DPD Group LTD: Business Expansion in Germany - PESTLE Analysis

This report examines the feasibility of DPD Group LTD's expansion into the German market. It employs a PESTLE analysis to evaluate the external factors impacting the company's potential success. The report delves into the political landscape, highlighting Germany's stable democratic government and strong international relations, which present opportunities for DPD. It then assesses the economic climate, noting Germany's strong GDP and low unemployment rate, while also considering the high tax rates. Social factors are explored, emphasizing the importance of understanding German cultural values and consumer preferences. Technological advancements are examined, particularly the need for eco-friendly technologies. Finally, the report analyzes the legal environment, including investment regulations and the potential impact of past legal issues. The conclusion summarizes the key findings, offering insights into the challenges and opportunities DPD Group LTD faces in entering the German market, providing a comprehensive overview to inform strategic decision-making.

Project

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business expansion refers to process through which organisation perform business
operations in more than one country. Under this process, there is requirement of complete
information about market through which it is easy to understand changes which are taking place
in external market (Aithal, 2016). There are different factors which affects business operations in
negative manner such as technological changes, difference in legal policies, etc. Hence while
expansion, it is responsibility of managers to analyse it and then perform business operations.
Research and development department of organisation is responsible for analysis of market. This
assist in getting positive results from the expansion.
This report is based on DPD Group LTD which deals in courier services providing parcel
up to weight of 30 kilograms. This association operates all over the world but have head quarter
in France. In this report, there is discussion about external factors through which is easy to
examine that managers of DPD Group LTD are able to expand in Germany or not. In order to
study, external factors PESTLE analysis is done (Cherkashin, 2016). There are some threats and
opportunities as well due to which DPD Group LTD can get chance to growth. Hence with
studying it managers are able to knowledge about changes which are taking place in current
market and hence they can accept it to get growth opportunities in Germany.
MAIN BODY
Managers of DPD Group LTD are thinking to expand their business in Germany but they
do not have their head quarter there. So they want to get knowledge about changes which are
taking place in external market. In order to study external market, PESTLE analysis is done.
Under this framework, there is complete knowledge about external factors which hampers
business expansion. These factors are not in control of managers but they have to change their
working style in specific manner (Ahmed, 2019). There is competition in market, hence in order
to expand in new market, it is essential that managers must have complete knowledge about it.
For instance: political policies of DPD Group LTD is not stable in Germany, then managers have
to think some strategy through which they acme to know about it. This makes continuous and
long term sustainability in Germany.
PESTLE ANALYSIS
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Political factor- Political factor includes impact of government and political parties on
operation of organization. While operating in market, Government parties places crucial role
because they keep eyes on working style of different organization (Khalifa and et. al., 2018).
Germany is a democratic, federal republic country which is specified under act in 1949. There
are three levels of political parties in Germany i.e. legislature, executive and judiciary which is
taken care by different parties. President is the core party who is responsible for implementing
new policies and is appointed for 5 years. Germany is the country which is connected with major
countries such as UK, Sweden, France, Denmark, Poland, Netherlands, Austria, Belgium,
Switzerland, etc. hence it is easy for managers of DPD Group LTD to trade from Germany.
Germany has good relations with France Government, so this gives positive impact if managers
of DPD Group LTD want to expand in Germany market. Germany has good relations with
World Bank, IMF, NATO, etc. and other big organizations, so DPD Group LTD get more
growth opportunities there. DPD Group LTD is one of the major contributor in European Union,
so DPD Group LTD get more growth and this country have strong alliances with United State, so
business growth opportunities for DPD Group LTD is more (Widya Yudha and Tjahjono, 2019).
It is clear that political environment of Germany is positive because there is no such
uncertainty in policies. Political parties does not get changes frequently. In Democratic republic
country i.e. Germany, managers of DPD Group LTD can operate business operations easily and
in effective manner. Germany have good relations with many countries such as Austria,
Denmark, Poland, then there is good opportunities for growth of business DPD Group LTD.
There are clear political policies which have to followed by DPD Group LTD to avoid
interference of political parties (Fozer and et. al., 2017). Hence it is clear that political factor of
Germany is favorable for DPD Group LTD and creates growth opportunities through which they
can expand their business and get positive hikes in revenue and profits. There is bilateral
relations of Germany with some countries, so there are possibilities that political policies of
Germany gets altered. This is threat for growth and development of DPD Group LTD. In order to
deal with this threat, managers of DPD Group LTD can analyse reason of change in political
policies and then alter their working style (Salam, 2016).
Economic factor- Economic factor includes tax rate, exchange rate, economy growth,
interest rate, etc. are discussed. There is requirement of complete information because this is
major factors on which organizational growth and decline gets effected. Germany is the 4th
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largest country in terms of economy. In 2019. there GDP was around $4.2 trillion. There is good
growth opportunities for DPD Group LTD because economic condition of Germany is strong
where loan rate is stable. Unemployment rate is Germany is very less, so labor can easily
available to DPD Group LTD through which they can perform their actions in smooth manner
(GE and et. al., 2019). There is provision of job protection ad provide highest salary to
employees. Tax rate for business is 15% approximately but they have to pay 5.5 % sur- charge
and 14% trade tax rate on it. Sub total of this tax rate is 30-33% which is high for setting up new
business.
But there is threat for DPD Group LTD because if employees are paid with high salary,
then there are possibilities that organizational revenue and profits are less. In initial years of
stating business, DPD Group LTD is not able to achieve good profits, then there are possibilities
that employee labor turnover rate is high. This affects organization growth and sustainability in
Germany. In order to deal with these issues, managers of DPD Group LTD have to proper plan
tax and then frame routine operation. If salary is high, then they can hire employees from France,
they have complete knowledge about services and does not left job as well (Kochkina, 2019).
Social factor- These factors are mainly linked to the social culture, belief, attitudes and
values of our social concern. Social factors are keep growing increasingly in the international
environment business world. In context of DPD group which is one of the well-renowned firm
deals with parcel delivery service have strong social command such as emotional support of the
people who are sending parcel to their peers and known one (Onyusheva and Seenalasataporn,
2018). With such support, decision to expand business operation to Germany is totally perfect
step to grow firm socially also. Also, firm has decided to go for joint venture with local parcel
service of expansion nation for ease to operate into initial period. People of the Germany uses
local parcel firm to deliver parcel to their peer, so its a strategic policy by the DPD group to start
operation as early as possible. As, in this direct investment is required to sign bilateral agreement
with local business to convince them to start operation. People of the Germany are pin dot of
their values, preference and choices and they uses parcel delivery service as part of such habitual
sense. Its been open ended chance for the DPD group to expand its business proceedings to
Germany and fulfill social desire of a people by making ease based delivery check in and weigh
system (Masih and et. al., 2019). Social factors are easy one to attract FDI, hence source for the
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FDI would be investor based in the Germany. Due to policy of a joint venture, its ease to grab
social beliefs of the Germany based people.
Here, DPD group is under threat circle of loss of investor by excessive pumping of funds,
in the bilateral agreement with local parcel service and this would create scope for the conflicts
with authorities of the Germany. To overcome, there are several solution such as creating contact
with people of the expansion nation so that they would convince local parcel service to go with
low investment and ensure people satisfaction at long. Apart from this, DPD is having major
opportunity to keep faith and trust of the German people by quality of the service and work as
per people convince (PANDEY, 2017).
Technological factor- Technological factor refers to innovation and arrival of new
technology. These days, technological changes are taking place with rapid speed. This ease in
performing operations through machines and automatic working. Research and development
department of DPD Group LTD have to understand about changes which are taking place in
technology and is effective for its working style. In order to implement new technology, there is
requirement of time as well as cos. Germany is 5th country which is technological developed.
Hence if managers of DPD Group LTD wants to operate in industry, then they have to
implement new technology. DPD Group LTD deals in courier services, hence there must be use
of new and latest technology through which receiver and sender gets up- gradations about their
courier. This provides growth to DPD Group LTD and able to sustain in Germany (Barik and
Kumar, 2018).
Germany mainly focus on using technology which is environment friendly because they
keeps check on environment prospects as well. Hence if managers of DPD Group LTD does not
focus on eco- friendly technology, then this is threat for organizational growth. Government of
Germany is planning for implementation artificial intelligence in industry since 2025, then this
might be costly approach for DPD Group LTD. This is threat for DPD Group LTD with which
managers can deal by setting proper budget for technological advancement. This makes proper
working style of organization and workers does not face issue in understanding technological
changes.
Legal factor- Legal factors have also grown highly important in the area of business
(Nandonde, 2019). Motive of the legal concern is to protect business proceedings and removal
of the barriers which mainly act as hurdle in case of business operation. DPD group is looking to
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attract FDI to bear expenses of an expansion and for this, legal investment approval routes is
essential case here. If looks in past time, DPD group has indulged in certain legal case such as
non-approval of item more than 34 Kg or avoidance of the custom. In corporate region, this had
simply effects image of the DPD group. Here, consideration or say opportunity is to approve
investment for expansion very ethically (Zahari and Romli, 2018). In Germany, investment till
100000 Euro needs no approval, DPD is looks out for FDI of 130000 euro which is legally
under jurisdiction of the German authorities. For this, DPD group has decided to adopt policy of
“trust and reveal” and prepares business presentation over pumping of the investment to the
financial authorities of the Germany. In this location, attempt to give bribe is legally offense and
cases are automatically starts as under legal penal code. Due to past legal issue, DPD group has
lost trust of the people for sometime and during this, loss of the brand image has led into role
(Aithal, 017).
Here, DPD group is having chances of threat of break down of an expansion due to its
past legal cases and increasing trend of giving and taking bribe by their people. Also, challenge
of the negative influence to the people is realized here. Solution is to hire professional person
who has capability to deal with all such concern and take approval for FDI effectively. Also here,
opportunity is to understand statutory requirements in case of business expansion in Germany.
Also, its an opportunities for DPD group to develop their own legal proceedings in zone of the
transfer of an investment for operational purpose (Oey and Nitihardjo, 2016).
Environmental factor- This factors simply relates to weather and climate understanding.
The weather conditions of the Germany is fluctuating and significantly impact ability of the DPD
group to manage transportation using road, rail and airways to deliver final parcel. This, in turn,
would affect the delivery dates of the parcel delivery in the case of, say, an unexpected monsoon.
As monsoon has no control in the Germany and this led to stoppage of the transportation for
people and business both. Due to increasing rate of an environmental influence, Germany can be
rethink on selection of any new location. Moreover, expansion to the Germany is largely possible
as because of limited period of climatic glitch and interference to the business operation. DPD
group mainly uses air and road route for parcel delivery so they have option to pre-identify time
of the monsoon and should go for rail network of the Germany to deliver of the parcel (Widya
Yudha and et. al., 2018). As this is cost incurring process as rail network is bit costlier and
transportation tax is also charged on delivery of the parcel. Due to increased cost of
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transportation, DPD group may face some critical issues or challenges such as excessive
pumping of the investment only into the bearing initial transportation cost.
Here, environmental issues such as fluctuation of the climate and excessive monsoon and
snowfall can cause stoppage of the transportation and process for parcel delivery. This would be
might led to flex in the operations of the firm and would led to glitch into business functioning.
Solution for this belongs to usage of tools or advance vehicle which can simply eliminate effects
of heavy monsoon and snowfall and they can use air support as opportunity to protect this
expansion into the Germany (Toyne and et. al., 2017).
CONCLUSION
From the above discussion, it is clear that DPD Group LTD can expand in Germany
market because PESTLE analysis shows positive aspects more as compered to negative. Political
parties at Germany are stable so political stability can be achieved. This assist in smoothly
working of organization and reduces possibilities of government interference. GDP growth rate
of Germany is good and unemployment rate is less, so they get talented and professional
employees. Local people have to courier different items and material for their different purpose,
so this is growth of business in Germany. Legal policies such as laws and regulations are simple
to understand, if managers of organization properly analyse it, then they are able to properly
maintain business operations. Technological advancement are rapid in Germany, hence courier
business can excel there.
But there are some threats as well which which managers of organization has to deal.
There are different countries associated with Germany having bilateral relations, so this cause
challenges for organization in expansion because of change in political policies. Salary rate in
Germany is high due to which cost for organization is high, but they can send candidates from
France through which working efficiency can be achieved. People of Germany have more faith
in local traders, so in order to operate and expand business franchise can be provided. With this,
managers came to know about local trends and culture. Hence it is concluded that there are
growth opportunities with threats. But with proper planning, it is easy to deal with it. This makes
easy to maintain long term sustainability in Germany and expand business. So it is recommended
to managers of DPD Group LTD that they have to proper plan to deal with threats and can
expand business in Germany.
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