Siemens Case Study

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Siemens Introduction

Depth analysis of both internal as well as external environment is essential for an organisation to ensure being in a competitive edge with strategic planning. Internal analysis with the use of SWOT therefore, helps in identifying strengths and weaknesses which would either hinder or influence needs of the target market. External analysis on the other hand, considers macro factors, especially, technological, economic, governmental and environmental that might affect the organisation. This study has laid emphasis on the case study of Siemens which is the largest automation and manufacturing company in Europe. This organisation is also the leading supplier of media diagnosis and power generation and transmission systems.

Company Name

Siemens

Type of industry

Conglomerate

Headquarters

Germany

Sales/Revenue

€ 83.049 billion

Area served

Worldwide

Number of stores

85 production and manufacturing facilities in 190 different countries

Competition

Philips, Schneider Electric, Hitachi Alstom and Larsen and Turbo

USP

Building technologies

Target Group

Multinational Corporations and government organisations along with retail sector customers

Products

  • Electrical installation systems
  • Hearing instruments
  • Home appliances like washing machine, coffee makers, vacuum cleaner

Website

new.siemens.com

Siemens Swot Analysis

According to the ideas of Phadermrod et al. (2019), use of this framework is considered to be fruitful in determining core competencies of an organisation besides identifying threats that might prove to be challenging.

Strengths

  • Siemens has succeeded in creating a strong brand portfolio by investing in fields like distributed energy management, IoT integrated services and electric mobility
  • Siemens UK has set its own “Business Conduct Guidelines” thereby enabling it to act as a responsible global corporate tax citizen
  • Efficient enough to build new revenue stream with excellent performance in the field of digital transformation
  • Contribution towards sustainability by preventing “Slavery and Human Trafficking” (Siemens.com, 2019)

Weaknesses

  • Siemens has witnessed multiple missed opportunities in comparison to its competitors due to incompetency towards demand forecasting
  • This resulted in increasing days inventory which tended Siemens to raise current capital of investing into different channels
  • Present business model is not efficient enough to support continuous expansion of different product segments

Opportunities

  • It is estimated for digital transformation services of Siemens to end up in increasing Earnings per Share
  • IoT integrated service, MindSphere to turn out to be the growth engine with estimated 15% margin besides profit pool of 12 to 18% by 2022 (Siemens.com, 2019)

Threats

  • Shortage of skilled workers due to global business expansion thereby posing threat on overall profitability
  • Some of the significant competitors are Philips, Schneider Electric, Hitachi Alstom and Larsen and Turbo

Siemens Analysis

As per the case study of Siemens, its foremost strength that is worth mentioning is that this organisation has successfully set the course of long-term value creation which resulted in strong profitable growth. This is evident from the fact that revenue and net income has witnessed 9% and 40% growth respectively as of 2017. The IoT operating system as offered by Siemens, Mind Sphere is analysed to be playing a crucial role towards digital transformation thereby attracting a large customer base all across the globe. Siemens UK has led the foundation towards sustainability by adhering to Modern Slavery Act 2015 (Siemens.com, 2019). As a result of this, this organisation has zero tolerance towards slavery, forced labour and human trafficking.

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One of the significant weaknesses as observed in the case study of Siemens is its higher Inventory Days of Supply (IDS). This in turn depicted that average number of days that this organisation holds its inventory prior to selling is comparatively higher (March and Scudder, 2017). However, as per financial statement 2018, inventory value has reduced from €13,521 million to €8,244 million as of 2018. Inspired by the ideas of Bröring et al. (2017), holistic offering of this innovative solution is all set to provide a comprehensive support to customers which in turn would enable Siemens to achieve its planned profit margin. The case study of Siemens revealed that being the leading automation vendor; it faces tough competition from household brands with Schneider Electric at the top position with varieties of energy management, automation solution and spanning services (Annarelli et al. 2019).

Siemens Pestel Analysis

Political

  • Brexit tended UK-based organisations to leave the European union without entering into any types of deals
  • The new trade policy under World Trade Organisation (WTO) Agreement on Government Procurement (GPA) provided UK businesses with the opportunity to access £1.3 trillion public contract in a year (Gov.uk, 2019)
  • The UK Labour Law has further ensured national minimum wage per hour for workers

Economic

  • UK GDP increased by 0.3% since May 2019
  • The inflation rate on the other hand, fell to 2.1% which was once 2.3% due to increase in wages (excluding bonuses) by 3.3%
  • Unemployment rate is down by 3.5% as of April 2019

Social

  • Population growth rate in UK is 0.6% as of 2016 with latest estimation of United Nations revealing current population to be 66,948,429
  • Population density of this nation is 277 per kilometre square with 81.4% residents living in urban areas
  • Median age of people in UK is 40.3 years which is however, constant since 2016 (Worldometers.info, 2019)

Technological

  • Comprehensive solution of IoT has lead to its widespread use across UK with estimation of availability of 156 million IoT devices by 2024
  • Expenditure on Research and Development (R&D) in 2017 is valued at £34.8 billion from £33.2 billion
  • This accounted for 1.69% of total GDP

Legal

  • Based on the case study of Siemens, the UK Government took initiatives to protect its consumers from unfair trading by with Consumer Protection Act 1987
  • It is unlawful to discriminate any individual on the basis of age, disability, marriage, belief, sex and religion (Gov.uk, 2019)

Environmental

  • Weather conditions all across UK seemed to be changeable
  • The Government of UK took initiatives to reduce emissions of greenhouse gas by 80% by 2050
  • The case study of Siemens depicted that organisations in UK are required to promote CSR by adhering to Health and Safety at Work Act 1974 and Race Relations Act 1976

Siemens Analysis

In context to the UK Labour Law, workers belonging in the age group of 16-17 are to be provided with GBP 3.57 and for 18-21 years, it is GBP 4.83. Workers above 22 years are to be provided with basic wage of GBP 5.80 (Expatica.com, 2018). According to the case study of Siemens, this might cause significant impact on its operational units which hire contractual workers. One of the significant reasons behind increased GDP of UK is production-based firms which contributed positively. Demographic characteristics play a crucial role while analysing external environment of an organisation as these reveal about income distribution, lifestyle and preference of consumers (Power et al. 2017). Scopes of technological advancement in the form of IoT has been analysed with an estimation of 156 million IoT devices to be installed in UK by upcoming 2024. The statistics was however, only 13 million as of 2016 (Ng and Wakenshaw, 2017). Emergence of Consumer Protection Act 1987 within UK has provided consumers with the right to claim for compensation in case they are provided with defective products. Section 3(1) specifically states the importance of warning labels to be attached with products.

Reference List

Annarelli, A., Battistella, C. and Nonino, F., (2019). Product Service Systems’ Competitive Markets. In The Road to Servitization (pp. 55-94). Springer, Cham.

Bröring, A., Schmid, S., Schindhelm, C.K., Khelil, A., Käbisch, S., Kramer, D., Le Phuoc, D., Mitic, J., Anicic, D. and Teniente, E., (2017). Enabling IoT ecosystems through platform interoperability. IEEE software, 34(1), pp.54-61.

Expatica.com. (2018). UK labour law: Employment contracts and wages in the UK. Available at: https://www.expatica.com/uk/employment/employment-law/uk-labour-law-employment-contracts-and-wages-in-the-uk-104501/ [Accessed on 30 July 2019]

Gov.uk. (2018). UK trade policy: a guide to new trade legislation. Available at: https://www.gov.uk/government/publications/a-uk-trade-policy-a-guide-to-trade-legislation/preparing-for-a-uk-trade-policy-a-guide-to-trade-legislation [Accessed on 28 July 2019]

March, S.T. and Scudder, G.D., (2017). Predictive maintenance: strategic use of IT in manufacturing organizations. Information Systems Frontiers, pp.1-15.

Ng, I.C. and Wakenshaw, S.Y., (2017). The Internet-of-Things: Review and research directions. International Journal of Research in Marketing, 34(1), pp.3-21.

Phadermrod, B., Crowder, R.M. and Wills, G.B., (2019). Importance-performance analysis based SWOT analysis. International Journal of Information Management, 44, pp.194-203.

Power, M., Uphoff, E.P., Stewart-Knox, B., Small, N., Doherty, B. and Pickett, K.E., (2017). Food insecurity and socio-demographic characteristics in two UK ethnic groups: an analysis of women in the Born in Bradford cohort. Journal of Public Health40(1), pp.32-40.

Siemens.com. (2019). Modern Slavery Act Statement on the Prevention of Slavery and Human Trafficking. Available at: https://new.siemens.com/uk/en/company/sustainability/modern-slavery.html [Accessed on 28 July 2019]

Worldometers.info. (2019). U.K. Population (LIVE). Available at: https://www.worldometers.info/world-population/uk-population/ [Accessed on 1 August 2019]

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