According to the constitution, Merkel is “only” the fourth-most-powerful person in the German state. Formally, the German President, the president of the upper house of parliament (Bundesrat), and the president of the lower house (Bundestag), are more powerful than the chancellor.
But the chancellor is de facto the most powerful politician in the country. He or she has the authority to make both domestic and foreign policy and, as head of the government, presides over a cabinet and its ministers.
Together, they make up the German executive branch -- the leadership of the country.
German citizens do not directly vote for a chancellor. Every four years, parliamentary elections decide who will fill that role. The candidate for chancellor from the strongest parliamentary party in the Bundestag is designated as chancellor. As a rule, that person must find coalition partners in order to give his or her party a majority of votes in the parliament. Traditionally, two parties make up a ruling coalition in Germany.
After a coalition, a cabinet
Once the chancellor has found a coalition partner, the next step is to form a cabinet. The chancellor selects ministers who will lead his or her cabinet. The ministers fulfill certain duties. Among the most important ministries are economics, environment, interior, foreign policy, finance, and defense. But family issues, justice, transportation and health are key ministries as well. The cabinet ministers are in charge of a given area and are responsible for that which goes on there -- while following given guidelines, of course.
The chancellor puts the ministry selections before the German President, who formally appoints the ministers to their posts for a four-year term. In addition, the president has the job of officially nominating the designated candidate from the leading Bundestag party as chancellery candidate. The chancellor is then officially elected from the members of parliament. That usually happens only after a coalition government is formed -- meaning the cabinet posts have already been awarded.