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Strategic Analysis Of Siemens Company Management Essay

This essay will start with a short explanation of Siemens, an release of its current objective affirmation and an evaluation of the main element strategic issues/goals which Siemens experienced and are facing. Another part, two appropriate tools of examination, PESTEL analysis of the external environment the organization faces, and Porter's 5-Pushes research of the competitive environment in which Siemens operates; a summary of its key tactical resources and competencies, and any resources which it lacks will follow these tow evaluation. Finally, SWOT research will be employed to describe and measure the tactical options for Siemens.

Siemens is Europe's major executive conglomerate. Siemens' international head office are positioned in Berlin, Munich and Erlangen, Germany. Siemens is a diversified group, with business in information and marketing communications, automation and control, vitality, travelling, medical and lighting businesses. The group's businesses have strong control in electronics and electro-mechanical executive. Siemens has experienced significant restructuring lately, including divestments, acquisitions and reorganization of divisions. Siemens has three main business industries: Industry, Energy and Health care and it offers with a complete of 15 divisions (Barclay, 2000).

Worldwide Siemens and its subsidiaries employ about 420, 800 people in practically 190 countries and reported global earnings of 76. 651 billion Euros as of 2009. Siemens AG is outlined on the Frankfurt STOCK MARKET, and has been listed on the New York STOCK MARKET since March 12, 2001.

Mission and vision

Highest performance with highest ethics - this is the standard demanded by Siemens' present president and CEO Peter L¶scher. Its objective is to find the best way of merging and expanding our know-how and experience, so that Siemens can profitably channel them into fantastic value for customers. It offers three core principles---- Responsible: Focused on ethical and responsible actions Excellent: Achieving powerful and positive results; Progressive: Being progressive to create ecological value.

Siemens Strategic profile

Keeping Profitable and long-term progress is the business enterprise strategy of Siemens, which is direct and simple.

Specifically, in line with the statement of Siemens AG, there may be several important components Siemens' strategy, which is confirmed in the table below.

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Source: http://www. siemens. com

In summation, there are several key management strategies as following.

Making better use of sustainability as an opportunity

Siemens view sustainability as an important success factor. Sustainability assists as the foundation for Siemens future business success and is also an integral pillar of Siemens corporate strategy. Siemens is a strong position to meet tomorrow business troubles, so sustainability is very important. By concentrating its activities in the three Sectors Industry, Energy and Healthcare, Siemens has a set up that permits it to benefit from four key megatrends - demographic change, urbanization, weather change and globalization. And with the Siemens Environmental Portfolio, it comes with an exceptionally broad spectrum of products and alternatives for environmental and climate coverage (Barney, 1986).

What's more, sustainability is thought by Siemens to be closely associated with its values. In every its complexity, Siemens view sustainability as a contribution to a far more equitable world market and the provision of energy-efficient, durable products and alternatives for Siemens' customers. In Siemens sustainability is also the manifestation of a sensible worker culture and a sign of uncompromising compliance with regulations.

Diversity as one factor of success

Siemens is promoting diversity in the management ranks of the business to a greater degree than previously. As much as nowadays, Siemens has given variety a permanent place in the organization level strategy. In Siemens' culture, because of the shortage of highly experienced people and demographic changes, variety is a prerequisite for Siemens' long-term success.

The supply of qualified specialized people and professionals in the industrialized world is growing ever tighter. That means it is even more important for Siemens to obtain talented people also to create an environment which allows them to defend myself against key functions in every systems of Siemens- irrespective of factors such as nationality, time, gender, source or religion.

In the entire year 2008, Siemens applied the strategy of variety into organizational framework. Siemens created the positioning of Chief Variety Officer and appointed Jill Lee, previously the principle Financial Official of Siemens China, to the new position. Armed with a comprehensive package of options, Jill Lee would work in the coming years to meet an ambitious aim for: By 2011 Siemens would like to have significantly expanded diversity on the list of users of its top management. Siemens wants to become the first choice in variety.

Delivering breakthrough inventions,

Innovation is definitely one of the most important elements in Siemens' business strategy. In Siemens' culture, Improvements are usually in a position to help spend less, increase sales and achieve higher earnings, and, those who fail to kick off the right new product on the marketplace at the right time will be punished more seriously than ever before. Siemens intends to become "a pioneer in variety". While this is vital, Siemens even today remains an extremely German and incredibly centralized company. Competition such as ABB are many years in advance in this respect as can be seen in various sizes such as plank structure, local management or repartition of headquarter functions.

Siemens intends to become "a pioneer in diversity". While this is very important, Siemens even today remains an extremely German and very centralized company. Competition such as ABB are many years forward in this esteem as is seen in various proportions such as table structure, local management or repartition of headquarter functions.

Siemens intends to be "a pioneer in diversity". While this is very important, Siemens even today remains a very German and very centralized company. Opponents such as ABB are a long time ahead in this esteem as is seen in various measurements such as mother board structure, regional management or repartition of headquarter functions.

Strategic examination for Siemens

Firstly, Porter's five makes and PESTEL will be applied to evaluate the microenvironment of Siemens and a complete SWOT analysis will observe to assess he strategic options for Siemens.

Porter's five forces

One of the main department and product of Siemens is electric equipment therefore Porter's five forces will be employed to assess electrical equipment industry as well as Siemens.

Porter's five forces

Degree of rivalry

The degree of conclusion in this industry is fairly high and there are many big players in this market

Bargaining electricity of customers

The space for customers to great buy is limited as the merchandise are highly specialized and buyers are always government authorities or big companies.

Bargaining ability of suppliers

Suppliers who supply raw materials or parts to makes have little bargaining power

Threat of new entrants:

As the equipment is of high technology, in the early stage of the industry, the entrant hurdle of this industry is high. Siemens and GE have dominated this industry for decades.

Threat of substitutes

However, with the popularity of new energy solutions, some small companies also moved into this market with lower-cost technology and energy, so it is getting more and much easier to find a substituted in a few limited field in a small scale.

Degree of rivalry: In this particular industry, Siemens competes with big players such as Standard Electric (GE) of Fairfield, Conn. , and ABB of Switzerland. GE has a strong market position in this industry, while ABB has great advantages in vitality generation and transmission. The amount of market players in this field is big and the degree of rivalry is high (Barney, 1995).

Bargaining electric power of customers: In other industries, companies are prone to slice their prices as they remain competitive for jobs. This is less inclined to happen with commercial electrical equipment. These products are highly specialized and technical, making it difficult for customers to find similar products at lower prices. And because these products have relatively few purchasers, their prices are less inclined to be forced down by free-market forces.

Bargaining electricity of suppliers: Companies offering parts and materials to these firms have little negotiating vitality. The components found in these complex electric powered systems have little value until they're area of the completed product. Suppliers of the natural components are a dime a dozen and can certainly be substituted.

The complicated nature of this equipment would also make it difficult for suppliers to minimize out the middlemen and sell right to end customers. These suppliers usually lack the skill and class to build these products.

Threat of new entrants: Siemens and GE have dominated this industry for decades. To run with the top players, a fresh company would need a lot of investment. The company will need very good credibility and associations of both proven firms and government authorities. So the entrant barrier because of this industry is high.

Threat of substitutes: some new technology from smaller companies, which concentrate on renewable energy, have placed danger to big companies that lacks a rivalling product. In solar equipment, for example, some smaller companies have become more feasible as their technology becomes cheaper, while solar companies may soon contain the strength to compete with traditional electricity source on price and performance, the risk from substitutes post pressure to supplier like Siemens.

In summary, but the conclusion in this industry is fierce, the entrant barrier for new entrants is high, also, both customer and company have limited bargaining vitality. The pressure from small companies which give attention to renewable energy keep increasing as they have got advantages on price and cost.

PESTEL research of the macro-environment

The external environment for international business is definitely complicated and dynamic. The PESTEL examination of the maco-environment of Siemens is based from two perspectives: one is that Siemens run its business in German and the other condition is the fact that it works its business internationally or in other vacation spot countries.

PESTEL research for Siemens




Germany government plan on subsidies; subsiding policies for German firms

Different countries has different regulations; the relationship between your government of vacation spot country and German; degree of local government's intervention throughout the market; the grade of service that local government provide to international firms; subsiding guidelines for domestic companies; tariff barrier of non-tariff barrier from destination country; the education of the workforce, the fitness of the nation and


The market in Germany; the growth rate of German overall economy; interest rate; inflation rate; home competitors.

Global financial meltdown; Overseas economic progress; the framework of local overall economy; the grade of the infrastructure of the overall economy including the transportation and electric system; level of national income; interest; exchange rate; inflation rate; Market demand and segments for Siemens products; local and international opponents.


Structure and size of people;

Structure and size of people; Option of local recruiting; Migration flows; culture distinctions; brand image of Siemens in vacation spot country


New technologies related with Siemens business in German; any technology that could reduce cost, improve quality or service and help marketing such as on-line technology.

International scientific breakthroughs; New systems related with Siemens business in German; benefits and drawbacks of Siemens systems in comparison to international competition; any technology that could reduce cost, improve quality or service and help marketing such as on-line technology.


Weather and weather in German; hardware such as land designed for Siemens business

Global climate change; weather and environment in destination country; natural environment ;


Environment rules; related laws and regulations in German.

Related international and local laws and regulations.


Political factors always have great impact above the maco-environment in which the business works, so muti-national companies need to do research on politics environment before their international marketing planning. Siemens does well in assessing political risk before it gets into a new market. It really is lucky for this that Germen federal government has steady romantic relationship with plenty of countries. Siemens often need to judge the historical romantic relationship between countries that would advantage or do harm to its business. The influence of neighborhoods or unions for trading is also in its thought. For instance, trade hurdle is also integrated in different organizations of local laws and regulations. If necessary, a written report regarding the political risks needs to be completed before its international marketing (Bell, 2001).


The economic situation in destination countries, the impact of money fluctuations on exchange rates, the introduction of local market, the local market composition (Barney, 1996), the local recruiting and the predisposition of local individuals are all very important issues for Siemens to consider (Bierly, 1996).

The global overall economy just experienced the financial crisis; Siemens' business in most countries also experienced a downturn. Another problem is that, alongside the financial meltdown is the tightened credit system for Siemens, which brought a lot of trouble to its business.

The highlight is the fact that some new market segments such as the China market are still growing fast and these new markets provide good opportunities for Siemens' revenue generation. From financial perspective, Siemens offers dependable financial performance in the modern times.


The social difference is usually a tough problem that the muti-national companies have fulfilled with (Choi, 2000). Culture, religious beliefs and modern culture are of great importance to us. Will and how the local cultural variations affect Siemens' business also needs to be examined.

One of Siemens' strategies is Diversity as a factor of success. Siemens is promoting variety in the management rates of the business to a greater degree than previously. In the entire year 2008, Siemens applied the strategy of diversity into organizational structure. Siemens created the positioning of Chief Variety Officer.

Besides, the brand image of Siemens is great and also means high quality by many purchasers (Davenport, et, 2000), which is one of Siemens' advantages from the social perspective.


Siemens still have great technical advantages in its professional domains and it is still holding a sophisticated position in the international competition.

However, in some countries where governments are not ready to afford high cost of new gadgets, some smaller companies gained advantages over Siemens. For example, smaller companies like First Solar (FSLR) are more practical than Siemens as their technology becomes cheaper.


With increasing attention from all countries on earth on global warming and with higher environmental awareness, environment is now a significant concern for muti-national businesses to consider (Michael, 2003). The growing desire to protect the surroundings is having a great impact the industry. More green products and techniques are in immediate demand. Many of these external factors can bring good business opportunities for Siemens.


The Throw away Electrical and Electronic Equipment (WEEE) Directive of the European Union (EU) makes companies of electrical power and electronic digital goods financially accountable for given collection, recycling, treatment and disposal of previous and future covered products. The Waste material Electrical and Electronic Equipment Restrictions 2006, which execute most areas of the WEEE Directive, arrived to force in 2007 generally in most Europe countries. Several product divisions of Siemens are subject to the WEEE rules (Hofee, 2003).

SWOT Analysis



Big company range and market share;

Strong brand image;

It has a lot of divisions;

Steady financial performance.

Strong R&D capabilities

Good at diversity

Less impressive in the low-cost new technology

Low in credit rating

Weak in interior control

Depend upon third party companies for majority of its operational activities



Increasing demand for environmentally friendly products

Bankrupt of some local companies in other countries

Joint project with other big playes

New rules;

Completion from new and smaller competition;

Unclear craze of global economy


Siemens is a German executive conglomerate with appreciable range and market share; Siemens is a varied group, with business in information and marketing communications, automation and control, ability, transport, medical and light businesses.

It have strong brand image. The make of Siemens has good global market penetration. The brand is always linked with products of high quality in a whole lot of market segments.

It has steady financial performance in recent years (Dess, 2008). Over the years, Siemens has delivered stable financial results. Siemens' world wide web profits have a similar trend in recent years. Dependable financial performance allows Siemens to control its functions well and also improve the financial flexibility within the next a few years.

Siemens is famous for its Strong R&D features, which is also an important factor because of its business success. Its research and development (R&D) investment maintains increasing lately; the average range of employees engaged in R&D also keeps increasing (Grant, 2008). The group's concentration in R&D facilitates development of new products and improvements to existing products assist in maintaining its strong market position and offering a new section of customers.

The global current economic climate needs diversity. Siemens has given variety a permanent place in the organization level strategy. In Siemens' culture, because of the lack of highly experienced people and demographic changes, variety is a prerequisite for Siemens' long-term success.


Siemens is less innovative in the low-cost new technology. For example, smaller companies like First Solar (FSLR) tend to be feasible than Siemens as their technology becomes cheaper, so Siemens now face the pressure from smaller companies.

Siemens is low in credit rating. Siemens's credit ratings were downgraded by some major global ranking agencies in the recent years, which is partly due to its capital framework (Hungenberg, 2008). In November 2007, Moody's Traders Service downgraded Siemens' long-term corporate credit history from Aa3 to A1. Its fund is not good at generating cash flow, therefore, Siemens' potential to obtain new funding and investment from exterior investors may be adversely influenced by its low credit rating.

Its internal controlling setting is not as effective needlessly to say. Some reviewers said Siemens' disclosure control buttons and strategies have been not effective anticipated to material weakness in its inside control. In the region of anti-corruption and financial article, Siemens got a great deal of trouble due to its weakness in inside control.

Siemens relied on third party service organizations for the majority of its functional activities. It buys third party services for processing, assembling and testing its products, while these third gatherings always have kinds of tie up ups with multiple companies. Any problems from these third functions could adversely have an impact on the group's functions. Heavy dependence on third party reduces the group's control over its procedure and business costs. The consistence of the products cannot be guaranteed, either.


During the financial crisis, a great deal of small companies gone bankrupt, some companies are of great value to improve Siemens' competency. It is a good time to buy these businesses with low cost.

Ally with a solid player is an excellent way to share the learning resource and enhance the competency of both companies. For instance, joint venture is an excellent way. Nokia and Siemens founded a 50-50 jv in 2007. The joint venture is called Nokia Siemens Sites, which combined Nokia's sites business and Siemens' carrier related operations for preset and mobile systems. This jv is likely to provide significant permanent results to both groups.

As all the countries are caring more about the environment, There is a increasing demand for environmentally friendly products, which is related to several products line of Siemens.


The new regulation of manufacturers of electric powered and electronic digital goods financially responsible for specified collection, recycling, treatment and disposal of earlier and future protected products post sizeable costs and liabilities to Siemens.

Small companies are increasing market show by their products with cheap, which make your competition more extreme.

The global overall economy has not completely retrieved from the financial meltdown, therefore the market has not fully retrieved, either. Besides, the credit is still tight, which is very hard for Siemens to get new funding from external capital market.

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