This document provides an overview of the handicraft company Royal Indian Handicrafts and analyzes the German consumer market using a PESTLE framework. Royal Indian Handicrafts exports various handicraft items from India to several countries including Japan, China, Spain, Italy, Russia, France, and Portugal. The PESTLE analysis examines Germany's political, economic, social, technological, legal and environmental factors. Key points include Germany having the largest economy in Europe, being highly developed technologically, and focusing on renewable energy and reducing carbon emissions. The document also discusses work permits and starting a business in Germany.

1. GLOBAL BUSINESS
ENVIRONMENT ASSIGNMENT
BY-
SRISTI SINHA (456)
CHELNA LUNKAD(517)

2. COUNTRY NAME

4. COMPANY PROFILE
Name of the company: Royal Indian Handicrafts
• Royal Indian Handicrafts is one of the biggest
handicrafts company in India.
• Its main office is in Jaipur.
• It exports its handicrafts to the following places-
 Japan
 China
 Spain
 Italy
 Russia
 France
 Portugal

5. Our company exports handicrafts which includes-
• Art metal Wares
• Wood wares
• Hand printed textiles & scarves
• Embroidered & Crotched Goods
• Shawls as artwares
• Zari & Zari goods
• Imitation Jewelery
• Misc. handicrafts.

6. GERMANY
OVERVIEW: GERMANY CONSUMER MARKET
The German consumer market is one of the largest in the
European Union. Germany's population is currently estimated
at about 81.726 million persons (as of 2011), which includes
citizens, permanent residents and other residents that are
permitted to live in Germany, e.g. persons with work permits
for both part time jobs and full time jobs.
It is the second largest exporter and third largest importer of
goods.

7. Germany (GDP per capita: US$ $43,741 in 2011) has one of the
most affluent consumer markets in the European Union.
Germany's economy appears to not changed much despite the
European Union (EU) crisis. It is the fourth largest economy in
the world (by nominal GDP) & fifth largest by PPP.

8. PESTLE ANALYSIS
• P: POLITICAL
Location: Central Europe
Officially known as Federal Republic of Germany
Area: 357, 104 Km2
Capital City: Berlin
State System: Democratic-Parliamentary Federal State
Administration:16 states
Time Zone: Central European Time (CET)
Currency: 1 Euro=100 cents
Gross National Income: EUR 2, 529. 78 Billion
President: Jaochim Gauck
3 levels of government: Federal, States & Local.
Main political parties in Germany are-The Christian Democratic
Union (CDU) and The Socialist Democratic Party (SDP).

10. Germany was a founding member of the European Community in
1957, which became the EU in 1993. It is part of the Schengen
Area, and since 1999, a member of the euro area. Germany is
a great power and member of the United
Nations, NATO, the G8, the G20, the OECD and the Council of
Europe, and took a non-permanent seat on the UN Security
Council for the 2011–2012 term.
Also a part of WTO, World Bank, IMF, UNCTAD & UNDP.

11. • E: ECONOMICAL
Largest Economy in Europe, fourth largest by Nominal GDP in
the world & fifth by GDP(PPP)
1 Euro = Rs 69.99
GDP (Purchasing Power Parity): $3.194 trillion
GDP(nominal): $3.367 trillion
Foreign Exchange Reserves (Million): 250, 603
Nearly 40 Fortune 500 Companies are headquartered in Germany.
Labor force - by occupation
• agriculture: 1.6%
• industry: 24.6%
• services: 73.8% (2011)
Among the world's largest and most technologically advanced
producers of
iron, steel, coal, cement, chemicals, machinery, vehicles, mach
ine tools, electronics, food and
beverages, shipbuilding, textiles.

12. Inflation Rate-0.57% (Jan 2013-Feb 2013)
Unemployment Rate in Germany increased to 5.90 percent in
January of 2013 from 5.30 percent in December of 2012
Germany introduced the common European currency, the
euro, on 1 January 2002.
Its monetary policy is set by the European Central Bank.
6th largest consumer of energy.
Committed to Kyoto Protocol.
Literacy rate among men and women: 99% (as of 2009)
Approx. 4.4% of GDP invested in education.
Germany's health care system was 77% government-funded and
23% privately funded as of 2005.
Germany is a transport hub. Mostly has motorways and high
speed trains. It has 2 large airports- Frankfurt airport &
Munich airport.

13. S:SOCIAL
Established Comprehensive System of Social Security
HDI=0.905. Index is based on
• Life expectancy at birth
• Adult Literacy Rate
• Standard of Living
Ethnic groups: German 91.5%, Turkish 2.4%, other 6.1% (made
up largely of Greek, Italian, Polish, Russian, Serbo-
Croatian, Spanish)
Religions: Christianity (50%), Other religions (3%), Islam
(2%), Buddhism (1%), Non religious(38%), Not stated (6%)
Languages: German (>95%): official language, English
(51%), French (15%), Russian (5%):main foreign languages.

14. The United Nations Population Fund lists Germany as host to
the third-highest number of international migrants
worldwide, about 5% or 10 million of all 191 million migrants.
Population Density: 229/ km2
Per Capita: $ 41,168 (GDP: Nominal)
Median Age:
• Male-42.2 years
• Female-44.7 years
Sex ratio: Male: female :: 1.06:1

15. T:TECHNOLOGICAL
Germany is one of the leading countries in developing and using
green technologies.
107 million mobile cellular users (9th in the world)
62.073 million internet users (6th in the world)
German companies represent 15.6% of research advanced goods
worldwide, ranking 2nd in the world (followed by US)
The Federal Government provides funding through annual grants
or endowment capital
In 2010 the Federal Ministry of Economics and Technology
created a budget of 2.3 billion Euros for technology research
and development.

17. L:LEGAL
Law enforcing System is divided at 3 levels-
• Federal
• State &
• Local
Historically speaking, German Law in part goes back to Roman
Law and in part dates back to numerous other legal sources in
the various German regions.
In surveys on Political and Legal Stability, foreign investors put
Germany second only to Great Britain. This legal stability
attracts foreign companies and is to the benefit of investments
and entrepreneurial activity in Germany.

18. All industrial imports into Germany are subject to an "Import
Turnover Tax" of 19%, which is charged on the duty-paid
value of the import article plus the customs duty, which varies
by item.
It is important, however, to collect and present all invoices as
originals in order to deduct any VAT charges from one's own
tax liability or to get reimbursed by the German Ministry of
Finance, if eligible.
To engage in "Crafts" you may need the approval of a trade
association and establish the fact that you meet German
standards relating to specific qualifications for your chosen
craft.

19. Imported goods must be accompanied by a customs
declaration, which has to be submitted in writing, and an
invoice in duplicate. Normally the German importer files this
declaration. The commercial invoice must show the country of
purchase and the country of origin of the goods. The invoice
should contain:
• (company) and address of seller and buyer
• Place and date of issue
• Number, kind of packages
• Precise description of articles
• Volume or quantity in normal commercial units
• Invoice price (in invoice currency)
• Terms of delivery and
• Payment.
In addition, a certificate of origin may be required in some cases.

20. Customs duties vary according to material and product. Though
duties are high for a few items, i.e., dried flowers, potpourri
(16.7-20 percent), T-shirts (12.0-13.2) and hand-
woven, woolen blankets (13.4 percent), the majority of
customs duty rates falls in the range of 5-8 percent.
In addition, there is a 16 percent sales tax, which is eventually
passed on to the consumer in form of the value-added tax
(VAT). But the VAT has to be paid when entering the German
market by the exporter/German importer.

21. E:ENVIRONMENTAL
Europe’s largest & world’s 6th largest carbon emitter
After signing Kyoto Protocol,
• 22% reduction in carbon (Cox) emissions.
• 39% of wind energy of world’s requirement.
• Committed to use renewable energy source in future.
Climate: Cool, continental climate with abundant rainfall and
long overcast season. Lower temperatures with considerable
snowfall in east and south.
Prone to rapid weather variations from merging of Gulf Stream
and extreme northeastern climate conditions.
January: coldest month
Annual precipitation varies from 2,000 millimeters a year in the
southern mountains to a low of 400 millimeters in the vicinity
of Mainz. Over most of the country, it averages between 600
millimeters and 800 millimeters per annum.

22. WORK PERMIT IN GERMANY
To qualify as for a German work permit, the basic requirements
for the employee and the German company are as follows:
• The potential employee has to be employed on equal terms as
a German employee.
• German or other European nationals are not available to fill
the position.
• Usually the employee must have a university degree or
comparable qualification. For some positions there are special
requirements.
• The German company must be registered at the Labor
Authorities in Germany and apply for a Corporate Registration
Number.

23. STARTING UP A BUSINESS IN
GERMANY
Starting a business in Germany is relatively straightforward.
While there are formalities to follow, the basic procedures and
regulations of starting a business in Germany do not significantly
differ from those in English-speaking countries. German law
makes no distinction between German nationals and foreigners
when it comes to establishing companies in Germany. There are
also no restrictions on the repatriation of profits. Much like in
English-speaking countries, German law distinguishes between
limited companies, joint stock companies (similar to a public
limited company), and other forms of partnerships.

24. STEPS-
• The first important steps are to contact a financial or tax advisor. They
will know if it is necessary to hire a notary and how to register the
business at the local court(Amtsgericht).
• Shortly after this, the chamber of commerce should contact you, having
received your details from the commercial register.
• The next step is to organise two sets of tax registration, one for
commercial tax at the so-called Gewerbesteueramt and one at the local
tax office (Finanzamt).
• After this it is possible to obtain a certificate of registration
(Gewerbeanmeldeschein) and to commence business.
Keep in mind that if you must have atleast 25,000 euros in the case of
limited liability company and 50,000 euros for a joint stock company.
Foreigners intending to open a business in Germany can obtain a residence
permit if there is an overriding economic interest or a regional demand, if
the activity can be expected to have a positive impact on the economy and if
the funding is ensured.

25. HANDICRAFTS INDUSTRY IN GERMANY
Germany is famous for the quality and detail of its traditional
handicrafts. Traditional motifs that incorporate natural
elements are still popular, adorning clocks, Christmas
decorations (which are almost synonymous with German
crafts), and even candy.
In the European Union, only 2 countries which have the most
significant number of buyers for handicrafts are- Germany and
Italy. Even though China is a major handicraft importer, India
is not behind. Indian SMEs have increased their supply of
production of handicrafts. There is a significant market
potential for Indian handicrafts in Germany.
Germany is the largest market for giftware and handicrafts items
in Europe.

26. HANDICRAFT INDUSTRY IN INDIA
• India is one of the important suppliers of handicrafts to
the world market. The Indian handicrafts industry is
highly labour intensive cottage based industry and
decentralized, being spread all over the country in rural
and urban areas. Numerous artisans are engaged in crafts
work on part-time basis. The industry provides
employment to over six million artisans (including those
in carpet trade), which include a large number of women
and people belonging to the weaker sections of the
society.

28. SWOT ANALYSIS
S: STRENGTHS
• Diversified and potential market.
• Large product variety and range due to the diversified culture
means more options to the customers.
• This legal stability attracts foreign companies and is to the
benefit of investments and entrepreneurial activity in
Germany.
• Flexible production from India.
• Cheap cost of the handicrafts.
• Good distribution.
• Some products have various applications.

29. W:WEAKNESS
• Some materials are too sensitive and can break easily.
• Trade barriers are strict in Germany
• No proper co-ordination between the government and private
players.
• Lack of promotion of the handicrafts.
• Poor advertising strategies.

30. O:OPPORTURNITIES
• Have more customers.
• Developing fashion industry requires handicrafts products.
• More demand of Indian Handicrafts.
• Germany has technology, man power and transparent system
of working.
• Expansion of the handicrafts industry.
• Has the opportunity to beat China for the No. 1 spot.
• Internet shopping of Indian handicrafts now available.

31. T:THREATS
• China is the biggest threat since they have a higher market
share in the handicrafts sector.
• Better trade terms offered by other competing countries.
• Balance between demand and supply.
• Increased and better technological support & R&D facilities in
competing countries.
• The recent hike in job losses in Germany.
• Entry of new competitors.
• Buyer’s perceptions about the brand/product..
• Buyer’s changing tastes and needs.
• Adverse shifts in foreign exchange rates and trade policies of
foreign governments.

32. MICHAEL PORTER’S 5 FORCE
MODEL
THREAT OF
NEW
ENTRANTS
RIVALRY
SUPPLIER AMONG BUYER
POWER EXISTING POWER
COMPETITORS
THREAT OF
SUBSTITUTES

33. Rivalry among existing competitors: Chinese competitors, local
competitors and the existing Indian competitors.
Threat of New Entrants: Different country handicrafts
Threat of Substitute Products: Other handicrafts companies
giving the same handicrafts with more options.
Threat of buyers growing bargaining power: If the buyer is well
known about the product, buyers are more concentrated on the
sellers and substitutes are available, then it is high.
Threat of Suppliers Growing Bargaining Power: pressure
suppliers can exert on businesses by raising prices, lowering
quality, or reducing availability of their products.

34. STP:SEGEMENTATION,TARGETING,POSITIONING

35. S:SEGMENTATION
• All Age Groups (above 16 years)
DEMOGRAPHIC • All Income Groups
• Majority Women
GEOGRAPHIC • Urban Area
• Brand Loyalty
BEHAVIOURAL • Product Usage Rate

36. T:TARGETING
• Mainly women ( especially students, house wives and working
both)
• People with interest in antiques and handicraft.
• Creatively innovative people.
• People who understand art, design, culture and aesthetics.

37. P:POSTIONING
“An effort to influence consumer perception of a brand or
product relative to the perception of competing brands or
products. Its objective is to occupy a clear, unique, and
advantageous position in the consumer's mind.”
Differentiation is based on:-
• Quality
• Pricing
• Unique
• Availability

38. MARKET ENTRY STRATEGIES
The German market is decentralized and diverse, with interests and tastes
differing dramatically from one German state to another. Successful market
strategies take into account regional differences as part of a strong national
market presence. For investors, Germany’s relatively high marginal tax rates
and complicated tax laws may constitute an obstacle, although
deductions, allowances and write-offs help to move effective tax rates to
internationally competitive levels.
• DIRECT EXPORT: The company directly sells to the costumer.
• INTERNET MARKET ENTRY has become an increasingly famous way of
entering into the market. This has resulted in the concept of International
Internet Marketing.
• JOINT VENTURE: Establishing a firm jointly with one or two or more
independent firms .
• MELA: The Indo-German Mela which happened recently in Pune could be
held in Germany as well but with a separate sector of handicrafts.
*Foreign entrepreneurs may be granted a settlement permit after three years if
their business is successful and their livelihood is assured.

39. OUR APPROACH
• General Partnership/ joint venture with
“Spiegel”.
• Spiegel is currently online and is planning to
open up a store. Taking the benefit of a store
opening, we shall do a JV or general
partnership.

40. PROMOTIONAL STRATAGIES
• Pull Strategies
• Promotional strategies that pull the product toward the end
user by enticing the consumer to buy the product.
• For this we will go for advertising because advertising is
geared to attract a customer's attention to help win his/her
loyalty .For this we will use radio, television, billboards and
the printed press.
• A small booklet can be provided on the planes which has info
on our company and our products. And also in how many ways
can you use the handicrafts.

41. Contd……
• INDO-GERMAN Handicraft Fair. This is a fair
which will showcase various Indian Handicraft items in
Germany for a few days.
• Contests
Contests are a frequently used promotional strategy.
Many contests don't even require a purchase. The idea
is to promote your brand and put your logo and name in
front of the public rather than make money through a
hard-sell campaign. People like to win prizes.
Sponsoring contests can bring attention to your product
without company overtness.

42. Contd…
• Mail Order Marketing
Customers who come into your business are not to
be overlooked. These customers have already
decided to purchase your product. What can be
helpful is getting personal information from these
customers. Offer a free product or service in
exchange for the information. These are
customers who are already familiar with your
company and represent the target audience you
want to market your new products to.

43. Contd…
• Social Media
Social media websites such as Facebook and Google+
offer companies a way to promote products and
services in a more relaxed environment. This is direct
marketing at its best. Social networks connect with a
world of potential customers that can view your
company from a different perspective. Rather than
seeing your company as "trying to sell" something, the
social network can see a company that is in touch with
people on a more personal level. This can help lessen
the divide between the company and the buyer, which
in turn presents a more appealing and familiar image of
the company.

44. Contd..
• Product Giveaways
Product giveaways and allowing potential
customers to sample a product are methods
used often by companies to introduce new
food and household products. Many of these
companies sponsor in-store promotions, giving
away product samples to entice the buying
public into trying new products.

45. Contd..
• Promotional Gifts
Giving away functional branded gifts can be a
more effective promotional move than handing
out simple business cards. Put your business card
on a magnet, ink pen or key chain. These are gifts
you can give your customers that they may
use, which keeps your business in plain sight
rather than in the trash or in a drawer with other
business cards the customer may not look at.

46. Contd..
• Customer Appreciation Events
An in-store customer appreciation event with free
refreshments and door prizes will draw customers into
the store. Emphasis on the appreciation part of the
event, with no purchase of anything necessary, is an
effective way to draw not only current customers but
also potential customers through the door. Pizza, hot
dogs and soda are inexpensive food items that can be
used to make the event more attractive. Setting up
convenient product displays before the launch of the
event will ensure the products you want to promote are
highly visible when the customers arrive.

47. Contd..
• After-Sale Customer Surveys
Contacting customers by telephone or through the mail
after a sale is a promotional strategy that puts the
importance of customer satisfaction first while leaving
the door open for a promotional opportunity. Skilled
salespeople make survey calls to customers to gather
information that can later be used for marketing by
asking questions relating to the way the customers feel
about the products and services purchased. This serves
the dual purpose of promoting your company as one
that cares what the customer thinks and one that is
always striving to provide the best service and product.

48. DISTRIBUTION CHANNEL
• Distribution intermediaries
While exporting, choosing the right trading partner is very
important. As mentioned earlier, the trade structure of the
handicrafts and wooden gifts market in the EU is very
complex. Therefore it is a must for exporters willing to export
to the EU to find out the best trading partner according to their
specific profile, product range and goals. Some main
distribution channels exporter may consider are -
Agents
• Importers-wholesalers
• Buying Groups
• Retailers
• Export marketing organisations.

50. Thank you