OVERVIEW OF SIEMENS AG

SIEMENS AG

INTRODUCTION

Siemens AG is a German base company. It’s headquartered is in Berlin and Munich and the largest engineering company in Europe with branch offices abroad.

The main divisions of the company are Industry, Energy, Healthcare, and Infrastructure & Cities. The company is a prominent maker of medical diagnostics equipment and its medical health-care division, which generates about 12 percent of the company's total sales, is its second-most profitable unit, after the industrial automation division. Siemens and its subsidiaries employ approximately 362,000 people worldwide and reported global revenue of around €71.9 billion in 2014 according to their annual report

MARKET ELEMENTS USED

Production

Siemens is known as a global powerhouse positioned along the electrification value chain – from power generation, transmission and distribution to smart grid solutions and the efficient application of electrical energy – as well as in the areas of medical imaging and laboratory diagnostics. As of September 30, 2015, Siemens has around 348,000 employees worldwide. Orders totaled €82.3 billion and revenue was €75.6 billion in fiscal 2015. They operate in 289 major production and manufacturing plants worldwide. In addition, they have office buildings, warehouses, research and development facilities or sales offices in almost every country in the world. (Bebchuk & Fried, 2003)

Price

Siemens’ powerful price strategy helped the company to increase its’ market share and total volume of sales. The Price Strategy of Siemens contributed significantly in positioning the company among top brands of the world. (Bradley K Estrin & Taylor, 1990)

Siemens Price Strategy can be referred as a successful Price Strategy as it helped the company to become one of the top manufacturer brand in Europe. From the very start, Siemens undertook strategies for Price Positioning. But, in the late 1990s, the company restructured its’ Price Strategy. (Bradley K Estrin & Taylor, 1990)

In the late years of 1990’s, Siemens was generating a sales volume, which was much below its’ expectations. So, in order to increase the volume of sales by gaining more and more market share, Siemens concentrated on developing an efficient Branding Strategy with Price strategy.

For effective Price Positioning, Siemens carried out market analysis using Price Consulting Services. The Consultant suggested two options, one of speedy Brand Positioning which will involve substantial amount of risk and other of Gradual Brand Building which will involve a step by step process. Siemens chose the second option as Brand Building Strategy.
After deciding on the process of implementation of the Price Strategy, Siemens undertook a market targeting project in order to identify the target customers and their requirements. The market research revealed that the customers had high levels of expectations from Siemens Products specifically regarding quality and technical excellence. (Bradley K Estrin & Taylor, 1990)

This way, Siemens evaluated its’ Pricing Strategy and determined efficient communication strategies in order to promote their Brand Products. In this new Branding Strategy of Siemens, the company developed new trade rationales, constructed new pricing strategy, drew market support plans for the major stockiest and decided on advertising strategy and product campaigning projects. (Bradley K Estrin & Taylor, 1990)

Siemens’ this initiative of building a powerful Branding Strategy really paid off and the company positioned itself among the top brands of the world.

Place/Distribution

Siemens serves the entire product, system and solution business for the power distribution infrastructure of residential, commercial, industrial and utility markets. The division offers a wide-ranging portfolio of power distribution and circuit protection products, covering the range from 120 V – 240V to 38 kV. It includes circuit breakers, switches and MV motor controls as well as switchboards, switchgear, bus way, power panels and standby power products. The division's protection and control offering encompasses power monitoring systems, electronic circuit protection, distribution automation and Smart-Gear(R) - Power Distribution Solution. Additionally, the division supplies energy-efficient solutions for the integration of renewable energy and electric vehicles. ( Dittmann, 2010)

Promotion

Siemens promotional plan contains a detailed strategy for expanding the business or marketing a particular product. They have to take several factors into account when they write their promotional plan, such as budgetary constraints, past sales and desired results.
They share their plan with business partners, investors, lenders and employees, so it must contain clear and concise information, including the specific actions that they intend to take. Once they have implemented their promotional plan, they keep it on file so they can track their progress towards their goals.(Eisenhardt, 1989)

People and Participation

Siemens’ people are shaping tomorrow's world. Their knowhow and commitment are among the most important drivers for their long-term competitive success. That's why they comply with the relevant international standards, safeguard jobs during economic downturns and invest in their people's training and continuing education. In fiscal 2010 alone, they spent roughly €225 million, or about €560 per employee, on education. Focused on strategic knowledge and skills, they challenging training and further education programs ensure that expertise in key positions is uniformly conveyed to employees worldwide throughout the course of their careers – because life-long learning is indispensable in a globalized world. (Fama & Jensen, 1983)

EVALUATION OF CURRENT STP AND MARKET MIX

Siemens create high end products by adding more technology and features. New and creative features are the key for strong competitive position. As the world is changing and technology is developing day by day. Thus Siemens consider that their feature in their products is the only factor that differentiates its products from others. Being the first producer to introduce a valuable new feature is a very effective way to attract consumers. (Geo global insights, 2014)

Siemens has so many strength points, which helps the company solve its issues and build more customer relationships, these points are:

Wide range of service offering.

Innovation in their products, ideas, and solutions.

Leading competitive position.

Strong Brand name.

Equity between employees.

Providing excellent goods and services and online services for their customers.

Decentralization.

All employees are directed and motivated towards one goal.

Siemens has some week points too, those are:

Less employee satisfaction with fewer promotions

Complicated organizational structure

Siemens does not put promotions in consideration, while promotions are a very important ingredient in the marketing mix. Promotions are the only way to make the customer aware of the company's presence. However, a large company like Siemens has a wide range of loyal customers. Second, the complicated organizational structure, which is an internal weakness point within the company itself. (Geo global insights, 2014)

As for the company's opportunities, here are three main opportunities the company has:

Innovative offering.

Employment opportunities.

Strong position and franchising in many countries.

Siemens offers young, creative people the opportunity to be a member of the company. That is because the company believes that these people need to gain experience, and there is no other place welcomes person to gain experience such as Siemens. Another thing is franchising and globalizing in many regions, such as Brazil, Egypt, etc. (Geo global insights, 2014)

Finally, there comes the firm's threats, the main threats are:

Intense competition.

Competitors are providing less product pricing.

Actually Siemens Company produces both types of products, services and physical. It works in more than 12 branches and product lines.

 

It’s market mix are:

1) Medical Instruments:

Siemens is one of the world's largest suppliers and producers of healthcare systems in healthcare industry. Siemens Company produces many Medical instruments and equipment such as:

Breast care solutions: fighting breast cancer requires a unique approach that targets every step of the breast care process, from diagnosis to after care. Siemens has the answers for breast care and contributes in solving any issues faced.

Imaging and therapy systems: Siemens helps doctors save lives with advanced diagnostics and therapy technology. By making medication easier, more people can live longer, happier, and stronger (Guedri, 2008)

2) Water Treatment and Management:

Water scarcity is a problem that endangers our planet, and water pollution is increasing rapidly. Thus Siemens decided to Challenge this problem especially in the countries of the Middle East. Resources are being saved as much efficiently as possible to use the minimum energy and power. Desalination plants in Abu Dhabi are one way to deliver water and energy supplies. In 2012, Siemens was awarded a long-term maintenance contract. This contract was awarded for the combined cycle power and desalination plant Jebel Ali M-Station in Dubai. This proves how efficient and effective the company is. (Milgrom, 1994)

3) Renewable energy:

Renewable energy generations are environment friendly with using its power saving solar and wind energy. These generators are used to face the climate change. Renewable energy sources like solar and wind energy are very important. These devices are considered green and not harmful for the environment. The innovations and technology that Siemens is developing and using are to make electricity generations from solar, wind, and nature powers a lot more economical and efficient. ( Jensen & Meckling, 1976)

 

 

 

4) Home applicants:

Siemens develops tremendous, innovative, and useful appliances. It makes life a lot easier without disregarding high-performance. Examples of home applicants are: (Air conditioner, microwaves, small applicants, cooking) (Kang & Kunar, 2006)

Before developing a product, a company should first define the benefits of its offerings; these benefits are related and delivered by product specifications such as features, style, quality and design.

Product Quality: "Germany Made" has always been an inspiration for tremendous success. Siemens quality is nothing less than putting the customer into consideration, not only in technology and services, but also in our behaviors and how workers are oriented to deal with them.

RECOMMENDATIONS BASED ON MARKETING THEORIES

SWOT Analysis

Strength	1. Pioneer of technology driven services 2. Market leadership through innovation and has presence in industry, Energy, Healthcare, Infrastructure and Cities 3. Financial excellence and stability 4. Over 400,000 employees worldwide shows its commanding global position 5. Operates in about 180 companies 6. It has operations in over 190 countries 7. Joint ventures with many internationally renowned companies and acquisitions have made it a powerful brand 8. Strong advertising and marketing through sports and lifestyle events, sponsorship online media, TVCs etc make it a high recall brand
Weakness	1. Dependence on third party providers can affect operational efficiency 2. Few allegation of corruption in the corporate environment by individuals hit the headlines
Opportunities	1. Expanding market share in emerging markets 2. Strategic acquisitions, partnerships and collaborations 3. Setting up of institutions worldwide for in-house solutions 4. Increase in demand for electricity and related services and products
Threats	1. Strict govt policies and environmental regulation affect operations 2. Economic fluctuations and currency devaluations affect the financial performance as it is an international company 3. Heavy dependence on few suppliers

Porter's five forces

Degree of rivalry

The degree of completion in this industry is pretty high and there are many big players in this market

Bargaining power of customers

The space for customers to bargain is limited as the products are highly specialized and buyers are always governments or big companies.

Bargaining power of suppliers

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

Threat of new entrants:

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

Threat of substitutes

However, with the popularity of new energy technologies, some small companies also entered this market with lower-cost technology and energy, so it is getting more and easier to find a substituted in some limited field in a small scale. (Long, 1978)

Degree of competition: In this industry, Siemens competes with big players such as General Electric (GE) of Fairfield, Conn., and ABB of Switzerland. GE has a strong market position in this industry, while ABB has great advantages in power generation and transmission. The number of market players in this field is big and the degree of competition is high (Barney, 1995). (Long, 1978)

Bargaining power of customers: In other industries, it is easy for companies to cut the prices as they compete for the same deals, which is less possible to happen in the industrial electrical equipment industry. These products are of highly specialized and professional technologies, so customers find it is very difficult for customers to purchase products of comparable quality at the same or even lower prices. (Long, 1978)

Bargaining power of suppliers: those companies that provide equipment parts and raw materials to these companies always have little bargaining power. As the equipment parts and raw materials are easy to be found in the open market, so the suppliers are easily to be replaced by other suppliers. (Long, 1978)

Threat of new entrants: Siemens and GE have dominated this industry for a lot of years. To run with the big players, a new company would need a great deal of investment. The company needs to have very good credibility and connections of both established firms and governments. So the entrant barrier for this industry is high.

Threat of substitutes: some new technologies from smaller companies, which focus on green energy, have posted threat to big companies that lacks a competing product. In solar equipment, for example, some smaller companies are becoming more viable as their technology becomes cheaper, while solar companies may soon have the strength to compete with traditional power source on price and performance, the threat from substitutes post pressure to supplier like Siemens. (Long, 1978)

In summary, although the completion in this industry is fierce, the entrant barrier for new entrants is high, what's more, both customer and supplier have limited bargaining power. The pressures from small companies which focus on green energy keep increasing as they have advantages on price and cost. (Long, 1978)

PESTEL analysis

Political

Germany government policy on subsidies; subsiding policies for German firms

Different countries has different policies; the relationship between the government of destination country and German; degree of local government's intervention in the economy; the quality of service that local government provide to foreign firms; subsiding policies for domestic firms; tariff barrier of non-tariff barrier from destination country; the education of the workforce, the health of the nation. (Mathien, 2009)

Economic

The economy in Germany; the growth rate of German economy; interest rate; inflation rate; domestic competitors.

Global financial crisis; Overseas economic growth; the structure of local economy; the quality of the infrastructure of the economy such as the transportation and electrical system; level of national income; interest rate; exchange rate; inflation rate; Market demand and segments for Siemens products; local and international competitors. (Mehran, 1995)

Social

Structure and size of population;

Structure and size of population; Availability of local human resources; Migration flows; culture differences; brand image of Siemens in destination country

Technological

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 technological breakthroughs; New technologies related with Siemens business in German; advantages and disadvantages of Siemens technologies when compared with international competitors; any technology that could reduce cost, improve quality or service and help marketing such as on-line technology. (Oyer, 2004)

Environmental

Weather and climate in German; hardware such as land available for Siemens business

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

Legal

Environment regulation; related laws in German.

Related international and local laws and regulations.

Political

Political factors always have great impact over the macro-environment in which the business runs, so multi-national companies need to do research on political environment before their international marketing planning. Siemens is doing well in evaluating political risk before it enters a new market. It is lucky for it that Germen government has steady relationship with lots of countries. Siemens often need to evaluate the historical relationship between countries that would benefit or do harm to its business. The influence of communities or unions for trading is also in its consideration. For example, trade barrier is also implemented in different firms of local laws. If necessary, a report regarding the political risks needs to be completed before its international marketing (Oyer, 2004).

Economic

The economic situation in destination countries, the impact of currency fluctuations on exchange rates, the development of local market, the local market structure (Barney, 1996), the local human resources and the predisposition of local consumers are all very important issues for Siemens to consider (Jensen & Meckling,1976).

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

The highlight is that some new markets such as the China market are still growing fast and these new markets provide good opportunities for Siemens' revenue generation. From economic perspective, Siemens has got steady financial performance in the recent years.

Social

The cultural difference is often a tough problem that all the multi-national companies have met with (Kang & Kumar, 2006) . Culture, religion and society are of great importance to us. Will and how the local cultural differences affect Siemens' business should also be evaluated.

One of Siemens' strategies is Diversity as a factor of success. Siemens is promoting diversity in the management ranks of the company to a greater degree than ever before. In the year 2008, Siemens applied the strategy of diversity into organizational structure. Siemens created the position of Chief Diversity Officer. (Long, 1978)

Besides, the brand image of Siemens is very good and also means high quality by many purchasers (Kang & Kumar, 2006), which is one of Siemens' advantages from the social perspective.

Technological

Siemens still have great technological advantages in its professional fields and it is still holding an advanced position in the international competition.

However, in some countries where governments are not willing to afford high cost of new equipments, some smaller companies gained advantages over Siemens. For example, smaller companies like First Solar (FSLR) are more viable than Siemens as their technology becomes cheaper. (Oyer, 2004)

Environmental

With increasing attention from all countries in the world on global warming and with greater environmental awareness, environment is becoming a significant issue for muti-national firms to consider (Michael, 2003). The growing desire to protect the environment is having a great impact the industry. More environmentally friendly products and processes are in urgent demand. All of these external factors can bring good business opportunities for Siemens.

Legal

The Waste Electrical and Electronic Equipment (WEEE) Directive of the European Union (EU) makes producers of electrical and electronic goods financially responsible for specified collection, recycling, treatment and disposal of past and future covered products. The Waste Electrical and Electronic Equipment Regulations 2006, which implement most aspects of the WEEE Directive, came into force in 2007 in most Europe countries. Several product divisions of Siemens are subject to the WEEE regulation (Mathieu, 2006).

As the findings above indicate, attempts to improve the protection of information need to address privacy and security concerns at both the organizational and the national or industry-wide levels. Organizations need to improve their internal mechanisms for handling  information, and the electronic industry as a whole needs to improve its practices for controlling and enforcing systemic uses of  information. In the absence of strong business motivations and economic pressures to improve privacy and security, other forces may be necessary to promote change. These include industry-wide efforts to develop sound practices for protecting information, initiatives to better educate patients about health data flows, or government regulation or legislation to provide patients with enforceable rights to privacy. Educating the public may also be an effective option for prodding organizational leaders to place a higher priority on privacy and security needs, though to date such efforts have not proved effective. Legislative initiatives have been stymied by an inability to achieve national consensus, and standards organizations are fragmented and lack sufficient authority to promulgate or enforce standards for privacy and security. (Guedri, 2008)

The recommendations below outline the roles of  organizations, the electronic industry, and government in improving privacy and security practices within individual electronic organizations, creating the industry-wide infrastructure needed to develop and encourage adoption of stronger privacy and security practices, addressing systemic issues related to privacy and security, and ensuring research to meet future technical needs. To the extent possible, the study has attempted to identify the organization or organizations best qualified to implement each recommendation. In some cases, Siemens will have to sort out their respective roles so as to make the best use of their strengths and resources. (Kang & Kunar, 2006)

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