Hi,
I would like to thank everybody for their valuable inputs. Taking all your suggestions into account, I have two viable options at hand.

1. Creating two different sites (one for German and one for English). I think this is the best option as you can clearly strategize your seo work. There will be German and English specific file names, title and meta tags and web content. At the same time, one can clearly make it easy for search engines to understand the web content without any ambiguity.
My only concern: Duplicate sites issue. I know both are in different languages but for an example is not possible for Google (using its translation tools) to know it. Please clarify my doubt.

2. By creating sub domains. I will be happy if anyone can give some practical examples. I mean sites which are online.

Thanks in advance again,
Rick