Siemens is currently one of Europes major anatomist conglomerates. Its international headquarters are situated in Germany. Siemens is a diversified and huge group, with business in information and marketing communications, automation and control, ability, transportation, healthcare, light and financial service businesses. Its businesses have strong leadership in electronics and electric powered executive. Siemens has three main business areas: Industry, Energy and Medical care and it has a total as much as of 15 divisions (Barclay, 2000).
Worldwide Siemens and its subsidiaries employ about 420, 800 people in nearly 190 countries and reported global revenue of 76. 615 billion Euros by 2009. Siemens AG is stated on the Frankfurt STOCK MARKET, and has been outlined on the New York Stock Exchange since March 12, 2001.
Mission and vision
Highest performance with highest ethics - that is the standard demanded by Siemens' present president and CEO Peter L¶scher. Its quest is for the best way of merging and expanding know-how and experience, so that Siemens can profitably route them into outstanding value for customers. It offers three core values---- Responsible: Committed to ethical and accountable actions; Excellent: Achieving powerful and excellent results; Innovative: Being ground breaking to set-up sustainable value.
Strategic issues
Pioneer of sustainability
Sustainability can be regarded as a key point for success. Siemens would like to be the pioneer of sustainability. Sustainable development is the main strategic objective over time. Sustainability serves as the foundation for Siemens future business success and it is the main facet of Siemens corporate and business strategy. (Barney, 1986). What's more, in recent years, Siemens has applied this plan into procedure, with the Siemens environmental portfolio increasing, it comes with an exceptionally broad spectral range of products and alternatives for environmental and climate protection
Great in diversity
Siemens is engaged in promoting diversity in all levels of the business to a greater degree than previously. Approximately nowadays, variety has been given a everlasting place in the corporate level strategy. In Siemens' culture, specifically for the increasing scarcity of highly qualified people and demographic changes in the global business, variety is a prerequisite for all the muti-national companies' long-term success. Variety is also a prerequisite for its international business.
Innovative
Innovation has always been one of center competency in Siemens' business strategy. In Siemens' culture, Innovations are usually able to improve the center competence of Siemens. What's more, Siemens have to keep its edge over its opponents in this technological product-dominated market.
Strategic research for Siemens
Firstly, PESTEL will be applied to evaluate the microenvironment of Siemens, for Porter's five causes analysis, the electrical power equipment department will be taken for example and a full SWOT analysis will observe to examine he tactical options for Siemens.
PESTEL examination of the macro-environment
The exterior environment for international business is obviously complicated and dynamic. The PESTEL examination of the maco-environment of Siemens is situated from two perspectives: one is that Siemens run its business in German and the other condition is the fact that it operates its business internationally or in other vacation spot countries.
PESTEL analysis for Siemens
Germany
GLOBAL
Germany government insurance policy on subsidies; subsiding policies for German firms
Different countries has different regulations; the relationship between the government of vacation spot country and German; degree of local government's intervention in the economy; the grade of service that local government provide to foreign firms; subsiding policies for domestic organizations; tariff barrier of non-tariff barrier from vacation spot country; the education of the labor force, the health of the nation and
The overall economy in Germany; the growth rate of German current economic climate; interest; inflation rate; home competitors.
Global financial meltdown; Overseas economic progress; the framework of local economy; the quality of the infrastructure of the market like the transportation and electro-mechanical system; degree of national income; interest rate; exchange rate; inflation rate; Market demand and sections for Siemens products; local and international challengers.
Structure and size of people;
Structure and size of populace; Availability of local human resources; Migration flows; culture distinctions; brand image of Siemens in destination country
New technologies related with Siemens business in German; any technology that may reduce cost, improve quality or service and help marketing such as on-line technology.
International scientific breakthroughs; New solutions related with Siemens business in German; advantages and disadvantages of Siemens technology in comparison to international challengers; any technology that can reduce cost, improve quality or service and help marketing such as on-line technology.
Weather and climate in German; hardware such as land available for Siemens business
Global climate change; weather and weather in vacation spot country; natural environment ;
Environment legislation; related laws and regulations in German.
Related international and local laws and regulations.
Political
Political factors always have great impact above the maco-environment where the business runs, so muti-national companies need to do research on political environment before their international marketing planning. Siemens is doing well in evaluating political risk before it gets into a new market. If required, a report regarding the political risks must be completed before its international marketing (Bell, 2001).
Economic
The financial situation in vacation spot countries, the impact of money fluctuations on exchange rates, the introduction of local market, the neighborhood market structure (Barney, 1996), the local human resources and the predisposition of local individuals are all very important issues for Siemens to consider (Bierly, 1996).
The global current economic climate just experienced the financial meltdown; although Siemens acquired a reliable financial performance for a lot of years prior to the financial crisis, Siemens' business in most countries still experienced a downturn. Another problem is that, together with the financial crisis is the tightened credit system for Siemens, which brought a whole lot of trouble to its business.
The highlight is the fact that some new markets such as the China market remain growing fast and these new marketplaces provide good opportunities for Siemens' income generation.
Social
The ethnical difference is usually a tough problem that all the muti-national companies have found with (Choi, 2000). Culture, religious beliefs and contemporary society are of great importance to us. Will and the way the local cultural distinctions affect Siemens' business also needs to be evaluated.
One of Siemens' strategies is Diversity as a factor of success. Siemens is promoting variety in the management ranks of the company to a greater degree than ever before.
Besides, the brand image of Siemens is very good and also means high quality by many purchasers (Davenport, et, 2002), which is one of Siemens' advantages from the sociable perspective.
Technological
Siemens still have great technological advantages in its professional field such as electronic equipment. It is still holding an advanced position in the international competition in this field. It also has been viewed as a top innovator in the fields of automation, lightening, healthcare and fire basic safety for a number of years. Keeping scientific advantages over its competition has always been its core competency.
However, its scientific advantage isn't that obvious in a few market segments. For instance, in a few countries where governments aren't willing to cover high cost of new equipments, some smaller companies gained advantages over Siemens. Some customers are definitely more interested in solar technology, while Siemens is not doing well in the solar energy field. On the contrary, smaller companies like First Solar (FSLR) will be more viable than Siemens and their technology are cheaper.
Environmental
With increasing attention from all countries on the globe on global warming and with increased environmental recognition, environment is now a significant concern for muti-national businesses to consider (Michael, 2003). The growing desire to protect the environment is having a great impact the industry. More green products and techniques are in urgent demand. Many of these external factors may bring good business opportunities for Siemens.
Legal
The Misuse Electrical and Electronic Equipment (WEEE) Directive of the European Union (European union) makes producers of electric powered and electric goods financially accountable for specified collection, recycling, treatment and removal of earlier and future protected products. The Misuse Electrical and Electronic Equipment Laws 2006, which execute most aspects of the WEEE Directive, arrived to pressure in 2007 generally in most Europe countries. Several product divisions of Siemens are subject to the WEEE rules (Hofee, 2003).
Porter's five forces
As Siemens have several important areas, and the 5 forces analysis for each sector are rather different. As one of the most crucial divisions of Siemens, electrical equipment will be used as the research goal for Porter's five makes evaluation here.
Porter's five forces
Degree of rivalry
The amount of completion in this industry is quite high and there are many big players in this market
Bargaining electric power of customers
The space for customers to deal is bound as the products are highly specialised and it problematic for customers to find comparable products at lower prices
Bargaining electric power of suppliers
Suppliers who source raw materials or parts to makes have little bargaining power
Threat of new entrants:
As the equipment is of high technology, in the first stage of this industry, the entrant barrier of this industry is high. Siemens and GE have dominated this industry for many years.
Threat of substitutes
However, with the level of popularity of new energy systems, some small companies also inserted this market with lower-cost technology and energy, so that it is getting more and much easier to find a substituted in a few limited field in a little scale.
Degree of competition: In such a industry, Siemens competes with big players. GE has a solid market position in this industry, while ABB has great advantages in vitality generation and transmitting. The amount of market players in this field is big and the amount of competition is high (Barney, 1995).
Bargaining vitality of customers: In other sectors, it is simple for companies to cut the prices as they compete for the same discounts, which is less possible to happen in the commercial electrical equipment industry. These products are of highly customized and professional systems, so customers think it is is very difficult for customers to purchase products of equivalent quality at the same or even lower prices.
Bargaining ability of suppliers: those companies offering equipment parts and recycleables to these companies will have little bargaining power. As the equipment parts and recycleables are easy found in the open market, therefore the suppliers are easily to be replaced by other suppliers.
Threat of new entrants: Siemens and GE have dominated this industry for a lot of years. To perform with the top players, a new company would desire a lot of investment. The business will need very good reliability and links of both set up businesses and governments. Therefore the entrant barrier for this industry is high.
Threat of substitutes: some new solutions from smaller companies, which concentrate on inexperienced energy, have posted menace to big companies that lacks a rivalling product. In solar equipment, for example, some smaller companies are becoming more practical as their technology becomes cheaper, while solar companies may soon contain the strength to compete with traditional electric power source on price and performance, the danger from substitutes post pressure to supplier like Siemens.
In summary, even though the completion in this industry is fierce, the entrant barrier for new entrants is high, what's more, both customer and company have limited bargaining electricity. The pressures from small companies which concentrate on green energy keep increasing as they have got advantages on price and cost.
SWOT Analysis
Strengths
Weaknesses
Big company scale and market show;
Strong brand image;
It has a great deal of divisions;
Steady financial performance.
Strong R&D capabilities
Good at diversity
Less innovative in the low-cost new technology
Low in credit rating
Weak in inner control
Depend upon alternative party providers for most its operational activities
Opportunities
Threats
Increasing demand for environment friendly products
Bankrupt of some local companies in other countries
Joint opportunity with other big playes
New rules;
Completion from new and smaller competition;
Unclear development of global economy
Strengths
Siemens is a German executive conglomerate with appreciable range and market show; Siemens is a diversified group, with business in information and marketing communications, automation and control, ability, transportation, medical and light businesses.
It have strong brand image. The brand of Siemens has good global market penetration. The brand is often linked with products of high quality in a great deal of market segments.
It has regular financial performance lately (Dess, 2008). Over the years, Siemens has provided regular financial results. Siemens' world wide web profits have a similar trend in recent years. Continuous financial performance permits Siemens to control its operations well and also improve the financial flexibility within the next a couple of years.
Siemens is well-known for its Strong R&D functions, which is also an important factor because of its business success. Its research and development (R&D) investment retains increasing lately; the average range of employees engaged in R&D also retains increasing (Give, 2008). The group's focus in R&D facilitates development of services and improvements to existing products help in retaining its strong market position and offering a new segment of customers.
The global overall economy needs diversity. Siemens has given diversity a permanent put in place the organization level strategy. In Siemens' culture, because of the shortage of highly certified people and demographic changes, diversity is a prerequisite for Siemens' long-term success.
Weakness
Siemens is less innovative in the low-cost new technology. For example, smaller companies like First Solar (FSLR) will be more practical than Siemens as their technology becomes cheaper, so Siemens now face the pressure from smaller companies.
Siemens is low in credit history. Siemens's credit ratings were downgraded by some major global ranking firms in the recent years, which is partly because of its capital structure (Hungenberg, 2008). In November 2007, Moody's Traders Service downgraded Siemens' long-term corporate and business credit rating from Aa3 to A1. Its finance is bad at generating cashflow, therefore, Siemens' capacity to obtain new money and investment from external shareholders may be negatively influenced by its low credit rating.
Its inner controlling method is much less effective as expected. Some reviewers said Siemens' disclosure handles and strategies have been not effective credited to materials weakness in its internal control. In the region of anti-corruption and financial report, Siemens acquired a whole lot of trouble due to its weakness in internal control.
Siemens relied on alternative party service organizations for the majority of its functional activities. It buys alternative party services for production, assembling and tests its products, while these third parties always have kinds of link ups with multiple companies. Any problems from these third parties could adversely have an impact on the group's procedures. Heavy reliance on third party reduces the group's control over its procedure and business costs. The consistence of the products could not be guaranteed, either.
Opportunities
During the financial meltdown, a lot of small companies gone bankrupt, some companies are of great value to improve Siemens' competency. It is a good time to buy these companies with low priced.
Ally with a solid player is an excellent way to share the reference and improve the competency of both companies. For instance, joint venture is an excellent way. Nokia and Siemens proven a 50-50 jv in 2007. The joint venture is named Nokia Siemens Systems, which mixed Nokia's sites business and Siemens' carrier related businesses for preset and mobile networks. This jv is expected to provide significant long term comes back to both communities.
As all the countries are nurturing more about the environment, There's a increasing demand for environmentally friendly products, which is related to several products type of Siemens.
Threats
The new rules of producers of electric powered and electronic goods financially accountable for specified collection, recycling, treatment and disposal of previous and future covered products post sizeable costs and liabilities to Siemens.
Small companies are attaining market share by their products with cheap, which make your competition more strong.
The global current economic climate has not totally retrieved from the financial meltdown, so the market has not fully retrieved, either. Besides, the credit is still tight, and it is very difficult for Siemens to get new funding from external capital market.
The proper options from SWOT
By the SWOT analysis, various tactical options could be draw from different perspectives: on one hand, Siemens could be advised to intend to strengthen its advantage; on the other side, strategy of weakening its weakness is also a good choice. Besides, for external research, Siemens need to attempt to make best of the opportunist external environment offered. Also, counteracting the negative impact from external danger is a means for Siemens to achieve its success.
Strengthened advantages
Weakening the disadvantages
Promote its company size
Increase its market talk about and keep revenue growing
Restructure the business to make its division more diversified.
Build even strong brand image and do better in brand market penetration by affordable public relation activities and marketing promotions
Update its R&D features to a even better stage so as to enhance its core competence
With steady financial performance, work hard on high RIO for stake holders.
Take actions to make both its business and organizational culture more diversified to adapt to the introduction of global economy
Develop new divisions in charge of new products with lower-price to compete in the low-price and new energy market segments
Improve its shoot composition, make more strict control in its fund process and do better in financing disclosure
The operational elements of Siemens need to be restructured to progress interior control, and process modelling of Siemens must also be revised.
Move a few of the actions from third parties into internal so that Siemens will not highly rely on third party providers
Make best use of opportunities
Counteract on threat
More investment on the R&D for the environment friendly and new energy products
Develop better general population romantic relationship with local government
Make acceptable investment on some smaller companies which were in bankrupt
Ally with some strong players to talk about the resources and reduce the risks.
Enhance its potential of resisting the negative impact of financial crisis or economical fluctuation from global economy
Do better on the study of new legislation and make preparation as early as possible.
Generally speaking, every strategy has its cost and gain, it will always be had to do an at all times cost and gain analysis for all your strategies listed above. It'll make Siemens expose to less risk by the strategy of strengthening its advantages. Also, as one of the market leaders in the industry, Siemens has advantages over its opponents in many aspects and make best use of market opportunities can always help a business to realize a whole lot in an extended run. However, defending strategies from its weakness and external danger also have special meaning because of its success. Based on all the analysis, recommendations for Siemens strategy are as pursuing:
Inner control
It is advised that Siemens need to do some changes to inside control so that it can do better in handling internal information and management; the process modelling of Siemens also needs to be modified.
Transfer activities from third parties
it could transfer a few of its outsourced activities into in-house such that it won't highly count on alternative party providers, which bring a lot of risk to Siemens;
Restructure the capital structure
it need to restrict its capture composition so that it could upgrade its credit rating, that assist it get steady funding in the reduced run; for external competition.
Found new divisions for new products
Found new R&D divisions to explore new products directed on the low-price technology and new energy market segmentation to compete with some smaller company with low-price products.
Joint venture
Joint opportunity with other strong players is an excellent strategy to reveal resources and generate revenue with lower cost.
