all directions (Jolly 2003, p. 104). This makes the country to have a structural advantage. Investing in the country would enable the company benefit significantly from the infrastructure.

The location of a country profoundly determines foreign direct investment (FDI) decisions of various international companies. Strategic location of a country is bound to attract more FDI as companies would use the market of the country to venture into neighbouring countries (Tamásy & Taylor 2008, p. 55). Germany’s central position in the European continent enables investors reach the entire European Union and Eastern Europe markets (Hyde-Price 2007, p. 119). Strategic location of the country would enable the company venture into adjacent markets easily.

The market size of a specific location determines whether establishing setting up operations in a certain location is a viable option for a given company or not. Ideally, companies should set up operations in locations that have a high market size. However, market size alone does not determine the viability of the country. Residents of the location should be able to afford the products of the company. Companies should relocate to geographical locations where consumers have a high level of disposable income. This allows consumers being able to afford various products, thereby increasing demand for the company’s products (Pass & Lowes 1994, p. 28). Germany is the most important European market. The country has the highest population and GNP amongst all EU countries (Kesselman et al, 2008, p. 177). Therefore, the high population and GNP make Germany an extremely favourable relocation spot for the company. Efficient venturing into the German market would guarantee the company high returns. Germany promises to contribute a sizeable percentage of the company’s revenue if the company successfully ventures into the market. However, the company would have first to overcome stiff competition from other companies that already have their operations in the country.

Companies strive to venture into countries that have a thriving economy. This ensures the future profitability of the company. Large, thriving economies attract companies to the country. Regardless of the labour costs in the countries (Cohen 2007, p. 149) Germany has a large, thriving economy. Its economy is the largest in Europe. Therefore, should the company successfully venture into the market, the company is guaranteed of reaping enormous financial rewards due to the continued economic growth of the country.

Availability of skilled labour is one of the main factors that affect the decision of a given company to relocate to a certain geographical location. Cheap skilled labour increases the viability of relocation of companies to a certain location. However, in some instances companies may be opt to relocate to certain geographical areas, despite the fact that these locations having high wages (Vaughan-Whitehead 2003, p. 408). Germany has a highly skilled workforce. German skilled employees are less likely to engage in negotiations on salary increase than unskilled employees are (Reynolds 2002, p. 47). This reduces the likelihood of skilled employees engaging in strikes due to dissatisfaction with wages.

Therefore, Germany promises to be a viable target for Greenfield foreign direct investment of the company. The company has a thriving economy that promises to fuel the growth of the company. The country has a huge population, which has high levels of disposable income. In addition, the country has the infrastructure that the company would need for its efficient operation. A large pool of highly skilled employees ensures that the company will never lack employees. However, the there are several established companies in the country. Therefore, it is critical for the company to formulate strategies that would enable it deal effectively with the competitors.



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