Competitiveness
<h>Despite</h> the issues that Germany's businesses face they still rank top in international competition. The reason: continuous corporate restructuring. When asked about competitiveness, Germans love to complain. Weak growth, sluggish consumption, high taxes and excessive social security contributions, and too much regulation. These are just some of the issues Germany is facing and they are found in almost every evaluation of the current economic situation. However, according to Axel Schmidt, head of the Operations Strategy Competence Center at Roland Berger Strategy Consultants, this is only part of the story. "In key areas, German companies are world leaders," said Schmidt during a speech at the London School of Economics. His assessment is backed up by the global competitiveness report of the World Economic Forum (WEF). While Germany ranks 13th in terms of business environment, German companies rank third, right after the United States and Finland. When it comes to brand image and international market presence, German companies actually lead the WEF ranking. | ||
Schmidt says there are a number of reasons for these results. "Due to the particular demands and opportunities in Europe, major German companies got an early start on restructuring, and they are now reaping the benefits of what they sowed," says the consultant. Take internationalization as an example: some 66 percent of DAX-30 companies' sales are realized abroad, and approximately 44 percent of the workforce work outside of Germany. Moreover, groups such as Siemens, E.ON and Continental have spun off business segments and now focus on their core competencies. They also cut costs through outsourcing, flexible management structures and a greater focus on customers and shareholders. Schmidt's conclusion: major German companies are positioned pretty well in the international arena. | ||
However, this excellent competitive positioning can be maintained only if the companies pursue a consistent growth strategy. According to a study conducted by Roland Berger Strategy Consultants among the world's 1,700 largest companies, only about a quarter of the companies were able to grow their sales and profits between 1991 and 2003. These "outperformers" also demonstrate above-average figures in terms of other indicators: productivity rose 4.6 percent annually from 1996 to 2003 (others: 2.4 percent), workforce grew 13.6 percent (4.3 percent) and free cashflow increased 53.8 percent (35.0 percent). With such a strategy, Schmidt says, soft factors, such as a trust-based corporate organization and philosophy, play an increasingly important role. In addition to openly communicating corporate goals and business development to employees, clear-cut rules regarding salary and personal objectives are necessary to achieve this trust. According to Schmidt, "Transparency inspires trust, and trust mobilizes people." If you have any questions or concerns, please feel free to contact us:  |
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