Economic Analysis of German Economy

ECONOMIC ANALYSIS

Economic analysis involves assessing or examining topics or issues. Economic analysis is the study of economic systems. It may also be a study of a production process or an industry. Aim of the analysis is to determine how effectively the economy or something when it is operating.

Economic Growth

Economic growth is the ability of nations to produce greater amount of goods and services in a certain period of time, usually one year. Strong economic growth reflects rich business opportunities to offer to society that will naturally create more job opportunities for peoples.

Gross Domestic Product

The market value of legal goods and services produced within the borders of a nation (local & foreign) in a certain period, usually one year. Germany is not only just Europe's largest economy but also the strongest. In 2018, Gross Domestic Product of Germany amounted to 3,386 billion euros. Germany is leading five countries in the world GDP ranking. Germany Gross Domestic Product has increased 108.

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66 billion from 2017 which is 3,277.34 billion to 3,386 billion in 2018. Gross Domestic Product record low in 2009 which is 2,460.08 billion and increase from 2009 until now.

Gross National Income

Gross National Income is a total income that received by the citizen. It is including any income earned abroad. Income is defined as all employee compensation plus investment profits. Germany's Gross National Income was reported at 874.375 EUR in March 2019. This records a decrease from the previous number of 883.132 EUR for Dec 2018. The data reached an all-time high of 883.132 EUR in Dec 2018 and a record low of 789.

499 EUR in July 2016 based on the graph.

Pros

Gross Domestic Product of Germany has consistently increase every year from 2009.The Faber-Castell company's core activities are innovation, manufacturing, and marketing and sell products. Generally, many people prefer use high quality of stationary such as water colour. Therefore, this condition will benefit to Faber-Castell.

Cons

Growing economy also benefits rival companies. It might let the others stationary company having more sales. Customers of Faber-Castell may move to other company. It will cause decreased of the profits of Faber-Castell.

Economic Systems

There are three types of economic systems such as Free Market system, Centrally Planned system and The Mixed system. All of them rely on a different set of assumption and condition and course, they all have their own strength and weakness. Germany is the largest national economy in Europe. Germans proudly label their economy a social market economy to show that the system as it has highly developed (German Economy, 2019).Germany Freedom IndexGermany's freedom score is 73.5. Germany is 24th freedom in the 2019 index. Its overall score has decrease by 0.7 point. Germany is ranked 14th among countries in the Europe region (Germany, 2019). Business freedom and investment freedom remained strong overall in Germany. Long-term competitiveness and entrepreneurial growth are supported by openness to global commerce, well-protected property rights, and a sound regulatory environment.

MARKET STRUCTURE

There are quite a few different market structures that can characterize an economy. However, if you are just getting started with this topic, you may want to look at the four basic types of market structure first namely Perfect Competition, Monopolistic Competition, Oligopoly, and Monopoly. Each of them has their own set of characteristic and assumption, which in turn affect the decision making of firm and profits they can make (The Four Types of Market Structures, 2019).

Perfect Competition Market Structure

Definition: Perfect competition describes a market structure where competition is at its greatest possible level. The market has large number of sellers and buyers and the products mostly homogenous (the economic times, 2019).Monopolistic Competition Market StructureDefinition: Monopolistic competition describes a common market structure in which firms have many competitors, but each one sells a slightly different product. There are usually a large numbers of independent firms competing in the market (monopolistic competition, 2019).OligopolyDefinition: Oligopoly describes a market structure in which a few firms dominate. When a market is shared between a few firms, it is said to be highly concentrated. Although only a few firms dominate, it is possible that many small firms may also operate in the market (oligopoly, 2019).

Monopoly

Definition: Monopoly describes a market structure in which one firm producing a good without close substitutes. The product is often unique. There are no competitors in the market for that product. The monopolist decides the price of the product, since it has the market power (Characteristic of monopoly market structure, 2019). Faber-Castell market structureWe conclude that the Faber-Castell categorized into monopolistic competition market. Faber-Castell has monopoly market with CX5 BALL PEN S-FINE (0.5mm). In the market, there were many sellers such as Pilot, Paper mate, Stabilo and BIO. The pen is essential to all office workers and students because they need to do paper work every day. Faber-Castell also tried to keep its own products dissimilar to their rival. For example, its products can be differentiated with aspects of function features, materials and design. This is because Faber-Castell tried to strengthen their brands identification. Besides, Faber-Castell also produces high quality products with reasonable prices. Hence, we can conclude that Faber-Castell categorized into monopolistic competition (study moose, 2016).

TECHNOLOGY ANALYSIS

Technological analysis is the process of researching technology solutions, risks and problems. It refers to new technologies, processes, materials, which create new or better product and market opportunities.

Germany has back national science and technology in several ways. It houses independent laboratories, national laboratories and also private research. The industry supports several important types of research and development. Germany has a Ministry of Science and Technology which is an organization coordinates and decided priorities for the national science and technology programs in Germany.