Analysis of 100 Companies: DSW Highlights Self-Inflicted Issues in German Corporations

The German corporate landscape is facing numerous challenges, as highlighted in an extensive analysis by the DSW (Deutscher Schutzverband der Wertpapierinhaber e.V.) in collaboration with Advyce & Company. The study examines 100 publicly traded companies and reveals that many of the problems plaguing these firms are self-inflicted rather than merely a consequence of external factors.

According to the report, which scrutinizes the effects of various influences on the companies, the issues of outdated structures, excessive bureaucracy, and inadequate innovation capabilities are significant contributors to the ongoing crisis in the German economy. While high energy prices are often cited as a major concern, the analysis suggests that they play a secondary role in comparison to other pressing challenges.

Martin Geißler, a study author from Advyce, stated that the pandemic and the conflict in Ukraine have certainly posed difficult conditions for many businesses. However, he emphasized that these challenges should not overshadow the fact that numerous companies have failed to adapt to essential changes over the past two decades.

The analysis points to the prevalence of archaic organizational structures, bloated administrations, and inefficient, poorly digitized processes as key factors driving up structural costs. This trend is particularly evident in sectors such as banking and pharmaceuticals, where traditional compensation structures have remained high, inhibiting competitiveness.

In contrast, technology firms are successfully reducing costs through streamlined, digital processes. This disparity underscores the need for management within many organizations to address internal bureaucracies effectively.

The study further investigates various factors impacting the transformation needs of the selected companies, including energy costs, international competition, labor shortages, regulatory burdens, and wage and structural costs. It reveals that high labor and structural costs are the most significant burdens on businesses, closely followed by bureaucratic hurdles. The research highlights that German companies must navigate approximately 97,000 individual regulations, which is an 18% increase compared to a decade ago.

Additionally, international competition, particularly from countries like China, poses a growing threat, especially within the automotive industry. The study notes that rising energy costs primarily affect specific sectors, such as chemicals and raw materials, but for most industries--including automotive, machinery, IT, and healthcare--they represent a lesser concern when viewed relative to other cost factors.

Despite these challenges, the report underscores a substantial potential for growth and improvement. Germany enjoys a unique advantage due to its well-educated workforce and highly specialized companies across various sectors. However, for this potential to be fully realized, it is crucial for policymakers to lower labor-related costs, support industries during their transitions, and strive to reduce energy expenses.