Siemens company review and background

Siemens is a global power house in electronics and electrical engineering which operates in industry, energy and healthcare sector. From a small workshop to a global business only few industries in the world can look back and can be proud of such a long and successful history as Siemens. Siemens was founded by Werner Von Siemens and Johann Georg Halske in 1847. For decades the majority of the total sales was earned by production of electrical telegraphs which a big breakthrough. For over century and a half, Siemens is very well known for its innovation, technical achievements, quality, reliability and internationality. One of the main aspect of the company which they feel proud of is that they are very environmental friendly. Nearly one third of their revenue is generated by green products and solutions. "In fiscal 2009, ended on September 30, 2009, Siemens had revenue of €76.7 billion and net income of €2.5 billion. At the end of September 2009, the company had around 405,000 employees worldwide." (

Strategic decisions taken by any organizations are likely to affect the long-term direction of the organizations. Strategic decisions are normally about trying to achieve some advantage for the organizations in the long run. Strategic decisions are made by keeping the scope of organizations activities in mind like should the organization concentrate on one area or several. As far as Siemens is concerned there strategic decisions are quiet clear. Siemens basic strategy is that they always been focusing mainly on innovation and technology driven growth markets and till now they have been quiet successful in capturing leading positions and setting up new technology trends along with strengthening their local presence and creating local value worldwide.

Since the beginning Siemens believed in diversification and innovation which outstands them in the market sector. They began identifying market-specific forward-looking trends and drawing the strategic consequences early on. A few years ago, Siemens geared their portfolio to four megatrends: demographic change, urbanization, climate change and globalization. These trends are already influencing the way we live today, and their impact will increase substantially in the decades to come. By bundling their business activities into the three Sectors Industry, Energy and Healthcare, they also set the stage for capturing leading positions in attractive growth markets.


As environment is changing so frequently now days internal analysis of an organizations has become a key feature. It has become more beneficial for any organizations to develop strategy around their own resources and capabilities to face environmental change. As far as Siemens are concerned they are up to the task already. They had always believed in their internal resources as their main strength.


The group recorded revenues of E77,327 million (approximately $116,294.4 million) during the financial year ended September 2008 (FY2008), an increase of 6.7% over the financial year ended September 2007 (FY2007). The operating profit of the group was E2,492 million (approximately$3,747.8 million) during FY2008, a decrease of 50.2% compared with FY2007. The net profit was E5,725 million (approximately $8,610 million) in FY2008, an increase of 50.4% over FY2007.(Data Monitor Siemens AG).


Siemens are very diversified in geographical presence. They operate in 190 countries spread over the Americas, Europe, CIS, Africa, Asia, Australia, and Middle East. During FY2008, the group generated 26.1% of its revenue from Americas, 52.7% from Europe, CIS, Africa, and 21.2% from Asia, Australian, and Middle East. (Data Monitor Siemens AG)


Siemens believe that outstanding and innovative employees are their one of the greatest assets. Siemens employees are well trained, determined, focused and innovative and of course the believe in their staff by the company which makes them stand out in the global market.


Siemens over 160 years had created a very good reputation worldwide. Operating in over 190 countries have made them very diversified and created their own brands. There brands include generators, electrical products, healthcare equipments etc are one of the best in the world.


External factors are the ones on which no organization can depend on because it is constantly changing, the environment is so dynamic that organizations has to rely on their internal strength to face any of these challenges. The global and economic crises created huge challenges for companies to survive, but as far as Siemens are concerned they are very well prepared . They have done their homework and introduced measures that will not only help them to get through this crisis but also they will emerge much more stronger because they began identifying market specific and started drawing the strategic consequences much early on. As a part of their homework they already had identified their opportunities and threats which are.


Siemens had bought quiet a few businesses in recent years because they think that these business have potential to drive its business growth. "In January 2007, the group acquired US based UGS, one of the leading providers of product lifecycle management (PLM) software and services for manufacturers. In the same month, Siemens Water Technologies strengthened its service and product business in the US with acquisitions of four companies: Envirotrol, CEC, Pure Water Solutions, and Sunlight Systems. In November 2007, the group acquired Dade Behring Holdings, a manufacturer and distributor of diagnostic products and services to clinical laboratories." ( Some information is taken from


Even though Siemens had done their homework their still threat lies in front of them. Siemens faces intense competition across its market segments. As Siemens is a huge industry with different sectors their competition is much more higher than other industries. Their main competitors in the industry sectors are ABB, Alstom, Bombardier, Emerson Electric, General Electric Company, Honeywell International, Johnson Control, Philips, Schneider Electric, and Tyco International.( Information is gathered from

Like wise in energy sector as well its main competitors are General Electric, Alstom Powers, Mitsuibishi, Abbott and lots more.

As you can se such an intense competition could adversely affect the revenues and margins of the group.


Organizations have to be careful in choosing their strategic directions. It is the way of the organizations to take their products to the market and to gain competitive advantage. As being pointed out by Johnson, Scholes and Whittington that organizations should be ware of 3 types of motives or pressures that may shape their choice which are

ENVIRONMENT BASED MOTIVES: As Siemens is concerned they already had pointed out he growth of economies in the different continents. "The group operates in about 190 countries spread over the Americas, Europe, CIS, Africa, Asia, Australia, and Middle East. During FY2008, the group generated 26.1% of its revenue from Americas, 52.7% from Europe, CIS, Africa, and 21.2% from Asia, Australian, and Middle East".(

RESOURCE BASED MOTIVES: As being one of the most diversified groups Siemens have a very strong resource capabilities. Due to their high revenues Siemens can afford to spend lucative amount on their R&D. In 2008 Siemens increased its research and development investment to (approximately $5,690.9 million).

To analyse directions of its strategies Igor Ansoff has developed a well known matrix for analysing the mix between the products that a firm sell and the market is to sell.

As far as Siemens is concerned due to bundling their business activities into 3 sectors Industry, energy and Health they set the stage for capturing leading positions in attractive growth markets. Siemens direction of its strategy lies in all 4 stages of ansoff matrix.


Siemens are constantly penetrating the market due to its business activities in the leading growth market. They also have a very diversified customer base. The group has industrial and infrastructure customers, which can be grouped in markets such as construction and real estate, transport and logistics (such as transport authorities), metals and mining, machinery, utilities, and automotive.


Siemens had already done their homework of seeking new markets. They are already operating in 190 countries around the world and generating high revenues.


Product development is a very effective way to counteract a new entrant. Product development means companies introduce new product to the same market or adding new services. There is no questions as far as Siemens is concerned they have a vast market around the globe. There business activities distributed in 3 sectors Health, Industry and Energy provides them a great deal of opportunities to develop their product. Siemens offering in energy sector spectrum of products and services like LED energy saving lighting and building control system which are up gradation to their products for their existing markets.


Organizations diversify to gain competitive advantage over their competitors but it includes a great deal of risk as a lot of money is needed to invest lucative amount in R&D. Siemens as it is a market leader in the growing sectors gives it a great deal of upper hand. Siemens always believed in new innovation and technology as being said by the founder of the Siemens Werner Von Siemens " If you are not moving forward you are moving backwards." Siemens diversify its business by two different ways.


As Siemens operates in different sectors of the market it provides them many opportunity to diversify beyond the present product market with in the broad confines of the industry. Siemens moves both forward and backward in their value chain to achieve new product market, like in industry sector Siemens offers different products as well as services like building, lighting and mobility solutions, In energy sector they offer distribution of the power and extraction, conversion and lot more.


Siemens also diversified its business beyond the its current scope or industry. As Siemens business activities operates in 3 sectors they always believe in new market and moving forward because they believe in technology and innovation. Of course it requires great deal of investment in R&D, As far as Siemens is concerned they have a very strong R&D. Recently Siemens had increased their research and development investment to E 3,784 million.

Siemens invested with Fujitsu in laptops which is a very good example of unrelated diversification.


Siemens portfolio is strategy is clear for the past several years which is based on capturing or maintaining no1 or no2 positions in tomorrows profitable markets. They believe that this is the only way to survive in the difficult environment. Siemens are concentrating more and more on renewable energy and concentrating deeply on organic growth. In the past five years they had invested 20 billion Euros in the acquisition of growth business. As Siemens operates their business activities in 3 sectors health, energy and industry they had also set the stage for capturing leading positions in attractive growth market. As a part of DESERTEC they are constructing solar thermal power in Sahara and wind farms in Europe, They are also producing smart grid solution based technologies like electric cars. And lots more. The best way to see there portfolio is by Boston matrix.



As Siemens had a very diversified business culture around the globe, in the 3 sectors where they operate they have varieties of methods to develop their SBUs (Strategic Business unit).

Siemens believe that one of the main aspects of their strategy for outperforming their competitors is to better than they are that's why they are constantly cooperating with their strong partners to beat their competitors and gearing their value chain to efficiency.

Siemens as a diversified business believe in various methods of development like as there one of the strengths is there strong R&D department they can afford Organic development. Since they want to continue ensuring strict resource allocation in the future, they are keen on organic growth. In the last 5 years they have invested 20 billion Euros in organic development. There was a significant increase in their R&D budget and it got its R&D location in more that 30 countries. They are also keen in acquiring growing businesses recently they had invested over 20 billion Euros in acquiring businesses. Siemens continuously optimizes its product portfolio. Every year, it completes numerous acquisitions and divestitures.

"In 2005 alone, Siemens invested around EUR 2.5 billion in new businesses and the 2006 figure will be substantially higher. On the divestment side, the carve-outs of BenQ, Product Related Services and Logistics & Assembly have caused a stir.

Regarding recent prominent acquisitions, such as Flender AG (Germany), CTI (USA), Bonus (Denmark), US Filter (USA) or VA Tech (Austria), Siemens Management Consulting was primarily involved in the pre- and post-merger integration (PMI) work". (Information is gathered from

Siemens believe that acquisitions have bought them closer to reach their goal of growing as fast as the global. Siemens also have joint ventures with one of their SBUs to obtain growth like Siemens and Nokia announced that they intend to merge the network business of Nokia and the carrier related operations of Siemens into a new company, which they will call Nokia Siemens networks. It's a 50-50 joint venture which means that both parties will invest half and half. They believe that this joint venture will make them a global leader with strong positions in important growth segments of fixed and mobile network infrastructure and services.

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