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Influence of the last global economic crisis on German IT industry and its further development

Term Paper 2017 22 Pages

Business economics - Trade and Distribution

Excerpt

Table of contents

List of Figures

List of Tables

1 Introduction
1.1 Economic crisis
1.2 Business context
1.3 Purpose of Research

2 Review of current thinking and Definitions
2.1 Business Cycle
2.2 Business Cycle indicators
2.3 Recession

3. Global Financial crisis
3.1 Influence on the German information technology sector
3.2 Crisis behaviour of the German information technology sector

4. Market situation after the crisis
4.1 IT competitive situation with Porter Diamond Model in Germany IT Industry
4.2 Demand Conditions
4.3 Factor Conditions
4.4 Firm, Strategy, Structure and Rivalry
4.5 Government
4.6 Chance
4.7 Related and Supported Industry

5. Data Analysis and Interpretation

6. Conclusion

Bibliography

PREFACE

This elaboration deals with the issue of the previous recession.

After a detailed definition of the business cycles their prediction and significance in the economic area, the emphasis was placed on the German information technology industry and examined. The global economic crisis had a significant impact on exports and investment-based industries. In contrast to other industries, this sector was able to recover relatively quickly from the market breaks. By using the Diamond Porter analysis, it was found that this was also due to the economic situation in Germany, thus highlighting Competitive advantages over other economic areas in the regeneration of market shares.

ZACRITI HOSNI

MONHEIM 09.04.2017

List of Figures

Figure 1 The business cycle

Figure 2 Business 360 Cycle

Figure 3 Phasing of BCT Indicators

Figure 4 GDP growth Rates

Figure 5 Real Growth

Figure 6 Tech - DAX CHART

Figure 7 Export – Volumes

Figure 8 Diamond Porter Model)

Figure 9 Export Partners by Share in %

Figure 10 Terms of Trade

List of Tables

Table 1

1 Introduction

1.1 Economic crisis

The global economic crisis rises at the beginning of the fiscal year as a result of a real estate bubble that had burst in 2008 with the associated insolvency of the first large investment banks. This was noticeable in all branches of industry. Producing trades have been heavily affected by the banks' distrustful attitude to lending. Furthermore, larger companies followed their future development cautiously as the financial market had not been sufficiently strong (Mohammadkhan, Abdollah and Fateme , 2010).

1.2 Business context

This work is intended to illuminate and objectively examine the last global economic crisis. Within the framework of the observation, the focus will be on the German information technology industry. The course is to be presented and explained in view of the global competitiveness. Furthermore, policy measures relating to the support of the IT sector are to be identified and critically examined.

1.3 Purpose of Research

The purpose of the elaboration is to provide a detailed presentation of the information technology sector in relation to the global economic crisis, with the ensuing subsequent development. Furthermore, a solution path that helped the German IT industry from this crisis has been analyzed and compared with other global IT sectors.

2 Review of current thinking and Definitions

2.1 Business Cycle

The economic cycle can be described as a fluctuation in the degree of utilization of an economy (Fox and Madura , 2015). This is a reversed wave-shaped change in the economic activity level. In detailed theory, the cycle is divided into 4 phases as Showing in the following Figure 1.

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Figure 1 The business cycle Source: (James, 2008)

Each of these phases has its own feature. The main reason for the change is the demand on a market with the corresponding supply as well as the production process (Paul, 2015). In accompanying theories it is also represented as shown in Fig. 2 as a 360 degree cycle. This is to make clear that there is a closed and regenerating system depending on various factors. By means of various mechanisms, the related industries as well as the respective states involved can counterbalance and redirect this (Thommen and Achleitner, 2012).

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Figure 2 Business 360 Cycle Source: (Own illustration following (Todd, 2015))

2.2 Business Cycle indicators

For the determination of the respective situation in a business cycle and its prediction, certain key figures of the respective markets are used. From a survey of the behavioral patterns of the largest companies of a market economy in the cross-country area, indicators are determined by the OECD (ATAMAN , BRIAN and VICTOR , 2010). These indicators serve as a prediction for certain trends. These have, after their publication, a considerable immediate influence on the behavior of companies as well as the stock exchange quotations (Saull, 2012). These are subdivided into the so-called quantities, price, early, presence and late indicators as shown in figure 3. During a period, the indicators must be grouped together in a number of ways, taking into account the economic situation (CAL, 2001). Martial, customer-specific and economic factors can be used here. The interplay of the various indicators can be predicted. However, these indicators are merely a subjective perception of the behavior patterns of companies and customers (Kirchgassner and Friedrich , 2009). Risks and natural catastrophes as well as unforeseeable situations, e.g. Wars are not considered (Fox and Madura , 2015).

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Figure 3 Phasing of BCT Indicators Source: (Roberto, 2017)

2.3 Recession

After the boom in a business cycle, the decisive downturn followed in a recession. If 2 periods as shown in Figure 4 of a low growth are referred, it can be viewed as a recession (Walter, 2009). As a further definition of the recession, the geographically tied and brittle growth tendency of a market can be demonstrated. The evaluation basis of the individual research institutes can be critically mentioned here. Unification is always subjectively shaped (Harris, 2010). Key figures as well as the calculation of the times are the responsibility of the respective institutes. On the contrary, large-scale institutes such as the IMF determine global trend structures and use a GDP real scale as the basis for assessment. Furthermore, recessions are compared with previous recessions in order to obtain a meaningful forecast (Zhang, 1988). The recession is simultaneously characterized by high unemployment. The decline in GDP is a negative indicator of consumer demand. This results in a lower production capacity with a further reduction in the production quota (Todd, 2015). A spiral of the downtrend can thus be mapped. It is crucial that the markets in this area have to regenerate independently or with the help of the states in order to open a new expansion cycle (Michael, 2009).

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Figure 4 GDP growth Rates Source: (Eurostat, 2013)

3. Global Financial crisis

The financial and economic system was at the bottom of the gap at the beginning of 2009. The speculative business with American mortgage bonds set the course for a global liquidity and trust crisis between banks and investors (Michael, 2009). This theme lasted for months on the floor of the world trade. Exchange-listed companies had to accept losses on the exchange. Large banks had to carry out billions of depreciations or even had to file for bankruptcy. Governments around the world were trying to calm the panic financial world (Douglas, 2010). At national, European and international level, close cooperation was sought to find solutions to limit the extent of the financial and economic crisis. The gross domestic product in Germany fell by 5% compared with the previous year (destatis, 2013). A slowdown with minimal growth could only be determined from a global perspective in the second quarter of 2010. As can be seen in Figure 5, the decline in the second quarter reached its peak except Greece and Ireland. The US needed to enter the growth zone by the 1st quarter of 2011. In return, the Eurozone weakened against the US and had to accept a weakening. This is justified by the Doller - Euro course.

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Figure 5 Real Growth Source: (Finanz.net, 2017)

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Details

Pages
22
Year
2017
ISBN (eBook)
9783668591394
ISBN (Book)
9783668591400
File size
1.4 MB
Language
English
Catalog Number
v383593
Institution / College
Buckinghamshire New University
Grade
2,3
Tags
International Trade World crisis

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Title: Influence of the last global economic crisis on German IT industry and its further development